It was a huge gamble to assume the new extended producer responsibility (EPR) tax system would work flawlessly in year one. Hoping to raise an astronomical £1.xbn from thousands of retailers, wholesalers and suppliers, the assumptions in PackUK’s calculations were subject to countless adjustments on different substrates right up to the last minute. So it was no surprise a black hole appeared in its coffers.
What is surprising – and welcome – is the Treasury bailout PackUK revealed this week, as it was feared those complying would have to cough up more to cover the shortfall.
The u-turn is therefore a major victory for the industry – and for The Grocer’s campaigning work to investigate and expose PackUK’s bungled handling of the scheme. EPR is not a sexy topic. You don’t read about it in the nationals, or other trade publications, but our relentless focus on the scheme’s complex iniquities has given thousands of producers greater transparency than the government would ideally have liked, stopped further injustice, and ensured that anger over EPR isn’t just seen as a kneejerk reaction to the producer pays system.
There was always going to be a backlash against EPR, once widespread ignorance and apathy turned to a realisation of how big the burden would be. But if the money can be accounted for, is collected fairly and invested in waste infrastructure as intended, it is hard to oppose the plan.
Yet the extraordinary series of cockups The Grocer has charted was not inevitable. That comes down to poor planning and the government not listening to the genuine concerns of industry and its own advisers. Treasury officials were warned in January last year that EPR was highly unlikely to balance the books in its first year but, as The Grocer revealed, insisted that Defra and subsequently PackUK should budget on a best-case basis to make the Chancellor’s figures add up.
How PackUK then allowed the shortfall to remain untackled until this ridiculously late stage is a further mystery but thankfully at least the huge unfairness of companies being asked to cough up even more has been avoided. For now.
But as one EPR scandal ends, another emerges, involving alarming evidence of another unintended but avoidable, consequence of the way the tax has been implemented.
An investigation revealed by The Grocer shows how new companies have been set up to exploit loopholes in PackUK’s funding model to avoid paying the fees. The Foodservice Packaging Association (FPA) is now demanding an inquiry and further measures to ensure EPR is better monitored and policed. It alleges the government was told long ago that the de minimis threshold for EPR was likely to have such an effect – and again ignored the warnings. When will lessons be learned?
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