Senior UK industry figures have issued a stark warning over the government’s new packaging tax, branding it “horrific” and economically damaging.
The finalised Extended Producer Responsibility (EPR) scheme, published by the Department for Environment, Food and Rural Affairs (Defra) on Friday, will make producers pay the cost of recycling their packaging from October.
Though the final fees are slightly lower than previous projections, business leaders across the retail, hospitality and food and drink sectors argue the levy will force companies to pass costs on to consumers or move operations abroad.
In a rare joint statement, lobby groups for the glass, pubs, whisky, wine, spirit and hospitality industries accused the government of ignoring repeated warnings from businesses. “The current EPR design does not meaningfully support the delivery of a circular economy, and adds a significant additional cost to businesses who use glass,” they said.
The British Retail Consortium (BRC), which had urged a delay, estimated the EPR would cost retailers £2 billion, just months after a £5 billion hit from employer national insurance hikes. “It’s inevitable this will add pressure on prices, adding to inflation,” said Andrew Opie, director of food and sustainability at the BRC.
Originally announced by the previous Conservative government, the EPR charges are intended to fund recycling efforts via local councils. Following criticism, Defra confirmed that revenue from the scheme will now be ringfenced exclusively for recycling, a move welcomed by the BRC and the Food and Drink Federation.
However, critics say the updated fees still disproportionately impact glass users. Although glass is taxed at a lower rate per tonne than plastic or aluminium, its heavier weight makes it more expensive in practice.
William Fugard, CEO of soft drink brand Gusto Organic, warned the policy would force his business to shift production from UK-made glass bottles to aluminium cans sourced from the EU. “This tax is symptomatic of a total disconnect in government policy around health, food security and inflation,” he said. “It’s a rotten piece of policy, ill thought out and serves only to raise money for the Treasury.”
Fugard also criticised the lack of support for small businesses, accusing the government of favouring multinational corporations. “DEFRA, in all their wisdom, have not supported SMEs with this tax as they said they would. There are no exemptions for small and medium-sized enterprises,” he told City AM.
He added that the EPR could lead to fewer consumer choices and higher prices, while damaging export-driven firms already grappling with rising costs and regulatory burdens.
With its October launch approaching, the EPR has become another pressure point for UK businesses, already strained by rising wage costs and looming additional taxes. Industry leaders are now calling on ministers to rethink the scheme or risk stifling British manufacturing and innovation at a critical time.
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Industry chiefs sound alarm over ‘horrific’ packaging tax threatening UK businesses