The new Extended Producer Responsibility (EPR) system aims to make producers responsible for the whole lifecycle of packaging, emphasising the importance of design for recyclability. EPR affects retailers, nurseries, manufacturers and suppliers – differently, depending on the scale of the business, type and extent of packaging produced.
Affected packaging producers are:
- Business, subsidiary or group (not charity) with annual turnover over £2m and responsible for more than 50 tonnes of packaging in a calendar year.
- Business with turnover of £1M plus and responsible for 25 tonnes or more of packaging in a calendar year are required to report their ERP data
Since January 2023, businesses have been obligated to collect packaging data, and businesses with a fee-paying obligation had to report from July 2023. The published illustrative fees, which will not apply until 2025, were calculated using weights of household packaging placed on the market in 2022, taken from 2023 reports.
For each category of packaging (aluminium, fibre-based, paper/cardboard, plastic, steel, wood, glass), EPR fees are categorised into ‘higher’, ‘intermediate’ and ‘lower’. The higher end of the illustrative fees for packaging range from £655 per tonne of aluminium or fibre-based composites, to £350 per tonne of paper or board, £610 per tonne of plastic and £330 per tonne of glass. Defra have said that manufacturers should not rely on these figures for detailed financial planning as they may be subject to change. Revised base fees are set to be provided in September once more robust data has been verified by regulatory bodies.
A Defra spokesperson said: “This government is committed to cracking down on waste as we move towards a circular economy. Extended producer responsibility for packaging is a vital first step. It will create 21,000 jobs, stimulate more than £10bn investment in the recycling sector over the next decade, and see packaging producers, rather than the taxpayer, cover the costs of managing waste. We will continue to work closely with businesses on the implementation of this programme, and publishing the illustrative base fees provides them with the clarity they need to prepare.”
Trade response
Not surprisingly, Defra’s EPR proposals have caused commotion amongst manufacturers. For many, the illustrated numbers are significantly higher than estimated and the indicative range being evidently wide causing uncertainty. On account of the long delay in the publication of the fees – which are yet to be finalised, manufacturers are calling to postpone their introduction.
BHETA, the UK Trade Association for manufacturers, importers, and distributors in the Home Improvement (DIY), Garden, Housewares and Small Electrical sectors campaigned “vociferously” against the “inequity” of the ERP scheme when first introduced. The association find the new proposed rates of tax to be punitive for individual businesses and the UK economy, and maintains that the scheme adds an unfair burden onto UK producers, as cross-border e-commerce suppliers are unaffected. According to the association, the impact of the new EPR packaging taxes will be significant for UK producers, estimating up to “a 30 or 40 times multiplier on existing Packaging PRN rates”. One of their members, a small domestic electrical distributor has concluded that they may facing £1.1m of additional costs. BHETA are planning a lobbying campaign against the proposals.
Metal trade body (MPMA) have warned that the “calamitous” illustrative EPR fee structure could reduce circularity and lead to job losses. According to the MPMA, the relatively higher fee structure could result in recycle-friendly cans to be replaced by other materials that are not so easily recycled. The trade body said the fees structure does not reflect the densities of the different packaging materials. Denser materials, such as metals and glass will pay disproportionately higher fees, whilst less dense, less circular materials like plastic and fibre composites will be proliferated, cites the MPMA. “It is MPMA’s view that it would be calamitous for a Government sustainability scheme to endanger the UK’s food can business which provides food security and the ability to combat food waste. When you consider that metal packaging is the most recycled packaging material in the UK, the DEFRA policy is completely counter-productive to its own aims,” explained Jason Galley, MPMA director and Chief Executive.
“In essence, the new EPR scheme is an additional tax, which targets product suppliers as well as retailers of own label goods. It represents a huge shift in financial responsibility for the treatment of household waste and waste packaging throughout its lifecycle, moving it 100% to suppliers of branded goods and retailers of own brand items. To date, the costs of kerbside recycling/disposal of packaging is split roughly as follows: 10% by producers through PRNs; 10% by retailers; 80% by the taxpayer through Councils,” explains BHETA. “The reality is that producers will be unable to absorb these additional costs on their own and as such they will be passed up the supply chain to retailers and ultimately to the consumer, adding to pressure on inflation. In BHETA’s view, it is not only is it vital that suppliers begin to prepare now for both the rules and the new reporting, as well as looking to lobbying. BHETA’s campaign is not about denying the need for change – just achieving an equitable spread of the responsibility and cost.”
Brands using glass claim that the plastic and aluminium sectors will benefit from an additional two years without waste policy costs, which will further incentivise material switching. The incoming deposit return scheme is proposed to run from October 2027, but will not be subject to EPR fees in the meantime
Speaking to the Grocer, CEO Ian Bray of Fentimans, the drinks company, said: “I know I’m not alone in being deeply concerned about the EPR scheme and what this will mean for other British businesses like us. Fentimans will always support sustainable practices and the principles behind the EPR scheme. However, in its current form, the EPR proposals unfairly impact glass when compared to other packaging materials such as plastic and aluminium, and we believe urgent intervention is needed. The current indicative EPR base fees, calculated based on the weight of packaging materials, place a disproportionate burden on the glass industry compared to other materials. These fees are much higher than we expected, and implementation without revision will be devastating for our business and will lead to investment being diverted outside the UK. It’s crucial that Defra avoids market distortion through EPR and develops a more equitable and competitive market for all packaging materials. We call on the government to consult further on the EPR fees, and to delay the introduction of EPR in line with the DRS introduction.”
Based on the illustrative rates published by Defra, trade associations are urging their members to review the likely changes to their packaging tax rates to ensure they fully understand how it will apply to their business, and what they need to do to comply.