Latte levy could cost UK £819m, paper cup industry claims

Introducing a 25p levy on drinks served in disposable cups could end up costing the UK economy £819m and removing 11,000 jobs from the coffee retail sector, new research from the UK’s eight largest paper cup manufacturers and suppliers has claimed.

The research, from the Paper Cup Alliance (PCA), suggests that the proposed “latte levy” would see just 5.7% of customers switch to a reusable cup, with a greater number (8%) simply choosing not to make a purchase at all.

It is the first major study into the economic consequences of the proposed levy, which was initially rejected by the Government in March.

“This research should come as a sharp wake up call to policy makers and politicians calling for a latte levy,” PCA spokesman Mike Turner said.

“More can and should be done to increase paper cup recycling rates, but this needs to be balanced against the devastating impact that a 25p tax could have for thousands of people working in the British cup manufacturing industry, the towns they are based in, and the wider supply chain.”

Infrastructure investment

The PCA, whose members include Huhtamaki, Benders and Stora Enso, is now calling on the Government to improve recycling infrastructure to better accommodate for the 2.5 billion coffee cups that are thrown away annually.

In the current market, takeaway paper coffee cups can only be recycled in select infrastructure, with just five paper cup recycling facilities in the UK. The cups are commonly sealed with a plastic lining to make them waterproof. Although both materials are recyclable, the lining cannot be handled by most recycling facilities, while the paper is subjected to contamination issues. As a result, just one in 400 cups are recycled – less than 0.25% – with half a million littered each day.

“This year alone we have installed 426 extra cup recycling bins across the UK, and they can now be found in 92% of local authorities. However, to quickly boost these numbers further we need a wholesale commitment from Government, councils, waste management contractors and other concerned groups to get more paper cups to the recycling plants,” Turner added.

“Further investment in infrastructure is the only way we can meet our important environmental obligations without dealing a blow to the UK manufacturing sector and our already struggling high streets.”

Retailer pledges

To help reduce the number of coffee cups that are currently thrown away annually across the country, Costa and Starbucks’ have both launched recycling schemes in all stores to ensure that as many as possible of their own takeaway cups – and those from competitors – are recycled. The chains also offer a 25p discount to customers who bring in a reusable cup, with Pret offering a 50p discount to further drive customer behaviour change.

Costa, which is the UK’s largest coffee retailer, has additionally pledged to recycle the equivalent of its entire annual sales of up to 500,000 takeaway cups – at a financial cost to the business. The chain will pay a £70 supplement to incentivise waste collectors, enabling them to invest in infrastructure that can increase the collection rates of the cups. 

Outside of the coffee retail sector, the Scottish Parliament last week announced plans to ban disposable coffee cups in its main buildings in a move that Ministers claim will see 450,000 cups diverted from landfill every year. Similarly, Parliament has pledged to “virtually eliminate” single-use plastics from its internal operations by 2019, introducing a 25p levy on disposable cups and switching plastic coffee cup lids to compostable alternatives.

Sarah George

Comments (2)

  1. Emma MacLennan says:

    I remember industry saying that a minimum wage in the U.K. would cause the loss of 1 million jobs, based on Treasury model predictions. This turned out to be totally wrong. Industry cried wolf at the thought of a plastic bag charge and was wrong too.

  2. Tim Beesley says:

    Not a very balanced article? Those that are arguing against this levy are the ones that stand to lose out from it. Was it really wise to give this ‘report’ publicity? It sounds like the most blatant self-justification to me. A simple attempt to protect their profits and the status quo, while passing costs onto others.

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