Corporate report

Compliance monitoring and enforcement activity 2021

Published 27 June 2022

Applies to England

This report provides a statement on the actual monitoring done and successes achieved during 2021 for the packaging regime.

1. Executive summary

The Environment Agency published its 2021 policy and monitoring targets in the packaging producer responsibility monitoring plan 2021. In 2021, using desk based monitoring, we monitored all registered producers, compliance schemes and accredited reprocessors and exporters. We audited a total of 251 persons.

Using an intelligence led and risk-based approach, we carried out compliance monitoring of accredited reprocessors and exporters, packaging producers and compliance schemes. We completed site inspections through pre-arranged or unannounced visits. We also used remote auditing processes that we put in place last year in response to the coronavirus (COVID-19) pandemic.

Where we identified non-compliance, we followed our enforcement and sanctions policy and associated guidelines to determine the appropriate enforcement action. Over the year our various interventions have resulted in disrupting approximately 600,000 tonnes of waste, with an estimated packaging recycling note (PRN) value of £11.5 million, of what we regard illegitimate evidence.

During 2021, we:

• suspended 10 accreditations
• cancelled 12 accreditations
• refused 4 accreditation applications
• caused 29 companies to withdraw their accreditation applications
• desk based monitored 349 accreditation applications
• assessed the submitted information and data from 349 applications for accreditation
• assessed the submitted information and data from 6,829 registered producers (approximately 10 million tonnes)
• assessed all 21 compliance schemes through quarterly desk based monitoring
• audited 9 compliance schemes

We accepted a total of 28 enforcement undertakings (EUs) from packaging producers in 2021. This resulted in £519,461 in financial contributions to environmental projects. Since introducing civil sanctions for the packaging regulations in 2011, we have accepted 362 EUs. These have made financial contributions of £7,302,589 to environmental projects.

Provisional figures indicate that in 2021:

• the final 2021 UK total recycling obligation was 7,861,521 tonnes (an increase of 244,585 tonnes on the 2020 final UK obligation)
• all UK schemes met their 2021 obligations (the UK scheme obligation was 7,513,831 tonnes)
• all but 7 UK direct registrant purchased their PRNs to meet their obligations (this obligation was 347,690 tonnes)
• the carry over PRNs decreased from 585,646 tonnes into the 2021 obligation year to 297,541 tonnes into 2022
• the year ended with the highest number of accredited plastic reprocessors (113) and accredited plastic (156) and paper exporters (77)

1.1 Compliance monitoring 2021

Audits	Monitoring in 2021	2020 actual	2021 actual	Percentage difference
Producer audits	We assessed the submitted information and data from 6,829 registered producers (approximately 10 million tonnes)	38	26	-31.6%
Accredited operator audits	We carried out assessment and determination of 349 accreditation applications	175	216	+23.4%
Compliance schemes audits	We assessed all 21 compliance schemes through quarterly desk based monitoring	8	9	+12.5%
Total		221	251	+13.6%

2. Monitoring and enforcement

2.1 Performance in 2021

In 2021, we audited 251 persons – an increase of 13.6% on 2020.

2.2 Monitoring registered producers

We continued to monitor producers who are registered:

• directly with us
• through compliance schemes

Our monitoring programmes are inclusive with respect to the registration route. When we establish our national monitoring priorities or local monitoring programmes, our approach is driven by risk, and we do not differentiate between:

• direct registrants
• those registered through compliance schemes
• those registered with different compliance schemes

At registration stage, we assessed the submitted information and data from 6,829 registered producers. This included comparing data submissions with those from previous years. We reviewed and validated all direct registration applications to make sure we published accurate data. We sought explanations and corrections where we believed the data submitted was inaccurate.

Our officers audited 26 producers in 2021.

The continued effects of the COVID-19 pandemic have meant that we have had to refocus our efforts on other areas of compliance monitoring in 2021. This has had a negative impact on the amount of producer audits we could carry out, with 12 less audits than in 2020.

Every year, before the end of the compliance period, we provide advice and guidance to direct registrants that have not purchased sufficient evidence to meet their obligations. This work supported all but 6 direct registrants meeting their obligations in full for 2021.

