Viewpoint

I doubt it - but at least the right steps were taken in 2005 by both the EU and UK in recognizing that simply piling regulation on businesses does not create better business.

What does create better business are governments creating a macro-economic climate to encourage investment and entrepreneurs, and regulations which aim to deliver improvements in the social and environmental areas, where justified, either by driving standards upward for the good of the broader society or seeking to iron out injustices.

Better regulations apart, I believe that 2006 will be a significant year in many areas impacting on the packaging converting sector. Firstly, we have the UK Packaging Regulations, which have delivered as promised the most cost effective system in Europe, albeit at the bottom end of the EU scale. However, the robustness of the system may be challenged in 2006 as we enter a phase where it is necessary to take much more out of the household waste stream in order to meet increasing business targets, which will tilt the PRN system from an excess supply to an excess demand scenario – especially if the expected results from capturing the franchise and lease operations are realised. And then there is the PERN system with our greater reliance on exports, especially to China, which now accounts for nearly 30 per cent of our total obligation.

Even if China turns off the tap gently, we shall catch a cold either by having to pay higher prices to compete with other Member States or funding an increase in our own infrastructure. In any business scenario, too much reliance on a third party and deep-sea exports is only a short term strategy. We need to recognize that high recycling targets are here to stay, and help considerably to improve the image of packaging. 2006 should be the year when all obligated companies start to take a more active interest in the UK infrastructure for a sustainable business model, which can manage the dynamics of the system to the end of 2008 and beyond.

Taking such an interest is not only good for the image of the sector, but also a prerequisite to ensuring that we do not fall foul to the many political traps still laid for us out there with product taxes, refillable systems and reduction targets. We shall never convince all the people all the time about the benefits of packaging, but we need to ensure that we convince the majority – by actions such as increased recycling, and positive steps to address issues such as open-ability, innovation and recognition of the need to conserve resources.

These should all be based on facts not rhetoric or propaganda, and not focused on internecine material warfare.

However, what we shall have to focus on more in 2006 are the issues associated with environment, which are fundamental to our manufacturing processes. The areas of particular note are climate change, which is having a big impact on our energy bills; and REACH, which will impact on our raw materials and intermediate processes.

Energy is the hot topic (sic) at the moment, and will continue to be so due to the fundamental shift in the UK's energy supply balance and greater pressures to meet climate change agreements. These issues are not unrelated since the energy suppliers became an obligated party under the EU Emissions Trading Scheme and financial institutions started to take an active interest in the price of carbon, not just the trading results of the utility companies. The UK's energy equation is to change forever and with it will be trading dynamics where environmental factors will take a greater role in the supply and pricing mechanisms. Adjusting to these developments will take time and need careful and constant review with the Government to ensure their policies do not impact on the macro-economic climate mentioned earlier.

If that's not enough, then adjusting for REACH will remove any complacency over the impact of environmental legislation. Many still do not seem to realise that these regulations impose the same obligation as the chemical suppliers on all downstream activities – most of which require packaging in some form. At the time of writing the politicians in Brussels are still fighting over the framework, but the devil will be in the detail. Be prepared.

The Packaging Federation will be tackling all of these issues in 2006 by updating the competitiveness study undertaken with PIRA for the DTI a few years ago. All those converters who care about our future should contribute to that study.

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