Consultation outcome

Environment Agency charges proposal for materials facilities: summary of consultation responses

Updated 1 October 2024

Introduction

Materials facilities (MFs) are regulated waste operations that receive over 1,000 tonnes of waste material a year and either consolidate into bulk quantities or separate into specified output material such as glass, metal, paper, or plastic. This allows the material to be recycled by other facilities or persons.

We recover the costs of regulating MFs through an annual additional subsistence charge in our environmental permitting and abstraction licensing charging scheme.

New MF regulations will come into force on 1 October 2024, which introduce enhanced sampling and reporting requirements. This will improve quality objective data for recyclable material and support the payment mechanisms for extended producer responsibility for packaging (pEPR). This will make sure packaging producers pay the cost of managing the packaging they place on the market throughout its lifecycle.

The new regulations mean we will need to carry out additional compliance work and data checks and the amount we charge will need to change as a result. We review our charging schemes regularly and consult with the public whenever we make changes.

In developing our proposal, we reviewed the regulatory activity we need to do. This activity analysis informed the proposed charge.

The consultation outlined how we aim to recover the full cost of our regulatory activity. We reviewed the charge to address:

• where it no longer recovers the cost of delivering our services
• inflationary pressures
• the additional costs to deliver our duties under the new MF regulations

We asked for your views on the following proposals:

• an increase to the additional subsistence charge for MFs from £2,240 to £4,154 per year so it reflects the costs of our regulatory activity under the new MF regulations
• a change to how we bill customers, so billing takes place in advance in March for the following financial year

How we ran the consultation

The consultation ran for 8 weeks from 10 April 2024 to 5 June 2024.

We ran the consultation in line with our legal requirements to consult following the Cabinet Office’s consultation principles guidelines. The consultation was hosted on GOV.UK and our Citizen Space consultations website and was open to anybody to take part. Those not able to respond online were able to request a printed copy of the documents to allow them to respond by email or post.

It was important for us to give our customers the opportunity to understand the proposals and the impact they will have. We publicised this consultation openly and encouraged our customers to take this opportunity to share their views. Throughout the development of the proposals and in the run up to the consultation, our staff engaged with stakeholders.

We contacted all our existing materials facilities and trade associations directly by email to inform them of the consultation. We used 2 Department for Environment Food and Rural Affairs (Defra) engagement events in May 2024 to outline the proposals, bring attention to the consultation and encourage responses, with a total of over 100 attendees. The consultation was also covered in the trade press reaching other potential stakeholders.

Summary of key findings and actions we will take

We received 14 responses in total, of which:

• 3 were from individuals
• 11 were from organisations or other bodies
• 0 were listed as ‘other’

The following key themes were raised by the consultees:

• disagreement with the proposal to increase the annual additional subsistence charge, with respondents challenging whether the charge is representative of costs and highlighting customer or regime impacts
• agreement with the proposal to change how we bill customers, with respondents saying this will lead to increased consistency, simplicity and efficiency
• requests to delay implementation of the charge so that it aligns with that of extended producer responsibility for packaging waste

Our response to these themes can be found below.

Consultation feedback and our response

In the following sections we describe the themes raised by consultees in each question and our response.

Annex 1 gives detailed information on the responses to each question. Annex 2 gives a list of organisations and groups that participated in the consultation. We would like to thank all those who participated in the consultation and value the feedback provided.

Proposal to increase the annual additional subsistence charge for a materials facility operation

Question 1: To what extent do you agree or disagree with the proposed change to the additional annual subsistence charge for a materials facility operation?

Summary of responses to question 1

This question received a lot more negative responses than positive responses. 

• positive response – 3
• negative response – 10
• neither agreed nor disagreed – 1

Some respondents supported the underlying principle of us seeking to recover the full costs of our regulatory activity through the proposed charge. There were requests for greater transparency around how the charge was calculated. Some respondents also called for the charge to be reviewed in future to make sure it remained representative of our costs.

There was particular concern that we had underestimated the number of customers obligated under the new regulations and that this may mean we are not properly resourced to regulate the regime effectively . A tiered charge was also recommended instead of a flat fee as it was suggested that different customers will have different sampling and reporting obligations.

Other reasons for disagreeing with the charge increase included the following:

• dissatisfaction with the regulatory service currently being delivered
• the flat fee may not encourage smaller sites to notify us, leading to an increase in unregulated activity – some respondents were concerned that we would not pursue such sites
• impact of costs on customers – the wider economic context as well as the other costs associated with meeting regulatory requirements mean that customers, particularly local authorities, are already under financial pressure

Some respondents also disagreed with the timing of implementation, saying that:

• the new charge should be introduced at the same time as extended producer responsibility for packaging waste (pEPR)
• implementation could be phased to lessen the impact on customers

Our response for question 1

We have sought to address calls for greater transparency in how we calculated the charge in Annex 3 which outlines our approach to developing charges. We are confident in the methodology used to estimate customer numbers and to calculate the charge. We will also review our charges periodically to make sure they remain representative of our regulatory costs. We do not believe a tiered charge is appropriate for this regime.

We agree that the regulatory service for MFs needs to improve. The existing annual subsistence charge for MFs is set too low. This means we are unable to carry out the compliance work we intended to do when the MF regulations were introduced. The proposed new charge will make sure we are properly resourced to meet our statutory duties under the new MF regulations. We will continue to work with industry to improve the service they receive. Being properly resourced means we will be able to regulate effectively, including identifying those operators who are not compliant with the regulations.

