The government’s pledge to cut the cost of regulation has been questioned after it emerged companies will be charged millions on top of what they owe to cover other businesses that haven’t paid their fees.
Extended producer responsibility (EPR) invoices landed with retailers and manufacturers for the first time in October. The so-called impairment charges added include more than £60m to allow Pack UK bosses to cover non-payments.
The BRC has now written to Pack UK saying the charge makes a mockery of Defra secretary Emma Reynolds’ pledge last month to slash the cost of regulation.
Reynolds’ pledge to assess the impact of any new food regulations on businesses and inflation, through a new cross-departmental Food Inflation Gateway.
Defra describes the impairment fee as an additional sum added to liable producers’ fees to reflect the estimated amount of fees Pack UK will be unable to collect in relation to Year 1 Notice of Liabilities.
It says the percentage will be updated each year, taking into account the actual level of uncollectible debt.
The charges come despite Pack UK warning producers that late or missed payments could trigger turnover-based penalties of up to 5%.
Its enforcement framework says that companies that miss the payment deadline for household waste disposal fees will be issued a variable monetary penalty calculated as either 20% of unpaid fees, or 5% of UK turnover, whichever is higher.
BRC director of food Andrew Opie said: “Even based on the government’s own £1.6bn estimate of the cost of EPR the impairment charges mean the industry is being hit with £60m a year in costs.
“Our members cannot understand how it is fair for them to be charged this money to pay for companies that haven’t paid up. It begs the question is the government serious about keeping costs down and does this so-called inflation gateway actually mean anything.”
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