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3.6.2 The impact of government intervention

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Question 2

Market for Synthetic Textiles in the UK

Figure 1: Trend in the purchase of low-cost synthetic-fibre garments (in millions of units, UK, 2016 to 2023)

20162017201820192020202120222023
1 2001 1501 080950820610480310

Extract A: New levy tackles fast-fashion waste

An environmental levy on synthetic low-cost apparel was introduced in the UK in 2020 to curb the volume of non-biodegradable clothing destined for landfills. The charge was increased to £1.00 per garment in 2023.

The Environment Minister declared that the garment levy has significantly reduced the impulsive buying of poor-quality items made from virgin polyester, preventing tons of microplastics from entering waterways. Without this regulatory intervention, the market mechanism fails to price in the negative externalities of synthetic textile production.

However, surveys indicate that low-income households are struggling to absorb these costs, with the purchasing of ethical, organic alternatives remaining prohibitively expensive for most.

Extract B: The synthetic textile levy

Independent clothing manufacturers have voiced concerns regarding the UK synthetic garments levy, warning that the policy is distorting local market competition.

The levy penalises businesses importing garments containing more than 40% non-recycled synthetic polymer fibers, charging £1.50 per unit. Garments utilising organic cotton or certified recycled materials are fully exempt.

A spokesperson for the Independent Retail Alliance warned that an unintended consequence of the levy would be a rise in direct-to-consumer imports from overseas platforms that exploit customs loopholes to bypass the tax entirely. "Instead of supporting sustainable domestic manufacturing, this policy will cause a surge in unregulated international shipping and put local shops out of business," they commented. Many smaller fashion boutiques rely heavily on mixed-synthetic apparel to remain price-competitive.

Extract C: Second-hand clothing initiatives

An estimated 350,000 tonnes of used clothing goes to landfill in the UK annually. Research into consumer behaviour shows that while dry-recycling drop-off points in supermarkets increase recycling rates by 4.2%, offering a £5 shopping reward voucher for old garments yields a much higher 8.5% increase. Combining environmental public-relations messaging in stores with physical recycling bins yielded the most significant shifts in household habits.

Explain what is meant by the 'unintended consequence' (Extract B, line 8) of the synthetic textile levy.

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3.6.2 The impact of government intervention Questions

  1. A Level
  2. /Economics
  3. /3.6.2 The impact of government intervention