The government is hatching plans to allow the extented producer responsibility packaging tax scheme to be run at a significant loss, in a bid to prevent a repeat of the black hole fiasco which led to a Treasury bailout last week.
However, under the proposed major shake-up, scheme administrator PackUK also revealed it will significantly reduce the window for firms to resubmit their data for the tax, after blaming a flood of late submitted data from producers for the crisis.
Last week PackUK and Defra revealed the government was stepping in with a bailout for the first year of the producer pays scheme, after The Grocer revealed it was considering asking companies to fund a major shortfall in the expected turnover of the tax.
Yesterday in a communication to the industry and local authorities, PackUK chief strategy officer Esther Carter stressed the bailout was a “one-off” and outlined a series of measures it planned to bring in to ensure it didn’t’ happen again.
“What we’re trying to do based on the feedback from local authorities and businesses is ensure a trade-off between being able to get the data right and making sure we have stability in the system,” said Carter.
“We are also working with the rest of the four nations to explore how we can relax the strictness of the requirement to balance the scheme each year.
“Currently the system does not allow PackUK to have a significant surplus or deficit in any given year. Given the complexity of those calculations, we have to make sure we balance the books. We’re exploring how we can amend those regulations.”
As well as revealing PackUK’s extraordinary plans to send out a second set of bills, The Grocer revealed last month the Treasury had pressed Defra to budget for full recovery of EPR in the first year, a move which came unstuck because of the shortfall in payments and the requirement to balance the books.
Carter revealed PackUK planned to put the onus on producers with a much stricter turnaround time for submitting data for any recalculation of their EPR bills.
“The challenge has been tied to a higher than expected amount of data resubmissions,” she said.
“In part we do expect that to level out as the scheme settles in and producers adjust, but we’re also conscious of the fact that we want to improve the data security. So as a result we are exploring earlier data resubmission deadlines that will give us more certainty on costs.”
PackUK was said to be in talks with industry trade bodies and compliance schemes as to what the new tighter deadlines would be.
Yesterday represented another nervous milestone for PackUK, as it saw the second round of quarterly direct debits for the tax due from companies.
In December The Grocer revealed fury after it emerged thousands of companies had been accidentally billed multiple times for their EPR bills.
Carter said she was confident there would be no repeat of the cock-up after a “very long and extensive root cause analysis” with PackUK’s financial provider.
But she added: “In addition we have added a manual check of every single payment to avoid a repeat of that situation.”
A source told The Grocer: “I think the moves from PackUK to ensure the EPR budget does not have to balance to zero is eminently sensible.
“Any system with so many many moving parts was never going to sum to zero, or if it has to is going to cause a lot of unnecessary pain for people. Building a system that didn’t have a safety valve in it was probably a mistake.”
However, the source added there would be major unease among suppliers at being asked to bring forward the submission of packaging data, especially with the introduction of more complicated rules in the next year of EPR reporting.
The new safeguards for EPR come as PackUK and Defra are expected to appoint a new producer-run organisation (PRO) imminently to take on several of its functions.
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