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The Grapevine

The WSTA's views, distilled.

The great glass rollercoaster

A case study into how the WSTA works for its members.

At the beginning of 2012 the cost of recycling glass, more specifically the cost of glass Packaging Recovery Notes (PRN), stood at a stable average of £10 per tonne. However a combination of tougher recycling targets from the Department of Environment and failures in the PRN market saw this price rocket to a peak in 2013 of £85 per tonne, a staggering 850% increase.

At first one or two members highlighted this issue to us, hugely concerned about the impact this was having and, in one instance, threatening the future viability of a  business.  After further inquiry it became clear that this wasn’t just a minor issue affecting a few people, but a cost burden that was having a major impact on cash flow and producers’ bottom lines across the trade. We calculated that when PRN prices were at their peak, producers had to find an additional £51m per year to cover the costs.

We knew we needed to act and so the WSTA took a leading role in co-ordinating the response across the trade. First, we coordinated an industry lobby of the then Minister which led to a review of glass recycling by the Advisory Committee on Packaging in 2013.  The review concluded, amongst others, that the recycling targets had been based on a significant over-estimation of the amount of glass circulating.  In a nutshell, businesses had to recycle more than they needed to and this was putting a strain on the supply chain forcing prices up.

We were delighted that the Minister took on board our concerns and the Department announced earlier this year it would revise downwards both the estimate for the amount of waste glass produced annually and also the business recycling rates for glass. The recycling rate for obligated businesses came down from 81% to 75% in 2014.  

We then looked to address the failures in the PRN market. A major criticism of the PRN system has been a lack of transparency about PRN prices which has undermined industry confidence in the system. In order to make this more transparent, the WSTA has now launched a dedicated website page for our members that will provide weekly updates, in partnership with The Environment Exchange, of PRN prices.

WSTA Members can access the prices here: http://www.wsta.co.uk/packaging-recovery-note-prices

Now they will be able to see what else is happening in the market and whether the prices they are paying their current compliance scheme are in line with the market price. In addition we are working with complydirectto develop a compliance scheme specifically tailored for the needs of WSTA members.

This action has thankfully helped to bring a costs down to a more acceptable level, now nearly to £20 per tonne, significantly easing the pressure on the trade. While we cannot always foresee when an issue like PRNs occur, when they do the WSTA is on hand to support our members to navigate them as best we can.

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Drop the Duty - Small drop, big cheer! Please help secure a 2% cut in alcohol duty

With the New Year already well under way, I can think of at least one important resolution that I am determined to keep – calling for the Government to ‘Drop the Duty’ on wine and spirits by 2% in the upcoming Budget.

With just nine weeks to go before the Budget and the election only months away, we now have the perfect opportunity to make a positive case about the huge and growing contribution that our great industry makes to a successful UK economy.

Although the sector had successes in 2014, particularly in helping to secure the end of the alcohol duty escalator and a spirits duty freeze in the 2014 Budget, the wine and spirits industry is still having to work within a duty system that places unnecessary burdens on producers, distributors and consumers.

Our ‘Drop the Duty!’ campaign, launched in partnership with the Scotch Whisky Association and the TaxPayers’ Alliance, aims to go some way to solving this by calling for the Chancellor to make a modest 2% cut in alcohol duty. To highlight the importance of this, we took over a pub in Central London showing exactly what your local would look like if the Chancellor was in charge.

 

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We’ve also got the figures to prove that a 2% drop in duty would bring major benefits to the UK economy. Recent analysis undertaken by EY has found that a modest 2% cut in duty on wine and spirits this year would lead to an additional 24,500 jobs across the sector. This not only allows the industry to continue to flourish, enabling producers to invest and expand their businesses, but will also boost the UK economy more broadly – generating an additional £1.5 billion for the public finances. 

As we all know, this is not just an issue for the health of the wine and spirits industry. Consumers are also being unfairly hit by the current duty system. In the UK we pay almost 60% tax on a bottle of wine and almost 80% on a bottle of whisky or gin.  Remarkably, wine duty hasn’t had a cut since 1984 – the same year that Wham were topping the charts with ‘Wake me up before you Go-Go’ and George Osborne was celebrating his 13th birthday.

 

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So, ahead of George Osborne standing up at the Dispatch Box on 18 March, we will be campaigning hard for this change by highlighting how a modest drop in alcohol duty would lead to a significant increase in economic activity across the wine and spirits sector.

Please help us to spread the word about the campaign by emailing  your MP on our campaign website and asking them to urge the Chancellor to cut alcohol duty by 2%. Last year’s successful campaign shows that your email can make a difference. Thank you.

Here’s hoping that we will celebrating at least one completed New Year’s resolution by giving George a big cheer for dropping duty on Budget day! 

 

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