Cut VAT on recycled products to boost sales, Government told

The Government should slash VAT on recycled products to make them competitive with goods made from virgin materials, according to a cross-party group of MPs which criticises the Coalition for lacking ambition and leadership on recycling.

Goods made from recycled materials are typically between two and 25 per cent more expensive than their non-recycled counterparts, providing a huge disincentive for people to buy them, experts argue.

However, a significant cut in the rate of the 20 per cent VAT tax – together with longer warranty periods for consumer goods and a ban on food waste being sent to landfill - would go a long way to reducing the unsustainable level of waste in Britain, the report argues.

“We had throwaway economics in the past, but that disposable society simply isn’t sustainable in the 21st century. Less than half of all the stuff we throw away each year is recycled and turned back into something useful, despite prices for raw materials rising across the world,” said Joan Walley, a Labour MP and chair of the environmental audit committee behind the report.

Zac Goldsmith, a Conservative MP and committee member, added: “Unless we learn to live within nature’s means, we are going to hit a wall. We know that because even while the world’s dwindling resources are becoming more and more expensive, our global appetite for resources continues to soar.”

Simon Ellin, chief executive of The Recycling Association, welcomed the report.

He said: “I think VAT should be cut on recycled products. There has to be some incentive other than the green credentials for most people to buy recycled goods. At the end of the day most people make their decisions based on their wallets.”

The report criticised Government leadership on recycling, saying the process was characterised by small-scale schemes, that responsibilities were split across a number of departments and that there industrial policy contains no strategic plan to change the system.

Just 400,000 tonnes of food waste, or around six per cent, is separately collected for organic recycling in the UK out of the 7.2m tonnes thrown out by households every year. Instead, this food waste could be collected separately and composted or used in anaerobic digesters to produce biogas and renewable energy and fertiliser.

Defra’s Resource Management Minister Dan Rogerson said: “We are fully committed to building a circular economy and want to see the UK leading the way in new waste and recycling markets. That is why we have invested £17million to encourage businesses to become more resource efficient. We will continue to work closely with local authorities, industry and the voluntary sector to consider how best to take these recommendations forward and will respond to the Committee in due course.”