Finance Fridays – The carrier bag charge

Welcome to Finance Fridays a new weekly series focusing on all matters money. It's going to be open for other people to link up their financial posts and full details are below. Firstly onto this week's feature and it's all about the humble carrier bag.

Wales and Scotland have had it for a while but on Monday 5^th October 2015 it is coming to England – it is the carrier bag charge or to give it its official title The Single Use Carrier Bags Charges (England) Order 2015. Unlike in Northern Ireland it is a charge rather than a tax. In Northern Ireland the money goes straight to the Northern Ireland Department of the Environment.

What is it?

It is a charge of a minimum of 5p to be levied against single use plastic carrier bags.

What does it apply to?

All retailers with 250 or more full-time equivalent employees across the entire business and not just in an individual store. Franchises need only count the number of employees in their part of the business. Note – this is not just supermarkets but all your favourite high street stores.

Smaller businesses can voluntarily opt-in to the scheme.

A single use carrier bag is defined here. It does not apply to paper bags, cotton or jute bags or multi-use plastic 'bags for life'.

Online deliveries

Supermarket delivery orders are notorious for using far more plastic bags than necessary. As the charge has already been in force in Scotland and Wales the supermarkets have come up with standard charges for orders. Tesco and Sainsbury's charge a flat 40p per delivery based on an average use of eight bags per customer order. You can opt for a bagless delivery but that may mean your shopping is piled up in your hallway! Certain shops are now offering refunds if customers hand back their bags. The individual shops' policies are changing all the time in response to customer feedback so check at time of ordering.

What is exempt?

There are a list of certain items that the Department for Environment, Food and Rural Affairs (Defra) have said can be exempted from the charge for health and safety purposes. To clarify this they sent out this informative tweet.

If you’re buying raw meat or fish you’ll still receive a free plastic bag when the 5p charge is introduced #reusebags pic.twitter.com/PKeJTkUhpW

— Defra UK (@DefraGovUK) September 21, 2015

Be warned though that if you mix an exempted item with a non-exempted item a charge for the bag will be applicable. Therefore if you a put a box of cornflakes in bag of loose apples you will be charged but if you put pears in with the apples you won't be.

Where does the money goes to?

At the end of each reporting period the retailers will need to file a report on how many bags they have given out and how much money they have received from the associated charges. As it is not a tax it is up to the retailers what they do with the proceeds. It is expected that the retailers will donate the proceeds to charity and good clauses. The reporting form will ask the retailers what they have done with the money and this will be available to the public to view. Effectively they can be named and shamed.

Some large retailers have already announced their chosen charities. Morrisons will be giving to Sue Ryder, Superdrug's proceeds will be going to Marie Curie Cancer Care and from this month all of Boots' UK bag charge proceeds will be sent to Children in Need.

As it is not a tax in England the Government doesn't directly benefit financially from the charge. However it is expected to make £19m a year from the VAT on the sales of the bags.

Why is it needed?

Last year over 7.6 billion single use plastic bags were distributed by just supermarkets in England. Per person that equates to 140 per person and a whopping 61,000 tonnes. Each of these bags take 10-20 years to decompose in landfill centres. Those that don't make it to landfill cause litter and major damage to wildlife and marine life. It is estimated that up to £60 million will be saved in clear up costs. Since the charge was introduced in Wales three years single use plastic bag consumption has dropped by 79%.

How to avoid the charge

Simply by remembering to bring your own reusable bags, trolley bags or boxes. You could also not bag individual items that you would normally pop into a plastic carrier. For example if you just buy a bottle of milk carry it using the handle rather than paying for a bag to put it in.

Finance Fridays linky

If you want to join in with this week's Finance Fridays then add your link to the linky below. Any post concerning financial matters is allowed. Full details here. It doesn't have to be published today as you have until 23.55 on Tuesday 6^th October 2015 to join in. Grab my badge below for your blog post.

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I'll share my favourites with you next week so we can all get our finances in order!

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