A new packaging tax to fund recycling will push up the price of many products, such as beer, soft drinks and small appliances such as kettles, some UK firms have warned.
This is due to the extended producer responsibility (EPR) scheme which comes into effect next year.
As part of the scheme, it will shift the cost of household recycling from councils back on to the companies using the packaging.
In August, the Department for Environment, Food and Rural Affairs (Defra) published its “first estimate” of the rates to be charged for each tonne of material, giving companies a price range from the lowest to the highest.
Pev Manners, the managing director of the cordial maker Belvoir Farm, said the preliminary cost for glass in the EPR for packaging was “nuts”, The Guardian reports.
He added that the rate for glass was “spectacularly high”, spanning £130 to £330 a tonne.
Based on the highest cost scenario covering the fees would add 25p – the equivalent of a 10% price increase – to a bottle of its elderflower cordial.
Manner said: "Last year, we turned over £21m and made £900,000 profit. My finance director estimates this tax will cost us £850,000 next year, so 100% of our profits.”
In a statement, Defra said the EPR was a “vital first step in cracking down on waste as we move towards a circular economy, and we have always been clear these fees are our initial estimates … We are continuing to meet with the glass industry to discuss more workable approaches, including for how we calculate the cost of glass.”
What other industries would be affected?
In a joint letter the British Beer and Pub Association, Independent Family Brewers of Britain, Campaign for Real Ale, and Society of Independent Brewers and Associates, suggested it would put between 3p and 7p on each of the 3.2bn bottles of beer sold in the UK each year.
Meanwhile, Ian Bray, the chief executive of Fentimans, said: "At the high end of their [glass] cost estimate it was a number which was greater than my profit for the year,” he said, having worked out it would add 50p to a 750ml bottle of its soft drinks.
Glass is hit hard because it is heavy and Defra is using weight as a key metric but as talks with industry continue Bray is more optimistic.
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“If they base it on volume rather than weight, then that will probably reduce the cost for glass by about a third, which starts to become more reasonable,” he said.
Meanwhile, the British Home Enhancement Trade Association, which represents DIY, garden, housewares and small electricals suppliers, said the “EPR tax will lead to price hikes across all manner of consumer goods”.
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Will Jones, its chief operating officer, said: “Producers will be unable to absorb these costs and will either have to pass them up the supply chain to retailers and ultimately consumers, adding to pressure on inflation, or implement damaging cost cutting measures in their business potentially leading to job losses.”
Discussing the EPR, Lee Marshall, policy and external affairs director at the Chartered Institution of Wastes Management said it should help reduce the “environmental burden of used packaging and support increased collection and recycling".
He added: "The system should mean packaging is designed to be more easily recycled, more of it is collected for recycling and that producers, rather than local authorities, fund all of this."
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