The Government's announcement followed a promise in March by Michael Meacher, now Environment Minister, of an "urgent" review of the packaging regulations if Labour came to power. The regulations already require a review by the Packaging Advisory Committee by the end of 1998.
At the time, Mr Meacher's main concern was that retailers would be able to meet their obligations more cheaply than firms further up the packaging chain - packer/fillers, converters and raw material producers. He claimed that because retailers can discharge up to two-thirds of their obligation by recovering transport packaging at their "back door", they would be able to limit their share of the cost of recovering packaging from the household waste stream to about 15% of the total.
In June, Mr Meacher confirmed that the Government will reassess the share-out in obligations between the packaging chain sectors. Addressing the Parliamentary Group for Sustainable Waste Management, he said that he will base the review - which "could have a significant effect on the percentage shares" - on packaging flow data for 1996.
Obligated companies must provide data on 1996 packaging flows to the environment agencies or a compliance scheme by 31 August. It may be optimistic to expect sufficient reliable data to be available by this date to complete a reassessment - including consultation - by the end of the year.
Announcing the review, Mr Meacher acknowledged that fundamental changes in the structure of the regulations this year would distract businesses from achieving compliance. However, any significant change to the percentage shares could also affect a company's decision whether to go it alone or join a compliance scheme.
The Department of the Environment will also examine two compliance issues this year. One is the competitive effects which the small business threshold "appears to have" in some sectors, especially those where importers can escape obligations by importing just below the threshold level.
The second is finding ways to ensure that companies which opt to go it alone, rather than joining a compliance scheme, have "convincing" plans for meeting their obligations.
Local authorities will be brought "more explicitly into the system as advisors and partners in raising recycling levels" to avoid any potential conflict between the regulations and their own recycling and recovery targets.
This could mean that compliance schemes such as Valpak would have to channel some of their funds directly into local authority collection schemes - which Valpak recently said it did not want to do.
The idea of a separate target for household waste is supported by the local authority body UK-PROG. According to its Chairman, Philip Olver, "there's been a great reluctance by industry to get involved despite several years of discussions. The UK will fail to meet its recovery and recycling targets. Here we are in 1997 and I don't know of a single local authority which has had funding from industry."
The review will also look at setting waste minimisation targets for companies in the packaging chain. This, said Mr Meacher, is a gap in the regulations that needs to be addressed. "Packaging in Germany was considerably reduced in 1996, possibly...by as much as 12%. However, in this country, the Industry Council for Packaging and the Environment estimates a 4% rise in food packaging alone between 1993 and 2000."
Concern that companies with packaging obligations are reacting too slowly to the regulations has been voiced by the Institute of Environmental Management (IEM), which has warned that too many businesses are in "a process of denial that is unlikely to be productive."
But the IEM adds that it is difficult for firms to decide whether to join a scheme or go it alone when there is so little information on the material levies that will be charged by schemes, the market for recyclates, and the price that packaging recovery notes will command in the marketplace.
The proposal hinges on the way packaging recovery notes (PRNs) - certificates which will prove that recycling has taken place and allow firms to demonstrate compliance with the regulations - are distributed. After keeping PRNs for paper to cover members' obligations, Paperpak will pass all remaining PRNs to PIMO for sale to other schemes, or individual firms with a paper obligation, at a fixed market price.
Unlike the glass sector, which will use its funds to help increase the number of bottle banks, more of the infrastructure for paper recycling is already in place. The biggest problem is fluctuating waste paper prices. The money raised by selling paper PRNs will be used by PIMO to subsidise reprocessing to make prices for waste paper packaging "more attractive".
Mr Oldman said Paperpak cannot be up and running before 31 August, the deadline by which the first wave of 4,000 obligated companies must choose whether to join a compliance scheme or register individually with the environment agencies. However, it will be operational before "crunch time" next April, when firms must renew their registrations and begin collecting evidence that they will meet that year's targets.
Waste businesses are hoping to obtain PRNs free of charge in exchange for materials which they retrieve from the waste stream and subsequently deliver to reprocessors, such as paper mills. As today, payments to or from reprocessors would be negotiated between the waste business and the reprocessor.
But under the paper industry's plans, everyone would have to pay fixed prices for PRNs, which they would obtain from PIMO. Delivery of materials to reprocessors would be left to market forces. PIMO would subsidise waste paper prices to encourage waste management firms and other waste paper businesses to collect more paper.
Wastepack, a compliance scheme proposed by waste broker Wastelink, assumed that waste management businesses would be in a position to offer free PRNs to its members. Most of these would be for paper. The fixed prices it would have to pay under PIMO's plans would make its scheme unviable.
In a separate initiative, UK Waste has announced plans for a compliance scheme called Recycle UK after one of its major customers, Marks & Spencer, suggested the idea. The scheme would have less than 100 members, including M&S and some of its packaging suppliers, but would account for 5-10% of the total UK tonnage obligation, according to UK Waste.
Recycle UK would charge its members a fee, based on their shortfalls in the different packaging materials, and set at a level to be competitive with alternative compliance options. The fee would be used to fund recycling of materials collected by UK Waste from its existing customer base, allowing it to divert more material from landfill.
Like Biffa, which has sent proposals for its compliance scheme - Bifpack - for OFT approval, UK Waste will seek to sell its PRNs to customers who go it alone, and to compliance schemes such as Valpak and Difpak.
Waste management firms were expecting to be given PRNs by the paper mills free of charge when they delivered waste paper packaging. But if PIMO's proposals go ahead, waste companies could only buy PRNs at a fixed price, preventing them from offering lower prices to their customers.
Meanwhile, several more major firms have announced they are joining Valpak, including Tesco, Mars and British Steel.