UK Packaging PRO’s Karen Graley on running the EPR engine room

Six months after Defra said it was time for the government to “get out of the way” and let the industry run the controversial extended producer responsibility tax, it’s becoming clearer what that will entail. An industry bid, known as UK Packaging PRO (Producer Responsibility Organisation) and led by the FDF, was given the keys to the castle.

It will be headed up by Karen Graley. All eyes will be on whether the former packaging boss for M&S, Waitrose and Safeway can win over those wary of a producer takeover and help turn EPR from a hated tax and Treasury liability into a driving force for a circular economy.

The PRO has only been operational since 1 April, and still only has four staff, including Graley. But it boasts heavyweight backing from a board of the most powerful food companies in the UK and aims to grow to 40 employees.

“We’ve been working across the industry to build on relationships we already had and make connections with those that are not as strong as we’d like,” says Graley. “And we’re now working with [Defra-run EPR scheme administrator] PackUK, looking at what functions we will take over. There are functions that will always remain with government, but if the PRO is really going to be a delivery function for EPR, delegation from PackUK is vital.”

However, some industry sources accuse the government of backtracking in its pledges to hand over power.

In February, PackUK strategy director Esther Carter stressed it would be “multiple years” before powers were delegated. Although that came after PackUK boss Jeremy Blake compared himself to a “turkey voting for Christmas”, suggesting almost all powers would transfer to the PRO.

“There was no change of tone,” Graley insists. “I was sitting in the front row when Jeremy said that stuff, and throughout the process this was always going to be a phased approach of delegation to the PRO.”

But wouldn’t it be a giant let down if the PRO was just left with the ‘engine room’ functions of EPR?

“I think functions will move across over time,” Graley says. “At the moment there are functions that are seen as sovereign, and we’re respectful of that, but we need to look at what the PRO can take, as only then can the industry drive efficiencies and effectiveness through the system.”

Another question on many lips is the extent to which the PRO gets to influence the money flow to local authorities. The FDF and other PRO backers such as the BRC have repeatedly raised fears that EPR is a “stealth tax” generating £1.5bn a year simply to plough into a “local authority money pit”.

environment secretary Emma Reynolds has already given powers to PackUK to dock millions from councils if they fail to spend money raised by EPR on boosting recycling capabilities – but it’s not yet decided how the PRO will fit in.

Graley reveals initial talks with both compliance schemes and local authorities have been held and stresses that as well as pushing for ringfencing, the PRO’s role will be improving the data flow between companies and councils, which should start to transform recycling levels and the quality of material recovered.

“Producers are paying their EPR fees, but they’re also massive buyers of material, so it’s important for them to understand what’s happening and where materials are going,” Graley says.

Getting political

She, of course, knows how political EPR can get. Just last week The Grocer revealed how the PRO found itself in a remarkable row with recycling bosses over comments junking the Packaging Recovery Note system – the currency used to underpin recycling in the UK for two decades. A newsletter from PRO founder member Incpen (Industry Council for Packaging & the Environment) incorrectly declared 2026 would be the last year of the PRN system – already described as “broken” by the BRC, and as a good way for hundreds of “middlemen” to get rich by other critics.

“My understanding is that a newsletter went out with a piece in it that wasn’t correct – which was corrected very quickly,” says Graley. “It’s unfortunate the newsletter went outside of Incpen’s membership and the lack of context has led to some of those other assumptions.”

The biggest question of all, though, is whether EPR can overcome its unpopularity and prove that the ‘producer pays’ model is more than just a glorified tax raid. Its first financial year ended in a fiasco that saw the Treasury forced to issue a bailout to keep the scheme afloat. At one point, PackUK was openly considering coming back to producers to ask for more money.

With the Treasury firmly ruling out any repeat of its bailout, the pressure is on to balance the books, as required by law, or for PackUK to convince ministers to bring in rules that are more flexible and, many would argue, more realistic.

“With anything new there are always going to be hiccups,” says Graley. “Do we have all the answers right now? I don’t think we do. Not everything has gone smoothly, but I think what we’ve seen is a vast improvement since PackUK was formed. Yes, there have been mistakes, but they have put them right very quickly.”

One example, she says, came after The Grocer revealed thousands of companies had been accidentally billed multiple times.

“I was impressed with how quickly that was corrected,” she says, before quickly adding, “not that it should have happened in the first place.”

For now at least, how to balance the books is one of those so-called sovereign matters for PackUK to worry about. But as producers look for more EPR powers, it might not be long until the PRO and Graley find a host of such challenges laid at their door.