Packaging - extended producer responsibility: Fairer Scotland Duty assessment

Summary of evidence

33. Packaging EPR is intended to apply across the UK and does not specifically target particular groups, geographical locations or sections of society. It is, however, important to ensure that the impact on those who experience socio-economic disadvantage is understood. This may be experienced through low income, low wealth, material deprivation, area deprivation or socio-economic background.

34. An Equality Impact Assessment (EQIA) and Island Communities Impact Assessment (ICIA) have been conducted alongside this Fairer Scotland Duty Assessment (FSDA). A partial BRIA was published alongside supporting legislation in January 2023.^[26] The socio-economic outcomes considered in this assessment have links with the potential impacts identified in the EQIA and the ICIA, so this document should be read in conjunction with the other impact assessments.

35. The possible impacts of the proposals on lower-income households have been assessed based on the available evidence. As part of the new scheme, producers will be required to fund efficient and effective services for household recycling and waste services for packaging, as well as funding the operating costs of the scheme administrator. This has the potential to create “cost pass-through”,^[27] which would see the cost of this to producers being passed on to the consumer in the retail price of the goods. As set out below, our estimate is that this should be limited.

36. Scoping exercises indicated areas of focus which are listed below and explored further:

• The price of groceries;
• The impact on local authority funding;
• The impact on litter; and
• The impact on jobs.

Low incomes, low wealth and material deprivation

37. It is estimated that 21% of Scotland’s population, over a million people each year, were living in relative poverty^[28] after housing costs in 2020-23.^[29] Around a quarter of those in relative poverty are children.^[30] The relative poverty rate all across Scotland is slightly higher than in recent years.^[31] Increases in the proportion of people living in absolute poverty indicate that prices are rising faster than the incomes of the poorest households.

38. One way in which individuals and households currently pay for the costs of packaging is in the price of groceries. Research by the Office for National Statistics has identified at a UK level that weekly spending on food makes up on average 10.7% of weekly household expenditure. Food accounts for 13.6% of total expenditure for the bottom decile of income distribution, compared to 8.3% for those in the most wealthy 10%. The weekly spend in real terms for the lowest income group (£42.50) is just under two-thirds of that for the highest-income group (£68.80).^[32]

39. In Scotland, 9% of households reported that they were not managing well financially, with the proportion being higher for those on benefits (17%).^[33] Levels of perceived financial difficulty were also higher in more-deprived areas, as measured by the Scottish Index of Multiple Deprivation, with 20% of households not managing well in the most deprived decile.^[34] There are also connections to protected characteristics, with higher poverty rates for some groups, as set out in the following.^[35]

40. According to the 2022 household survey, 11% of those aged 16-34 and 12% of 35-59 year-olds said they are not managing well financially.^[36] In 2020-23, 39% of people in households with household heads aged 16-24 were in relative poverty after housing costs. Those aged 55-64 were the next most likely to be in poverty. The age groups in between all had similar poverty rates between 17% and 21%.^[37]

41. Average equivalised household disposable income, across the UK, by age group of the adult in the household with the highest gross income for 2021/22 was lowest in the 16-24 age group (£27,596 per year), with disposable income for other age groups ranging from £31,085 (65+) to £40,926 (25-34). This shows that the youngest and oldest are most likely to have the least disposable income.^[38]

42. Scottish national statistics show that 24% of households where a household member is disabled are in relative poverty compared to 18% of households where no one is disabled.^[39]

43. The poverty rate has been consistently higher for LGBT+ adults compared to heterosexual adults since this category was first assessed in 2011-14. In 2020-23, 25% of LGBT+ adults were in poverty, compared to 19% of heterosexual adults and 21% of adults whose sexual orientation was not known.^[40]

44. In 2020-23, people from minority ethnic (non-white) groups were more likely to be in relative poverty after housing costs compared to those from the 'White - British' and 'White - Other' groups.^[41] The poverty rate was 50% for the 'Asian or Asian British' ethnic groups and 51% for 'Mixed, Black or Black British and Other' ethnic groups. The poverty rate amongst the 'White - Other' group was 22% and that of the 'White - British' group was 18%.

45. The mean equivalised household disposable income, across the UK, by ethnicity for 2019-21 was lowest in the Black African, Black Caribbean and Black Other ethnic group categories (£31,633 per year). Mixed (£33,886 per year) and Other (£35,916 per year) ethnic groups were the next lowest, with Asian (£36,454 per year) and White (£36,660 per year) having the highest disposable income.^[42]

46. In 2018-23, Muslim adults were more likely to be in relative poverty (61%, 40,000 each year) than adults overall (19%), after housing costs were taken into account. For adults belonging to the Church of Scotland, 16% were in relative poverty after housing costs (160,000 adults each year), compared to 17% of Roman Catholic adults (90,000 adults) and 21% of adults of other Christian denominations (70,000 adults).^[43]

47. There is a disparity between people who rely on benefits and those who rely on earned income. Previous research has identified that households in Scotland relying mainly on benefits were two and a half times more likely to say that they were not managing well financially compared to households relying on earnings.^[44]

Rural Communities

48. Those living in remote rural areas of Scotland also experience higher costs: between 15% and 30% higher to achieve the same standard of living when compared to those in urban parts of the UK. ^[45] The budgets that households need to achieve a ‘minimum acceptable living standard’ in remote rural Scotland are typically 10-40% higher than elsewhere in the UK.^[46] The research suggests that this is because of significant additional costs of items such as household goods, food, and clothing, and travel.

49. In deprived areas more generally, there is a more mixed picture about the cost of living, with some evidence pointing towards higher food prices in more deprived areas, whilst other studies found no strong link.^[47]

50. It is likely, therefore, that households in remote rural Scotland require a higher income to attain the same minimum living standard as those living elsewhere in the UK.^[48] While living in remote rural areas in Scotland incurs additional costs, it is not clear whether there would be any differential impact from packaging EPR.