The food and drink sector looks set to be spending the weekend counting the cost of the controversial extended producer responsibility (EPR) scheme, after the government published the final fees suppliers and retailers will have to shell out for their different packaging materials.
In May, Defra unveiled a package of measures which it claimed showed ministers had “listened and responded” to feedback from across the packaging value chain. At the time, supermarket bosses said the emergency package of concessions “falls well short” of what would be needed to salvage the scheme.
Now, producers are set to receive EPR invoices in August with payment due by October. Some industry experts have estimated the scheme will cost them around £2bn.
There looks to be a measure of relief for some suppliers – such as alcohol drinks businesses – who primarily use glass, following fears the tax would dramatically hike up the price of their products. Many had argued this would undermine the purpose of the tax, encouraging producers to favour less recyclable materials such as plastic.
Producers using glass jars or bottles will now be charged £192 per tonne (of glass entering circulation). The predicted fees have jumped around widely over the last year, with predictions that glass could be charged as much as £330 per tonne. In September some suggested this would be reduced to a maximum fee of £115 per tonne, while the latest predictions in January suggested a middle ground of £240 per tonne.
Fees ‘too high’
Responding to the official fees, The Wine and Spirit Trade Association (WSTA) said the glass fee remains too high and is calling on the government to delay implementing EPR and review the methodology for fee calculation.
“Wine and spirit businesses have been waiting a long time for confirmation of glass price fees and while the final EPR prices announced today provides financial certainty for accounting purposes, the scale of the glass fees confirms industry fears,” said WSTA chief executive Miles Beale.
”These hefty EPR fees are still significantly more per unit compared with charges across Europe, eight times more than in Germany, and three times more than in Croatia or Finland.
This news is another blow to the sector, which is already reeling from consecutive duty hikes and whose margins are already tight. Having to pay the highest EPR fee for glass will force businesses to pass the costs onto consumers, pushing up inflation while – perversely - encouraging the use of cheaper and less sustainable packaging alternatives.”
A joint statement from the British Beer and Pub Association, British Glass Manufacturers’ Confederation, Scotch Whisky Association, WineGB, Wine and Spirit Trade Association, and UK Hospitality, said the announcement ”goes against the UK government’s plans for boosting growth at home”.
”The disproportionately high fees for glass demonstrate that the UK government has not listened to the concerns of businesses – laid out clearly in last week’s letter to the Secretary of State – regarding this poorly designed scheme,” it said.
”The current EPR design does not meaningfully support the delivery of a circular economy, and adds a significant additional cost to businesses who use glass.
“There is a risk that without action from the UK government to reduce these fees and move to meaningfully support businesses rather than restrict them, the scheme will result in producers switching to less sustainable materials and that many producers will be charged twice – further restricting investment into the economy.
“We are united in urging the government to reconsider the proposed fees, and to work with businesses to implement a scheme that truly supports the delivery of a circular economy.”
The fees for other key packaging materials, as confirmed by the government’s EPR administrator PackUK, will be £423 per tonne for plastic, £266 per tonne for aluminium and £196 for paper and card.
“Like the figures or not, release of the base fees for 2025 finally gives producers what they have been asking for since the regulations were announced: clarity on the costs to them,” said John Redmayne of environmental compliance consultancy ERP UK.
“Arriving at the figures was never going to be easy with such a large and complex policy change, and the transfer of £1.5bn to £2bn of costs from local authorities to packaging producers for the management of household packaging waste was certainly never going to come cheap.
“However, from talking to our clients and other large producer companies, they are well prepared to meet the updated costs and meet the demands of the last step of this new process, which will be the issuing of invoices from PackUK to producers in October, ushering in a new era of packaging recycling.”
Ringfenced for recycling?
Some sectors remain concerned around how the money raised from EPR will be used. The BRC has lobbied hard that that money should be ringfenced to enable councils to improve recycling capabilities at a local level.
“Government has now confirmed its new packaging tax will be introduced in October,” said Andrew Opie, BRC director of food and sustainability. “We estimate this could add £2bn to retailers’ costs, coming on top of the £5bn of additional costs which kicked in in April as a result of the budget. It’s inevitable this will add pressure on prices, adding to inflation.
“While we are pleased government listened to calls from the retail industry to ensure that EPR fees are directed toward recycling improvements, we are yet to see how this will be enforced. Consumers will rightly expect to see a well-run system that makes significant difference to recycling in the UK, not a pay and pray tax which EPR could end up being in its current form.”
The Food and Drink Federation director of corporate affiars and packaging Jim Bligh added: “These fees provide welcome clarity for manufacturers on the costs they will be facing for the first year of EPR. At £1.4bn a year, EPR is an expensive programme.
”So, it’s critical that government demonstrates to industry how the scheme will deliver value for money, improve the UK’s flatlining recycling rates, and build the circular economy that packaging producers expect. The UK government beginning to set out measures to ensure that local councils only spend EPR fees on packaging recycling is a welcome step in the right direction.”
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