Single-Use Disposable Beverage Cups Charge: Partial Business and Regulatory Impact Assessment

9. Costs

Option 1: Under this scenario, it is expected that the consumption of single-use disposable beverage cups will continue to grow in line with current projections^[62]. It is not known whether there will be an increase or decrease in the number of businesses implementing their own charges^[63], as this is entirely at the discretion of the business themselves in response to changing preferences or market conditions.

If current projections are used then the negative externalities associated with the manufacture, use, and inappropriate disposal of single-use disposable beverage cups will continue to increase (as previously evidenced in the background and rationale for intervention sections). This includes, but is not limited to, local authority waste disposal costs, private waste disposal costs, the visual disamenity of litter, and the impact of harmful materials and chemicals entering and persisting within terrestrial and marine ecosystems.

There will also continue to be a rise in material use associated with the rising consumption of single-use disposable beverage cups.

Option 2: This will require a specified minimum amount to be charged for the single-use disposable beverage cup. Depending on how the business responds to the charge, they may internalise the cost so the overall price for the cup plus drink will remain the same for the consumer.

Alternatively, they may partly or fully pass the cost onto consumers. If passed on, from an economic perspective, this is a transfer payment from consumers to businesses – the cost of the product itself has not increased through external forces. If consumers choose to bring their own reusable cup, then there will be no additional cost for the business.

However, if an alternative is provided by the business such as a returnable cup loan scheme for reusable cups, there would be extra costs involved for the business in purchasing, washing, and managing this service. It is unclear how this would balance against a reduction in costs from single-use disposable beverage cup purchase.

There will be costs involved in the implementation of the policy, such as development, communications, data collection and analysis, and enforcement. These can be divided into one-off, ‘start up’, costs and ongoing costs.

There are concerns from businesses around the potential for a charge on single-use disposable beverage cups to negatively impact sales of beverages. It is generally assumed that increases in prices for goods and services will reduce consumer demand. Some evidence however shows this is not necessarily straightforward. University Crosshouse Hospital found that during their trial of reusable cups and a 10p charge on single-use disposable beverage cups, that sales of hot drinks increased by almost 10%^[64]. Impacts on consumer demand and business revenue for beverages within single-use disposable beverage cups will be analysed in detail in the final BRIA.