Green levy to hit consumers at the till

The call follows news that EU rules requiring the recycling of all electrical products, from toys to TVs and dishwashers, will come into effect next Summer.

Firms like Bosch, Sony and Philips yesterday led an industry call for the imposition of a levy that would raise £200 million a year to recycle old products.

The firms warned the government that if it refuses to back the plan, headline prices on their products could rise by as much as £600 million a year to foot the cost of recycling.

A green levy on electrical goods has already been imposed in several EU states, including Ireland and the Netherlands.

Industry leaders admitted yesterday that the new recycling tax 'may mean a little pain' for consumers. However, they claim families are ready to pay for efforts to remove toxic chemicals and recover metal to be re-used in new products.

The new regime means families will be expected to take their old electrical products to council recycling centres - rather than putting them in the bin.

Special collection days might also be held at schools, community halls or shopping centres. The electrical goods industry will then be responsible for removing these products and taking them to processing sites.

A powerful industry alliance has been formed to lobby for the green levy which they are calling an Environmental Recycling Charge. (ERC)

The group includes, AMDEA - the Association of Manufacturers of Domestic Appliances, whose members include Hoover-Candy, Bosch, Siemens and Electrolux - and the Consumer Electronics Council, which speaks for Sony, Toshiba, Philips, Alba and JVC, among others.

Also supporting the plan is SEAMA, which for the makers of small electrical goods, and RETRA, the trade body for small electrical retailers.

To date, the government has indicated that big business should pay for the recycling as a normal cost of business. It has objected to any new charge.

The industry yesterday held high-level talks at the Department of Trade & Industry, in a last ditch effort to persuade ministers to back the levy.

The delegation included experts from the organisation which runs the recycling levy regime in Ireland.

The idea of a separate tax paid at the till has been opposed by retailers such as Currys and Comet, who would have to go the huge expense of changing their tills and pricing signs. They argue that manufacturers should pay for the lion's share of the green measures.

However, the chief executive of Hoover-Candy, Graham White, said there is no way that manufacturers can absorb the £200m costs on recycling millions of worn-out and broken products.

He said a failure to implement the levy would force firms to add the cost to the headline price of their product, which could mean customers end up paying much more - possibly £600 million.

This is because, he claimed, any increase in the manufacturer's headline price would be inflated by profit margins taken by retailers and distributors.

Mr White said: "There is no way at all that manufacturers can absorb the cost of recycling. Prices will have to go up.

"The only question is whether you have a visible fee or it is wrapped into the headline price, in which case the bill will be inflated."

However the recycling costs are met, it seems the changes will deliver a stealth tax windfall to the Government.

For consumers will inevitably be paying more for electrical goods from next Summer, so driving a rise in VAT income to the Treasury.

Mr White suggested that some firms may turn their back on Britain if industry is made to foot the bill for recycling. This might mean that any new factories are built in other countries which are seen as more business friendly.

The industry is proposing that the levies would be reviewed annually and reduced over-time before being abolished by 2013 at the latest.

AMDEA chairman Uwe Hanneck, said: "An ERC will give consumers transparency, confidence in what the charge is for, why it is being introduced, and the length of time it will apply for.

"ERC is supported by the overwhelming majority of manufacturers. Similar models have already been introduced successfully into many European countries. "It may be a little painful for consumers, but we feel the public is ready to pay a green levy if they can see the benefits."

The DTi said yesterday that a levy has not been ruled out. However, any move to side with the industry would amount to a major U-turn.