Government data reveals Tesco deducted administration costs from plastic bag sales, unlike other major supermarkets, angering senior MPs
Millions of pounds in administration costs were deducted from the charitable donations made by Tesco using funds generated from the plastic bag tax, government data has revealed. No other major supermarket made any such deductions, leading senior MPs to urge Tesco to follow their lead.
The 5p charge for plastic bags was introduced in England in October 2015 and has led to an 83% reduction in their use, equivalent to 9bn fewer bags. It is also credited with a drop by nearly half in plastic bags found littering beaches.
The government is clear that it expects shops to donate the proceeds of the 5p plastic bag tax to good causes. The latest official statistics, covering the year to March 2017, show that Tesco sold 637m carrier bags, raising £31.9m in proceeds. But the supermarket giant deducted £3.4m to cover the “cost of administering donations”, equivalent to more than 10% of the total.
Tesco topped the list of plastic bags sales but no other company in the top 10 made administration deductions, including Asda, Morrison, the Co-op, Marks and Spencer, Aldi, Iceland and Waitrose.
“The legislation for the 5p plastic bag charge is clear that the money raised should go to good causes,” said Mary Creagh MP, chair of the environmental audit committee. “Five years after the horsemeat scandal and three years after a false accounting scandal, Tesco finds itself again in the spotlight for doing the wrong thing. They should drop this ridiculous charge immediately.”
Neil Parish MP, chair of the environment, food and rural affairs select committee, said: “As much money as possible from the plastic bag tax should be going to charitable causes. It would be great to see Tesco follow the lead of other retailers and not deduct admin costs. That would be a very positive step for Britain’s biggest supermarket to take.”
A spokesman for the Department for Environment, Food and Rural Affairs said: “There is clear expectation to donate the proceeds of the plastic bag charge to good causes. We know that £95m raised has been donated to good causes so far and by publishing the data on donations, along with the number of bags distributed, this has the added effect of encouraging retailers to donate to good causes.”
Tesco’s spokesman said: “Since launching in 2015, our Bags of Help initiative has provided more than £33m to over 6,400 local community projects. A small proportion of the money raised is used to run and administer the scheme in partnership with the charity Groundwork, who help distribute the money to good causes.”
Companies can deduct a portion of the revenue to cover “reasonable costs” of administering the donations. The spokesman said Tesco’s administration costs included customer communications and the provision of voting tokens and booths which customers use to choose the charities that are supported. The spokesman said Tesco did not profit from money retained for administration.
Tesco stopped selling 5p “single-use” plastic bags on 28 August, instead offering a “reusable” 10p bag, which will be replaced free of charge if damaged. The company said the proceeds of the 10p bag sales would continue to fund community projects.
All employers with more than 250 staff are required to charge customers in England for disposable plastic bags. Legally, retailers can choose whether to donate their bag tax revenue to charity. The government data lists the revenue of some, including Poundstretcher (£250,000), as “retained by company”. Companies can deduct a portion of the revenue to cover “reasonable costs” of administering the donations.
England was the last nation in the UK to implement a plastic bag tax following Wales (2011), Northern Ireland (2013) and Scotland (2014), all of which subsequently saw big declines in bag use.