OPINION: In April 2025 the Labour government introduced the Extended Producer Responsibility (EPR) scheme. This will make around 8000 businesses responsible for the cost of managing all their packaging waste, currently estimated at between £1.5 billion and £1.8 billion per annum.
EPR shifts the cost of collecting and disposing of packaging from local councils to producers. Charges will vary depending on the material type and by weight and how easy the packaging is to recycle. This means heavier materials like glass face higher fees up to seven times greater than lighter materials such as plastic.
The EPR costs will be calculated against three key criteria, the primary being the weight of the material. The producer must declare the weight of each packaging material e.g. plastic, paper. In addition, there is a base fee per material set by the regulatory body. These rates are based on the net cost of managing the waste. Finally, there is the modulated fee factor (from 2026) that will incentivise more sustainable packaging, The tax kicked in on 1 April 2025, and the first bills landed on producers’ desks (brands and retailers) during October of this year.
It is important to note at this juncture the importance of collaboration between the packaging designers, the producer and recycling companies. If all three are aligned from the packaging design kick off all stakeholders can have opportunities on the actual packaging material type required to ensure maximum recyclability.
The larger brand owners such as Diageo, PepsiCo and Coca Cola will have been aware of EPR for several years and will have had the opportunity to engage with government and more importantly have prepared internally for this significant shift of responsibility and cost implication. Specialist resource would have been brought in to execute the plan.
The rationale for why so many smaller companies are not up to speed with EPR is that they do not have the resource (both financial and people) to engage with government and regulatory bodies. The new legislation has not been widely communicated so it is not surprising that there is blanket ignorance across SMEs of this new regulation.
The financial impact for these SME’s will be huge with many already working on tight margins and the impact of other recent tax hikes such as the NI Employer contributions. This will have serious implications for companies cashflow, future financial planning and investment against an already dim economic outlook and a winter budget looming.
The EPR regulation in principle is sensible because the UK waste infrastructure rapidly needs investment however there are two key missing links which effectively means the monies will not be destined for waste and recycling projects across the UK. The EPR funds are not currently ringfenced thus local councils can effectively spend the money where they desire. In addition, the admin bureaucracy will be vast in managing the 20,000 SMEs in the food and drink manufacturing sector and how effectively will fee collection be enforced?
Only time will really tell how effective the EPR roll out, and execution has been. However, at this current moment in time it will be the smaller SME ‘s across the United Kingdom operating within a broad array of sectors who will be the most vulnerable going forward.
The wider environmental impact will also need to be monitored; SME’s will potentially look for cheaper packaging options that may not be as carbon friendly.
Going forward, it will be necessary for new recycling legislation to be well developed, communicated and executed.
EPR is new to the UK and whilst it begins with noble intentions, we must tighten up the loopholes in the previous PRN scheme, so retailers and manufacturers pay a fair price if they play within the rules of EPR.
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