PackUK’s recent update, warning of a potential shortfall in EPR fee collection driven by an unexpectedly high volume of appeals, is the latest “popcorn moment” for those closely following the scheme.
The scale of those appeals is telling. It reflects widespread uncertainty among producers about how fees have been calculated, what they are expected to pay and why. For a scheme intended to be predictable and transparent, alarm bells are ringing.
From the outset when the first set of base fees was published in August 2024, the Metal Packaging Manufacturers Association has warned the current EPR framework risks driving the wrong outcomes. Rather than incentivising packaging material choices that support high recycling and circularity, the system is skewing decisions towards higher volumes of packaging that recycle at lower rates and cost more for local authorities to manage.
This is the impact of a weight-based system that fails to recognise the nine-fold different densities of competing materials.
Systemic issues and rising costs
These rising costs are not simply the result of early implementation or minor teething problems. They reflect hard‑wired, systemic issues with immediate commercial consequences, affecting costs, cashflow and budgeting at a time when brands, retailers, manufacturers and consumers are already under intense pressure.
Even before the latest funding gap emerged, businesses were bracing for increases. Now with under‑collection in the spotlight, further fee rises to close the gap seem inevitable.
Packaging is squarely in policymakers’ sights, promising rich pickings for new funding streams. Future policy will attach ETS (Emissions Trading Scheme) fees to packaging, with plastic packaging expected to be most affected.
Meanwhile, the Welsh government is consulting on the extension of EPR fees to littering and public bins. If implemented, this will be an expensive addition to the EPR fees. But is littering really a packaging problem or is it a societal one?
Packaging is being treated as a pariah. And yet it’s one of the most crucial solutions leant on by society. A 2018 study by Wrap concluded just 3% of the carbon footprint of the UK food packaging chain was down to packaging. That 3% is the investment to protect the 97% carbon necessary to farm, produce, store and distribute the UK’s food. Without packaging, food waste soars and we lose the ability to feed ourselves, impacting food security.
A true circular economy
Eliminating unnecessary packaging, increasing recycling rates and improving circularity are the goals of EPR. That ambition remains sound.
But a functioning circular economy depends on packaging materials that can be used again and again through multiple high-quality recycling loops. The reality is today’s EPR system supports a linear economy, not a circular one. It’s a system failing to distinguish between materials that are recycled only once and materials that can be recycled endlessly without loss of quality.
This is where the current system falls short, undermining its own objectives. And, crucially, it’s where the solution lies.
I urge Defra and PackUK to use this funding shortfall as an opportunity to recalibrate EPR base fees to reflect the true net cost of managing different packaging materials and their real value to the circular economy. That means recognising material density differences and properly recognising the ’permanent material’ status of aluminium and steel. These are materials that retain their quality and value no matter how many times they are recycled and which can be recycled repeatedly at scale through established infrastructure.
At present, the fee structure doesn’t adequately recognise this. The result is a pricing framework that inadvertently favours less recyclable packaging and delivers weaker circularity outcomes while increasing costs for producers.
This isn’t about weakening environmental ambition or rolling back reform. It’s about getting the pricing mechanics right so that EPR rewards the behaviours it was designed to encourage, reduces costs over time and delivers genuine progress towards a circular economy.
Jason Galley is director and chief executive of MPMA
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