February 26th, 2016

Levelling a charge: small business and levies

by Chris Sherrington

 

One of the most remarkable features of the way in which the carrier bag charge was introduced in England was the Government’s insistence that small retailers be exempted. This was despite repeated requests from the Association of Convenience Stores, the National Federation of Retail Newsagents (NFRN) and the British Retail Consortium that all retailers be included.

 

A mixed bag

Indeed on the very day that large stores in England began charging for bags, representatives of the NFRN met with Rory Stewart to again appeal for the decision to be reconsidered. The NFRN warned that excluding small shops would adversely affect small businesses and the environment, and that while small shops can, of course, voluntarily charge for plastic bags, many will be reluctant to do so for fear of losing out to local competitors. According to the NFRN, the exemption means that:

“Small business will be burdened by providing more carrier bags, free of charge, for fewer items. As a result this will add an additional cost to retailers’ businesses.”

The federation instead advocates a “universal rule” to remove any uncertainty and maximise the benefits.

To me this is a clear example of where well thought through legislation (as seen in Wales, Scotland and Northern Ireland) can be of clear benefit to those to whom it is applied, as well as wider society. This is important, given the often apparent ‘knee-jerk’ reaction from some quarters against proposed increases in the burden of ‘red tape’.

 

Wake up and smell the coffee

I was discussing this recently with a friend who runs a small independent coffee shop. He pointed out the parallels between carrier bags and single-use takeaway cups, and the potential for a universally applied charge to be financially appealing, particularly for smaller retailers.

While I have long advocated the notion of applying a charge to single-use takeaway cups, this view has been largely formed from the perspective of seeking to prevent waste and reduce the wider negative impacts of litter. Similar in concept to carrier bag charges, money raised through such a charge would be directed to charitable causes. I must admit that I hadn’t given much thought to the potential benefits to retailers.

 

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Should the free disposable coffee cup be put out to grass? Photo: GrooverFW (CC BY 2.0), via Flickr

 

However, single-use takeaway cups are (to me at least) surprisingly expensive. My friend pays about 10p per cup and lid. Then he has to store them all inside the relatively cramped café, which makes life that bit more difficult for him and his colleagues. Finally he is more than a little concerned about the reputational issue of cups that have clearly come from his coffee-shop (there aren’t any others nearby) that end up being littered. Being a good neighbour he feels compelled to send his employees outside to pick up those that he can see.

 

Small discount

He has thought about offering a discount for people, like me, who bring their own reusable cups. However, he feels that the effect would be very limited because it’s not something that customers, many of whom are just passing through, would necessarily expect to be on offer.

In short, he would strongly welcome a universally applied charge on single-use takeaway cups. It would save him money, prevent waste, reduce the amount of litter in the neighbourhood, and raise funds for good causes. Importantly, the beneficial effects to small retailers of a universally applied charge would seem to be far greater than those that could be achieved via a voluntary approach under which some might choose not to charge, for fear of losing custom.

I’m not sure how much it costs large retailers to buy cups and lids, but I would imagine they might be able to negotiate a much better deal than that available to my friend. If so, the savings to larger players per takeaway cup avoided would be smaller, so there might be less enthusiasm for such a charge. For smaller businesses however this would seem to be a particularly appealing prospect – something the government should consider as it sets about planning its new national litter strategy for England.

 

Chris Sherrington

 

Chris Sherrington

 

We are grateful to Footprint for their permission to publish this article, which first appeared in the magazine’s February issue.

 

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3 Comments on "Levelling a charge: small business and levies"

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Phil Conran
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Phil Conran
5 months 8 days ago
I am trying to work out why a single use cup charge would ‘save him money, prevent waste and reduce litter’ as this doesn’t seem to be explained in the article. The principle behind the bag charge is that it would encourage people to reuse bags thereby reducing dependence on new bags. That will not happen with discretionary beverage purchases and even those regular customers, as Chris’ friend admits, are unlikely to carry a reusable mug around, especially with drinks residues in it. I therefore fail to see the environmental benefit of a single use cup levy. These types of… Read more »
Chris Sherrington
Member
Chris Sherrington
5 months 8 days ago
Phil Thanks for your comments. I think we’d both be in agreement that the clamour among some elements of the media for these cups to be recycled is misplaced. However, the intention of a charge, as described in my article and originally proposed, and described more fully, in our Clean Sweep Report, would not (as some media commentators have suggested) be to provide additional funding to increase the proportion recycled. Instead the aim would be to provide a financial incentive for customers to bring their own reusable cup. The focus would thus be squarely on waste prevention. With the current… Read more »
Phillip Ward
Member
6 months 3 hours ago
Plastic bags are a great example of where competition produces undesirable effects. When plastic bags first appeared – and I am old enough to remember it- charges for them were common. Then one chain of stores spotted a way to get a competitive advantage and started to give them away, forcing everybody else to follow. Eventually the plastic bag industry grew into an expensive and reputational monster for the supermarkets. Privately they would have loved to go back to charging but they were scared of being the first mover and competition law prohibited them from getting together to decide to… Read more »
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