OPINION: The Times recently reported that ministers are reviewing a so-called “shopping stealth tax” – Extended Producer Responsibility (EPR) – on packaging. The British Retail Consortium is quoted as calling for the modification of EPR, the temporary suspension of the Plastic Packaging Tax (PPT) and the removal of the ‘broken’ PRN (Packaging waste Recovery Note) system.
Liability for the Plastic Packaging Tax is affected by decisions taken by producers in the recycled content of their packaging products. EPR has introduced disposal costs charged to liable producers, some £1.4 billion last year, which are used to reimburse local authorities for their net costs in the collection, sortation and disposal of household packaging.
Meanwhile, the PRN system, now incorporated into EPR, has been working in the background to deliver compliance with national packaging recycling targets since 1997.
The Food and Drink Federation has also been advocating for the demise of PRNs for a couple of years now. Before we get un-nerved by the rhetoric, we should consider what the PRN costs, what it delivers and if it were to go, what would replace it. When we do that, the numbers tell a very different story to the one being briefed by some.
A ‘stealth tax’ on the weekly shop?
In 2025, the PRN system generated around £322 million in revenue for accredited UK reprocessors and exporters. Spread across an estimate of 118 billion items of both household and commercial packaging placed on the UK market, that works out at roughly 0.27p per item. For a typical household using say 3,000 packaging items a year, the maximum theoretical impact – if every penny were passed through by producers to only household consumers – is £8 a year.
Yes, there are associated extra costs, but all of these add up to a marginal increase that many producers can either minimise or, in some cases avoid.
Calling this level of cost a “stealth tax” on the weekly shop is, frankly, a stretch. The Iran war’s effect on energy, fuel and fertiliser prices is doing the heavy lifting on grocery inflation. Implicating a recycling levy of around 0.3p per item is a convenient distraction.
A system that pays its way – and shifts costs away from the taxpayer
The PRN system is the UK’s mechanism for applying the ‘polluter-pays’ principle to packaging. Producers, not taxpayers, fund the recycling of the packaging they put on the market. By extension, the Government has confirmed the intention that EPR “moves the cost of dealing with waste away from taxpayers” and generates over £1 billion annually while supporting 25,000 jobs.
Importantly, the price of a PRN is dependent on the extent to which ‘polluter payments’ are required to meet the required levels of recycling. Producers pay more only when the extra money is required. Reprocessors and exporters are assured of financial support, but only when it is necessary: there are no free lunches here.
Scrapping or postponing these revenue-streams will not make the costs go away. It will hand the bill back to local authorities – and ultimately to the payers of council tax and business rates. In the current system, those who buy the most, pay the most, and this is therefore a positive, progressive policy approach.
Underwriting £1 billion of UK industrial investment
The PRN is the financial mechanism that has unlocked serious capital investment in British recycling infrastructure. In 2025, out of the £322 million raised in total PRN revenue, over £95 million was committed to infrastructure and capacity. Of this, domestic UK reprocessors invested at least £20 million, as well as retaining an additional £7 million for future investment.
Major projects depend on it. The running of the Shotton Mill on Deeside, being redeveloped with a £1 billion investment to produce recycled cardboard packaging and tissue paper, is viable in part because of confidence that the subsidy PRNs can provide will be available when needed.
New investment in plastic and glass reprocessing capacity across the UK has also been possible for the same reason. Even with PRN support, the last two years have been brutal for UK plastic reprocessors – several of which have closed. If the PRN is pulled from those that are left, further collapses will be immediate.
Nearly 30 years of delivery, 7.7 million tonnes recycled in 2025
Since 1997, the PRN system has driven UK packaging recycling rates from estimates of 27-30% to 70% in 2025. It currently supports the recycling of around 7.7 million tonnes of UK packaging waste every year. Defra’s own assessment is that “the PRN system has met its core objective of increasing recycling rates and meeting recycling targets.”
Crucially, this means the PRN system has not only provided financial support for the recycling sector but it has been the mechanism through which the UK has fulfilled its statutory recycling targets, meeting a legal obligation for nearly three decades.
Compliance schemes, of which there are 14 operators running 40 schemes and employing over 600 skilled professionals, fulfil the obligations of 97% of UK businesses obligated by the regulations. They provide detailed expertise and guidance to producers, identify free-riders (those not paying in to the system), audit producer data, and act dynamically in the PRN market to keep producer compliance costs as low as is practicable. That competition element is precisely why the UK’s system is more cost-effective and efficient for producers than many equivalent EPR schemes in continental Europe.
What the BRC and FDF appear to be missing
Removing the PRN will not remove the obligation to fund packaging recycling, merely change who collects the money and how efficiently this is done.
The likely alternatives are an additional flat business tax, a centrally administered producer fee or an inflexible subsidy regime. None of those are likely to be cheaper for producers or households, and all would remove the market incentives that drive investment in UK reprocessing capacity.
We are not aware of any example anywhere in the world where a centralised, monopoly compliance system delivers more efficiency, innovation or transparency than a competitive market-based one: This is not merely nostalgia for a novel UK idea that has delivered tangible and cost-effective results.
There is also an uncomfortable irony in this narrative. The UK government seeks to align more closely with the EU, which is extending the producer responsibility concept and has further reformed its own packaging regulations. Just ripping up a system that successfully delivered our recycling obligations for nearly 30 years, and until recently under the requirements of an EU directive, is exactly the wrong direction of travel.
Reform yes, removal no
The PRN system isn’t perfect, and no one in either our sector or the recycling industry is pretending otherwise.
Defra ran a public consultation on PRN reform that closed in early May. Our industry, including compliance schemes, The Recycling Association, and reprocessors, has actively and constructively engaged to support proposals that level the playing field between domestic and export evidence, tighten due diligence requirements and improve transparency of information.
However, scrapping the PRN completely is not a sensible approach. To do so would collapse demand for UK-recycled material almost overnight, kill investment in domestic reprocessing capacity, hand a bigger bill to councils and put the UK’s recycling targets out of reach.
The PRN system costs the average household around the equivalent of a couple of takeaway coffees, supports over £1 billion of economic activity and 25,000 jobs, and provides a level of confidence to make significant industrial investment.
If the BRC and FDF have a viable alternative proposition for funding packaging recycling that achieves successive governments’ environmental objectives, which I assume they share as we do, they should put it on the table.
Briefing newspapers about the abolition of a proven PRN system by conflating it with a “stealth tax” isn’t based in fact, or particularly helpful.
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