2.3 Monitoring unregistered producers (freeriders and drop offs)

Where we investigate and identify an obligated producer as not being registered (‘free riding’), our initial approach is to bring the producer into compliance. Alongside this we also investigate the severity of the non-compliance and determine the most appropriate enforcement responses. These are in line with our enforcement and sanctions policy. In 2021, in certain cases, we accepted an EU offer.

An EU is a form of civil sanction. We accepted a total of 28 EUs from packaging producers in 2021. This resulted in £519,461 in financial contributions to environmental projects, bringing the overall amount paid through EUs to over £7.1 million since 2011.

The largest EUs in 2021 were for:

• Fonthill Waters Limited at just over £46,000
• Bee Health Limited at just under £44,000
• Lotus Bakeries UK Ltd at £35,000

We are now investigating additional freeriders that appear to have had past offences.

After the registration deadline in April 2021, we had 777 businesses (in England) that failed to re-register.

We worked alongside packaging producer compliance schemes to contact these businesses and bring them into compliance. As a result of this work, 756 businesses either re-registered or were identified as no longer being obligated.

Where businesses failed to register, we will consider our enforcement options in line with our enforcement and sanctions policy. The remaining 21 businesses had a combined obligation in 2020 of 2,777 tonnes. This represents 0.04% of the total UK obligation.

Since 2019 when the new freerider process was implemented, we have investigated 322 companies. This has generated £147,940 in accumulated registration fees for the Environment Agency. In addition, we have brought in 73,445 tonnes of packaging obligation into the producer responsibility system at an estimated cost of more than £3 million to the producer.

2.4 Monitoring compliance schemes

In 2021 there were 21 approved packaging compliance schemes registered with the Environment Agency. We mostly monitor all approved compliance schemes by:

• validating, assessing, and analysing information and data submitted at registration, and after resubmissions
• assessing and investigating late or missing submissions
• monitoring PRNs and packaging exporter recycling notes
• assessing compliance statements
• risk profiling

Our aim is to check conditions of approval have been complied with and to identify and address any failures.

We carried out quarterly desk based monitoring of all 21 compliance schemes throughout 2021. This also involved a discussion about their compliance position and ability to meet their recycling obligations (where appropriate). We carried out additional desk based monitoring ad hoc when a compliance scheme uploaded a template. We audited 9 packaging compliance schemes during 2021. All our approved schemes submitted a statement of compliance and met their obligations for the 2021 compliance period.

For the 21 compliance schemes, during 2021, we:

• carried out quarterly desk based monitoring – this involved a discussion about their compliance position and ability to meet their recycling obligations (where appropriate)
• carried out additional desk based monitoring ad hoc when a compliance scheme uploaded a template
• audited 9 packaging compliance schemes

All our approved schemes submitted a statement of compliance and met their obligations for the 2021 compliance period.

2.5 Monitoring accredited reprocessors and exporters

The Environment Agency accredits and monitors the activities of reprocessors and exporters of UK packaging waste. This activity involves:

• an initial site inspection to determine any new applications
• assessing submitted information and data at application stage
• compliance monitoring throughout the year for all accredited exporters and reprocessors during the period of accreditation

Accreditations must be renewed each year.

In 2021, we assessed and determined 349 accreditation applications.

We monitor, on an intelligence led basis, the sampling and inspection plans when we assess and determine an accreditation. This makes sure they are robust and reliable. We did this through desk based monitoring, site visits or remote inspections.

Once accredited, we monitor all accredited exporters and reprocessors on an intelligence and risk-based basis. During 2021 we audited a total of 216 operators for compliance through site inspections or desk based monitoring. As a result of compliance assessments (both site-based and desk based) we suspended 10 and cancelled 12 accreditations. A 69% increase in suspensions and cancellations compared with 2020. We communicated these decisions to industry. This was to inform them:

• of reduced availability of evidence onto the market
• to send a deterrent message on the consequences of non-compliance

This shows we are prioritising the identification of non-compliance, including possibly fraudulent activity. We are encouraging compliance. This enforcement activity has also helped to inform decisions on applications for accreditation.

Our enforcement activities during 2021 saw us disrupt 600,000 tonnes of waste, a 200% increase on last year.

2.6 Impact of the COVID-19 pandemic

We recognise that the COVID-19 pandemic continues to change the way many organisations operate, including the Environment Agency. Throughout 2021, we were able to fully operate. Our frontline teams were and are still active, where necessary, on the ground tackling priority issues such as flood risk and pollution.