Under managing public money guidance, we have a responsibility to recover the costs of our regulatory activity by setting charges for the work we do at the appropriate level. The current charge does not fully fund the regulation we need to do. When the new regulations are introduced, we will also need to do more work. In developing the proposal, we reviewed the regulatory activity we need to do. This activity analysis informed the proposed charge. It is right to bring the charge in line with the managing public money guidance as this means the charge reflects true costs. Otherwise, costs could be borne by the general taxpayer.

MFs will need to adhere to the requirements of the new MF regulations in advance of pEPR coming into force. The data gathered will form a key component of the payment mechanism to local authorities for the collection of packaging wastes. Defra and the scheme administrator for pEPR payments want the data collection to start 1 October 2024, to allow calculation of future payments to local authorities. The charge needs to be increased at the same time as these new regulatory requirements come into force on 1 October 2024, to fund this work.

We will implement the annual additional subsistence charge of £4,154 as outlined in the proposal on 1 October 2024.

Proposal to change the billing approach for the additional subsistence charge for a materials facilities operation

Question 2: To what extent do you agree or disagree with the proposed change to our approach to billing for the additional subsistence charge for operators of materials facilities?

Summary of responses to question 2

This question received a lot more positive responses than negative responses.

• positive response – 8
• negative response – 2
• neither agreed nor disagreed – 3

Most respondents agreed with the proposal because it will lead to increased consistency, simplicity and efficiency. Some respondents disagreed with the proposal because they think it will mean more administration for us when operators notify or de-notify during the year. One respondent said:

the initial payment may be too much of a financial burden for some smaller sized operators and local authorities

Our response to question 2

We agree that bringing charging into line with our approach for other environmental permit subsistence fees will create efficiencies and lead to a better customer experience. We already have systems in place for taking payment or issuing refunds during the year, so we do not think this process will be administratively burdensome.

We will implement the new charging approach as outlined in our proposal. To aid the transition to the new approach, we will only start advance billing from the 2025 to 2026 financial year.

Economic impact

Question 3: To what extent do you agree or disagree with our view of the economic impact?

Summary of responses to question 3

This question received more negative responses than positive responses.

• positive response – 4
• negative response – 7
• neither agreed nor disagreed – 2

Some respondents agreed with our view of the economic impact on customers. One respondent said:

it brings MF operators in line with other sectors within the waste industry and streamlines the process

Some respondents suggested that there should be a discount for smaller and or local authority owned MFs. However, one respondent suggested the opposite because:

“the smaller companies are typically the ones who practice unethical work practices”

Some points were raised that have already been addressed above. It was again suggested that we had underestimated the number of customers and therefore the impact. It was also recommended that implementation of the new charge aligns with that of pEPR. One respondent said:

I don’t believe that all the financial burden will be passed onto packaging producers

Others pointed out the impact of other costs resulting from the requirements of the new regulations and commented on Defra’s associated impact assessment, neither of which are the subject of this consultation.

With regards to impacts on small to medium enterprises (SMEs) specifically, respondents said that SMEs will be impacted by both the charge and the cost of complying with the new regulations. One respondent said:

the increased cost of sampling is one financial impact for SMEs, increased subsistence charges from the EA will compound this

Another respondent said:

the additional subsistence charge for MFs will have a greater financial impact on smaller facilities and this may disincentivise some sites from notifying

This point was also raised in relation question 1 and our response to this can be found in our response to question 1.

Our response to question 3

We are grateful for your feedback which has helped us to better understand the economic impact of the charge proposal.

We need to bring the charge in line with managing public money which means that the charge will increase for all customers, but we believe the charge is fair and proportionate and will enable us to regulate effectively.

Question 4: Do you have any comments about our proposals for additional subsistence charges for materials facility operations?

Summary of responses to question 4

Several of the themes raised in response to this question are already covered in the previous sections so we will not repeat them in this section.

Additional themes raised included the following:

• a query as to whether the 1,000 tonnes de minimis threshold is set at the appropriate level
• clarification around the charge amount and whether it is in addition to or replaces the current charge
• a request for support and guidance to make sure of a smooth transition to the new system

Our response to question 4

We are grateful for your feedback and have considered your responses when developing our final proposal and preparing for implementation. We will provide advice and guidance to operators to make sure the new charges are clear.

We can confirm that the amount MFs will be required to pay on an annual basis as an ‘additional subsistence charge’ in accordance with Part 3 14 (2)(c) of the environmental permitting and abstraction licensing charging scheme is £4,154. The charge of £4,154 will replace the old charge of £2,240 and is not in addition to it. This charge will increase annually in line with the consumer prices index (CPI) the previous year.

We are committed to continuous improvement. Where any additional comments have been submitted that are outside of the scope of this consultation, we will make sure they are considered as part of any future review of our charges and processes for the regulation of MFs.

Next steps

The Environment Agency (Environmental Permitting and Abstraction Licensing) (England) Charging Scheme 2022 version 1.4 will come into force on 1 October 2024. This is after approval from the Secretary of State for Environment, Food and Rural Affairs and HM Treasury. The changes will be implemented under existing legislation in Section 41 of the Environment Act 1995.

We have now published the updated charging scheme on GOV.UK.