The Office for the Internal Market (OIM)’s purpose is to support the effective operation of the UK internal market through the application of economic and other technical advice. The OIM is part of the Competition and Markets Authority (CMA).

This report sets out the OIM’s findings of a discretionary review of single-use plastic (SUP) restrictions under section 33(1) of the UK Internal Market Act 2020 (the Act). Section 33(1) of the Act allows the OIM to review any matter relevant to assessing or promoting the effective operation of the internal market in the UK.

Focus of this report

This report is principally concerned with the effects of SUP regulations on businesses, with a specific focus on the functioning of the UK internal market. Governments have been taking action to regulate SUP products which are not commonly reused or recycled because of their impact on the environment. SUP material often does not decompose and can last centuries in landfill or alternatively ends up as litter in the natural environment, which in turn can pollute soils, rivers and oceans, and harm the wildlife that inhabit them.

Our review has considered different types of regulations, such as bans and pricing restrictions, covering a range of SUP products (for example, drinking straws, plates, bowls and cutlery), looking across supply chains that include a variety of suppliers such as manufacturers, wholesalers, distributors and retailers. In terms of the time period covered, we have focused our attention on SUP regulations following the introduction of the plastic bag charge by the Welsh Government in 2011 and include certain SUP regulations proposed in the future, for example, proposed bans on wet wipes containing plastic and on the sale of single-use vapes.

To understand the effects of SUP regulations on the internal market we have examined, amongst other issues:

• businesses’ understanding of the Act

• how businesses have adjusted their strategy in response to current and anticipated SUP regulations

• the costs and impacts of regulatory differences to businesses at different levels of the supply chain

• any lessons that can be learned from the introduction of SUP regulations to help inform the future operation of the internal market

We have gathered information from a variety of sources, including government consultations and impact assessments. We have also been provided with information from the 4 governments of the UK, including from officials with specific knowledge of SUP regulations. Our main source of evidence has been in-depth qualitative interviews with businesses and trade associations. We are grateful for the support and assistance we have received.

Key findings

Our key findings, relating to the functioning of the UK internal market, are:

• regulations governing individual products have mostly been introduced in different UK nations at broadly similar times meaning that suppliers across supply chains and the nations have largely adapted simultaneously. With a few exceptions, we have not found material differences before and after the introduction of regulations in the identity of the suppliers active across the supply chain in the UK or individual nations. In some cases, large downstream firms appear to be the main drivers of the transition to alternatives to SUP products, as these firms can account for a large proportion of demand and often have public-facing sustainability commitments

• businesses of all sizes strongly prefer alignment of SUP regulations, in terms of scope and implementation dates, both across the UK, and (where businesses sell into the EU and/or rely on EU supply chains) with EU regulations. This is despite businesses seeing some small benefits from opportunities to trial new products in nations which have introduced a SUP restriction first and/or being able to move unused stock to nations with later implementation dates for SUP restrictions

• whilst the cost of complying with SUP regulations has for some businesses been significant, the additional costs of complying with any internal market differences have been relatively small, because most SUP regulations to date have been aligned in terms of their scope. This has enabled most businesses which trade across the UK internal market to adopt a uniform approach which ensures their products/services comply with SUP regulations in all nations, rather than tailoring different approaches depending on the specific SUP regulations in each nation

• we were told by stakeholders that suppliers appear to take different approaches to compliance, with larger businesses often going further than SUP regulations require, and some smaller businesses reportedly not complying with bans on certain SUP products

• governments are working effectively together on SUP restrictions having taken into consideration lessons learned from the introduction of previous SUP regulations (for example, by sharing data on research and impacts and keeping each other informed of their SUP policy plans). Governments are using Common Frameworks to manage regulatory proposals, including collaborating on the proposed bans on wet wipes containing plastic and single-use vapes

• businesses told us that differences in SUP regulations to date had not significantly hindered nor contributed to product or process innovation. We were told that some larger businesses were already progressing to more sustainable products in line with voluntary commitments to reduce SUP items and that some businesses with European supply chains were taking steps to comply with EU legislation – for example, selling plastic bottles in the UK with tethered plastic bottle caps

The information we gathered also allows for some broader observations about regulation of SUP products across the UK:

• the SUP regulations have led to a change in behaviour, albeit as noted above, prior to their introduction some large businesses had already made voluntary commitments to reduce SUP use

• whilst consumer research and feedback from other stakeholders suggests that consumers are generally supportive of environmental sustainability goals, including restrictions on SUP products, we were told that many consumers are reluctant to pay increased prices

• some businesses and other stakeholders told us that there was a lack of compliance with some SUP regulations meaning that some banned SUP products (principally, polystyrene food containers and plastic cutlery) continue to be available, which may impact businesses who are complying with the relevant bans through potential lost sales of alternative compliant products

• some businesses told us about challenges they have experienced with SUP regulations, for example, differences in definitions for ‘plastic’ in different regulations and issues such as, in their view, a lack of earlier consultation, timely guidance and/or workable timelines

Overall, we have found that, while there have been significant impacts on some individual businesses, the overall effects of SUP regulations on internal market trade have been modest. This is in the context of the current broad alignment in existing SUP restrictions across Great Britain, with Northern Ireland expected to implement many similar restrictions in due course.

We have identified the potential for future regulatory difference in relation to other SUP products which might see restrictions introduced in the future, for example, the proposed ban on oxo-degradable plastics in Wales and Scotland. Whilst we anticipate that many businesses - especially larger firms which trade across the whole of the UK - will look to adopt a set of business-wide standards, other firms that trade in more than one nation may incur additional costs in managing divergence.

Recommendations

To support policymakers across the UK to manage regulatory difference or alignment between nations, depending on the specific SUP policy under consideration, we have developed some practical recommendations, drawing on the insights and stakeholder engagement obtained through this study.

We have considered our recommendations by reference to 2 scenarios, depending on the extent of policy alignment between governments. In developing these scenarios, we recognise that each government will make policy decisions in the interests of its citizens and will take into account a range of public policy considerations when deciding how to take forward regulations relating to SUP products. The recommendations below are therefore provided within the context of how governments may be able to achieve their policy aims while supporting the effective operation of the internal market in the UK.

Where governments in all UK nations have broadly the same policy goal and intend to introduce bans or restrictions for the same SUP products, we recommend close collaboration between the governments via relevant Common Frameworks and other mechanisms to develop the specific SUP regulations, including (where possible) in respect of any exemptions from the regulations, reporting requirements, and related guidance. Such collaboration could include discussions between governments to consider carrying out joint consultations to reduce potential stakeholder fatigue and avoid confusion over similar questions, and for governments to endeavour to achieve common implementation dates, as has been the case with the proposed bans on the sale of single-use vapes and wet wipes containing plastic.

Conversely, where governments may have different aims regarding SUP regulations, we recommend that governments work together to consider the potential impacts of these differences for businesses that trade across national borders, as such businesses are at risk from incurring additional costs from having to comply with different national requirements. In this scenario, we recommend that governments collaborate to explore options for designing regulations in a way that enables businesses, should they wish to, to adopt a single business model which is able to comply with any differences in national regulations.

In both scenarios, we further recommend that governments provide relevant trade associations and businesses with clear guidance on SUP regulatory changes, and how to comply with them, at the earliest opportunity to help these businesses to plan for their transition to alternative products. Engagement with trade associations can be particularly important as small and medium size enterprises (SMEs) rely significantly on them for information.