Within the Environment Agency, we have adapted our ways of working. We have embraced doing remote compliance monitoring and auditing the customer groups we regulate. The regulatory activities we were able to perform in 2021 were directed by the COVID-19 restrictions in place at the time. By the end of 2021 we had restarted most of our field and site based regulatory activities in a coordinated and safe manner to:

• protect people and the environment
• support those we regulate

The pandemic meant resource available to do audits and give support to officers that did have capacity was still significantly reduced. In 2020 we were able to maintain a regulatory presence by developing a new remote auditing process. In 2021 we reviewed this process and from lessons learnt used best practice for remote auditing. This meant we were able to increase the amount of remote auditing we did in 2021 by 50% compared with 2020. We continue to review the process and it has been agreed that we will maintain some remote auditing alongside our field and site based regulatory activities. The increase in audit activity can also be attributed to the more agile way of working we have adopted. We continue to target our audits to where there are spikes in data reported by operators that might indicate a non-compliance risk.

Officers have been using video conferencing software to make sure remote audits reflect face-to-face audits as closely as possible. With operators’ screen sharing, we can ask to see whatever documents we need on their laptop, as if we were sat next to them. This has significantly reduced an operator’s ability to send us anything non-compliant.

We also contacted many of our producer responsibility customers to gauge whether they were still operational during the pandemic and at what capacity. This informed our compliance monitoring activities, risk profiling and added to our intelligence picture. We also dedicated resource to helping operators who might be struggling during the pandemic by offering advice and support.

As lockdown measures eased, we returned to a ‘business as usual’ approach to any non-compliances. We will continue to improve and deliver on our successes realised during the pandemic, for example, continue to make use of remote auditing where appropriate.

2.7 Successes

We completed our ‘lessons learned’ review following 3 independent reviews. This proved a great success and all reviews and decisions were upheld. The outcomes of the reviews will further improve our strong processes for refusing and cancelling operators.

Refusing applications is an important tool. It gives us the opportunity to prevent potentially non-compliant companies entering the regime before non-compliance is committed and illegitimate revenue from the packaging waste regime can be claimed. Thirty three companies were stopped from entering the regime this year, either due to their applications being refused, or our actions causing these companies to withdraw their applications.

We also succeeded in compliance monitoring accredited reprocessors and exporters. This resulted in:

• cancelling 8 exporter accreditations and 4 reprocessor accreditations where either the severity or type of breach meant they could not be brought back into compliance
• bringing 2 exporters and 2 reprocessors back into compliance through actions given as part of suspensions
• bringing 4 exporters back into compliance through formal advice and guidance
• sending 6 exporters warning letters resulting from offences identified
• keeping 6 exporters suspended after they failed to comply with the actions within their notice

Through improving processes and closer working amongst teams, we have been able to act on non-compliance promptly.

We request Annex VII forms from some packaging exporters 3 days before they export. We target those exporters we consider present the highest risks, based on a range of factors. We request the Annex VII documents using an ‘information notice’ issued under the Transfrontier Shipment of Waste (TFS) Regulations. The information is extremely useful to our compliance monitoring work and some of its uses and successes from the work are summarised. The Annex VII collection team have an additional responsibility of maintaining and overseeing the overseas reprocessing facility database. They compile a list of the recovery facilities and give them a risk rating using direct correspondence with the competent authority.

In summary:

• we use the information gathered with other datasets to target shipments believed to be of higher risk
• we use the information to help us develop intelligence to better understand the risk from the operators and their load sites
• it has allowed us to target container and trailer shipments believed to be illegal
• we have identified interim sites that are not final recovery facilities thus meaning the Annex VII was illegal
• containers and trailers have been stopped based on the Annex VIIs provided due to them not meeting the legislative requirements
• companies have had their accreditation cancelled because we could intervene based on the information given
• shipments have been stopped based on information collated in the overseas database
• our understanding of local restrictions and legislation significantly increased through the contacts we made as part of this work
• we have begun investigations based on our analysis of the information in the Annex VII form and the overseas database
• the work has been boosted using robotics to automate the input process saving approximately £80,000 per year or 2.5 full time equivalent