EPR expenses could affect the packaging industry's bottom line

Recent EPR legislation reforms are reshaping the packaging circular economy by urging robust recycling investment. Industry experts highlight rising costs and ambiguities in policy implementation, stressing that clear funding allocation and unified standards are essential to boost recycling efforts and reduce the burden on retailers.

 

 

 

As Defra continues to implement EPR legislation amendments, it's critical to keep in mind that the goal is to create a packaging circular economy and a world-class recycling system.

 

However, there are significant concerns regarding its price.

According to industry insiders, the government must release plans outlining the distribution of EPR funding in order to bolster recycling initiatives.

"The retail industry is eager to see a comprehensive scheme that improves recycling across the UK and ensures a steady supply of recycle bag material that can be reused for future packaging," according to the British Retail Consortium (BRC).

 

Jim Bligh, director of corporate affairs, communications and packaging, The Food & Drink Federation (FDF), added: “Government must match industry’s investment and ambition with real action. This can start with turbocharging efforts to attract investment in the UK’s recycling infrastructure, including by accelerating mass balance accounting and chemical recycling. It’s also vital that the significant revenue raised through EPR fees is ringfenced to ensure that this money is spent on improving recycling rates.”

 

Jason Galley, director and chief executive of metal packaging association MPMA, warned that to achieve EPR objectives and improve packaging recycling rates the fees must be protected and allocated specifically to packaging waste collection and improved recycling outcomes: “Without that, we can rightly call the fees a tax. A well-defined, ringfenced budget is crucial to strengthening the recycling infrastructure, without it the EPR system risks failing to deliver meaningful change.”

 

He went on to say that carefully considered EPR rates for various packing materials are also crucial in this situation.

 

“In charging by weight, we are in a nonsensical situation whereby a steel food can, under the latest illustrated fees, pays two to three times more to be sorted than a competing plastic or fibre-based carton. This means we have the packaging material with the best recycling record, paying the most, subsidising those materials that lack the same results and ease of recycling.”

 

According to the massive packaging distribution company Macfarlane Group, there is still too much misunderstanding.

 

Peter Atkinson, chief executive, said: “EPR is very complicated – it’s quite a lot information still to be gathered. What we are finding at the moment is the customers we have who operate in the retail space are needing lots of help.”

 

Companies will begin paying taxes in October, which will have a direct tax impact of about £300,000 on Macfarlane.

 

Retailers and brand owners bear the brunt of the burden.

 

Andrew Opie, director of food and sustainability, BRC, said: “The funds must be ringfenced, guaranteeing that all money raised through Extended Producer Responsibility (EPR) is used by local councils to create and operate a world class recycling system that collects and processes as much recyclable material as possible.

 

“Furthermore, given the September Budget added £5bn to retailers’ costs in 2025 through increases to employer NICs and national living wage, we urge the Government to temporarily postpone the introduction of an additional £2bn in retailer EPR fees in October this year. Without this, retailers face a combined £7bn in costs this year, which will inevitably push up prices for consumers.”

The FDF’s Jim Bligh, said: “With EPR expected to cost food and drink producers £1.1bn in the first year alone, it’s imperative that government works with producers to make sure this investment actually delivers the environmental and economic benefits we’ve been promised. Our support for EPR is conditional on the UK’s governments making that large investment worth it.”

 

The industry's worries were emphasized by Adam Anderson, global managing director of food packaging expert Go-Pak: "It will cost the industry an estimated £1.5 billion, which it cannot absorb." We're still having a terrible time putting this into practice and spending a lot of time and money learning how to generate profits. The main problems are that in order to supply distributors, we require full information from our consumers. It goes without saying that they are not always inclined to share this kind of information.

 

“There are so many grey areas in the legislation we are struggling with… if we import x tonnes but export x tonnes of OCC how does this play out? Theoretically this will push to more ‘sustainable’ packaging’ but the is reality I fear this could lead to more expensive and less functional packaging.”

 

Anderson said he was cynical about the new taxes: “This could be is the new type of tax that is not a tax.”

 

"At the moment, the only thing that is evident is a higher cost to beverage companies and the industry at large – something that nobody needs in the current market conditions," remarked Jo Taylorson, head of marketing and product management at Kingsland Drinks. Defra needs to engage with the drinks industry to provide clarity across the board and enable us to effectively prepare for this big shift.”

 

Peter Atkinson, Macfarlane Group, said: “M&S were making statements recently about the cost to them of EPR and that it should be abandoned etc. It is predominantly a retail tax – a tax on retail packaging.”

 

Jim Bligh, added: “Let’s be clear: this money is for investment in recycling, not to plug shortfalls in council budgets.”