Anger is growing over failure by the UK governments to reveal the extent of the financial “black hole” threatening the future of the EPR packaging tax.
The landmark producer pays strategy had been plunged into chaos after scheme administrator PackUK admitted it may have to re-issue the first year of bills because of a major shortfall in the money raised.
Sources told The Grocer this week that despite repeated requests for transparency over the amount of the shortfall, they had been stonewalled by Defra, PackUK and the devolved governments.
“The concern from producers is big and the question that none of the officials seem willing to answer is what is the size of that black hole?” said one supplier source.
“If it’s a comparatively small black hole it’s still not great, but it’s a very different proposition if it is suddenly hundreds of millions of pounds.
“Some of the smaller producers talked last year about their profits being wiped out overnight because of EPR fees. To then come back and ask for yet more money is going to be catastrophic.”
There have been claims that the governments of the four nations are reluctant to come clean about the extent of EPR’s financial woes because of the looming elections in Scotland and Wales and related political sensitivity.
Pressure is also growing on the Treasury to step in to cover the shortfall, rather than hit food and drink companies with even higher bills.
“There are suggestions that the reason the black hole is not being revealed is because of the potential political damage, but for us it’s irrelevant,” added the source
“We don’t care about that. We need answers now to give businesses the clarity they need so they can figure out where on earth they get that money to plug this gap.
“We appreciate that PackUK is doing what they can, but this is bigger than that. It’s down to the four nations to look again at the regulations because clearly how they’ve been set up is wrong.”
Anger over the debacle has been ratcheted up further after The Grocer revealed last week that the Treasury ordered Defra to include “full recovery” for the first year of EPR in its budget figures, even though they were warned it was an unachievable goal, to improve last year’s spring spending review forecasts.
One leading source told The Grocer the department ordered Defra to budget for full recovery in the first year of the scheme despite the warnings, claiming the situation was a “fudge”.
“It was just a fix to make this look better than they really were.”
PackUK has blamed the shortfall on a “higher than expected” number of appeals by companies against their EPR bills that landed for the first time in October.
The supplier source told The Grocer huge questions had been raised over why the UK government had not incorporated a “buffer” to underpin EPR as it got off the ground, as is the case with many other countries operating EPR schemes.
They added: “It seems grossly unfair that producers should be liable for something because of the way this has been set up.
“Clearly the four governments need to look again at the funding model for EPR but first and foremost need to come clean about he scale of the issue. Keeping the industry in the dark is unacceptable.”
Defra and PackUK have been asked for comment.
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