The government has agreed to bail out the funding gap that has caused a crisis in the first year of its extended producer responsibility (EPR) tax.
In an announcement yesterday, PackUK said the “one-time intervention” would help to ensure the scheme did not lead to increased costs, after it faced a furious backlash from suppliers at the prospect of new higher bill.
As fury grew over lack of transparency over the black hole, PackUK finally issue a statement on its website yesterday.
There was no clarification about the extent of the funding shortfall but the move is a victory for industry bosses, who have expressed outrage that producers could be forced to pay for the shortfall.
It said: “PackUK can confirm that there will be no change to disposal fees for year one of EPR, which will remain as outlined in producers’ Notices of Liability in October 2025.
“As more accurate packaging data has been resubmitted by producers, PackUK identified a shortfall in the funding originally calculated for year one, primarily due to a reduction in tonnages reported.
“This situation is provided for under regulations, and under normal circumstances, this would have required a recalculation of producer per tonnage fees.
“However, we recognise that packaging EPR is a significant change in how packaging is managed, and there has been a high number of resubmissions in the first year as businesses familiarise themselves with new requirements.”
“To address this shortfall and ensure local authorities receive the critical funding they were promised, the UK government has agreed to close the funding gap. This is a one-time intervention by the UK government to help mitigate increasing costs for producers and maintain stability during the first year of the scheme.”
The statement confirmed that the shortfall occurred after producers submitting a lower total tonnage under the first year of the scheme than previously reported.
“Under the regulations, producer fees are calculated by dividing the total cost of efficient household waste management by the total tonnage of packaging placed on the market.
“Consequently, a reduction in reported tonnage contributed to a shortfall.
“To ensure local authorities receive the full level of funding committed under packaging EPR, the UK government will cover this shortfall in year one on an exceptional basis.”
FDF chief executive Karen Betts said: ”The UK government’s commitment to close the EPR funding gap is very welcome. It’s reassuring news for the UK’s food and drink manufacturers and will reinforce confidence in the new system.
”We’ll continue to work with all four nations’ governments and PackUK to ensure that EPR delivers the circular economy for packaging that everyone wants and needs.”
Earlier this month, The Grocer revealed the landmark producer pays strategy had been plunged into chaos after the scheme administrator revealed a a major shortfall in the money raised.
Sources said that despite repeated requests for transparency over the amount of the shortfall, they had been stonewalled by Defra, PackUK and the devolved governments.
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