The new Extended Producer Responsibility (EPR) scheme, which comes into effect on October 1, is set to increase the cost of many household goods, including wine, beer, and spirits. Retailers warn that more than 80% of the cost will be passed on to consumers, adding to the financial pressures already felt in the cost-of-living crisis.
This new tax, which targets packaging produced by companies and bought by households, aims to encourage sustainable practices. However, industry leaders argue that the tax may result in a higher burden on consumers without the expected environmental benefits.
Retailers Brace for Financial Impact
The British Retail Consortium (BRC) has expressed concerns that the EPR scheme will exacerbate inflationary pressures on food prices. According to the BRC, the tax is expected to add approximately 0.5% to food inflation, which comes on top of significant challenges already faced by the sector. Retailers have been struggling with rising employment costs due to increased national insurance contributions and the national living wage.
As part of the EPR, firms will have to pay fees based on the packaging materials they use. This includes not only major retailers but also smaller businesses and brands, all of whom will need to report the amounts and types of packaging they place on the market. According to a survey by the BRC, 85% of retailers stated that their administrative burdens have increased significantly due to the tax, forcing many to pass the costs directly onto consumers.
The packaging tax is expected to affect the price of everyday items. For example, a standard bottle of wine will rise by 9p, while a 330ml bottle of beer will cost an extra 4p. Spirit bottles will see a 11p increase. Industry leaders like Encirc, a major glass manufacturer, warn that this could hit the UK’s efforts to reduce plastic waste, as glass bottles are considered more environmentally friendly than plastic alternatives. Encirc’s managing director, Sean Murphy, described the new tax as a “bitter blow” to businesses investing in green technologies.
Questions Over Environmental Impact and Transparency
The BRC has urged the government to clarify how the funds raised from the tax will be used, specifically requesting legal protections to ensure that the money is spent effectively on improving local recycling systems. Andrew Opie, director of food and sustainability at the BRC, said that retailers are committed to reducing packaging waste but questioned the tangible benefits for consumers if the funds are not used transparently.
While local councils support the polluter-pays principle, which holds producers accountable for the disposal of packaging waste, there is a dispute over how the funds should be allocated. The Local Government Association (LGA) has rejected the call to ring-fence the funds solely for local recycling operations, arguing that councils should have the flexibility to decide how best to invest in waste management services.
The implementation of the EPR scheme is an important step in encouraging more sustainable practices in packaging. However, the concerns raised by retailers and industry leaders suggest that it could have unintended consequences, especially in terms of higher costs for consumers and a potential misalignment between the scheme’s objectives and its outcomes.
