business design politics sustainability

How government can support a circular economy

growing-a-circular-economyOne of the big movements that I keep an eye on with the blog is the shift towards a circular economy – an industrial system centred around re-use rather than disposal. That transition received a bit of a boost last week with the publication of a new report from Parliament’s Environmental Audit Committee.

Tasked with reviewing policy around sustainability and the environment, the cross-party committee has been investigating the circular economy. They’ve been talking to experts and to businesses, and they’ve got some ideas about how the government can help.

“Current rates of resource consumption are not sustainable” the report states bluntly. As the global population grows and more and more people are lifted out of poverty, more resources are needed every year. Altogether, providing these needs will require “something like three times more resources than we use today in 2050.” This huge increase in demand for resources will lead to rising prices and potential shortages, and one obvious way around that problem is to steward materials better.

The government is aware of the economic and environmental benefits of a circular economy, and has put programmes in place to help develop it. There is WRAP, the Sustainable Clothing Action Plan, and the Circular Economy Task Force. Various policies have helped too. The landfill tax in particular has forced councils and businesses to look at local waste streams.

However, funding has been cut from several schemes and some have folded altogether as the government has pursued its austerity drive. This is a false saving. The report is at pains to point out that the circular economy should not be seen as an environmental alternative, something that will hinder business with red tape. Quite the opposite. This is a business-driven process, aided by government action, which streamlines the materials use of the economy, eliminates waste and improves efficiency.

There are a number of key ideas in the report, policy areas that need attention. Britain’s low recycling rate looms large. Recycling grew for a couple of decades and now appears to have peaked at 43%. That’s far below what other developed countries have achieved – Germany and Austria recycle 62% and 63% respectively, while Japan almost doubles our score.

Britain’s recycling is organised by local authorities. Standardising recycling would push us further and bring the country more in line with the best performing areas. It would mean an end to the ‘widely recycled’ or ‘check local recycling’ labels on packaging – everybody would be recycling the same things. As it happens, the plastics industry in Britain is very supportive of these changes, as the quality of recycled plastics is currently poor to the point of being uneconomic.

At the moment, some areas collect food waste separately and others don’t. That could be standardised too. Food waste to landfill is banned in Scotland, and the rest of us should follow suit, focusing on reducing waste, composting, and using it for anaerobic digestion instead.

While we’re at it, we could build on the landfill tax by taxing the next worst options – like incinerating waste. So far many councils have stopped dumping rubbish and just burn it instead. With a progressive set of tax bands for waste, you could incentivise further work rather than just doing the minimum.


Tax also has a role to play at the production end, with a variable rate of VAT to encourage more sustainable products. If a product could be certified carbon neutral for example, or was made from recycled materials, it would qualify for lower VAT. This could be paid for with higher VAT on more environmentally damaging products. Tax incentives could also be used to encourage work in repair and re-use industries, offering lower national insurance contributions.

These are all good ideas, and there’s more to explore in the report should you be curious, including removing trade barriers for re-manufactured goods, and using government procurement better. If there’s a problem, it’s a matter of over-emphasis on waste and how we deal with it, and particularly with raising the recycling rate. This is of course important, especially since Britain can do better here and is going to miss EU targets. But the circular economy is bigger than that, and issues of design and selling services rather than goods are secondary here. Missing altogether is the contribution of collaborative consumption, which improves efficiency and reduces waste by community sharing. Presumably it’s harder to make an economic case for that, but it’s a key part of the transition.

Still, it’s great to see the government engaging with principles of circularity at this level, and making policy suggestions which would make a genuine difference. It gives campaigners a platform to work from, demanding that the government now act on those suggestions. It’s feedstock for parties ahead of the general election, and an opportunity to build those policies into manifestos.

I’ll let Joan Walley, Labour MP for Stoke on Trent and chair of the committee, sum up:

“Unless we rethink the way we run our economy and do business in a different way, environmental problems like climate change will get worse and the cost of living and doing business in the UK could continue to rise. The good news is that with the right Government support we can stimulate UK manufacturing, create jobs, grow our GDP and reduce our environmental footprint. We have to create a more circular economy that rewards innovative businesses, values natural capital, and is resilient in the face of rising global resource prices.”

1 comment

  1. Member of the committee Rt Hon Caroline Spelman MP also chaired the All-Party Parliamentary Sustainable Resource Group’s recent inquiry ‘Remanufacturing – Towards a Resource Efficient Economy’.

    A follow-up inquiry tentatively titled ‘Remanufacturing – Resource Security & Opportunity for Growth’ is currently under way in partnership with the All-Party Parliamentary Manufacturing Group. This inquiry will endeavour to delve more deeply into issues of design for end-of-life and the importance of servitization. Hopefully, this will also feed into present and future governments’ work around the circular economy.

    Read more about the inquiry and the new call for evidence here:

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