A new UK packaging tax, set to fund recycling efforts, is expected to drive up the cost of a range of everyday items such as soft drinks, beer, and small appliances like kettles and toasters. UK businesses are warning that the tax, which shifts recycling fees from councils to producers, will likely be passed on to consumers.
The Extended Producer Responsibility (EPR) scheme, coming into effect in 2025, is designed to make producers accountable for the cost of recycling their product packaging. While its environmental goals are clear, companies argue that it will cause significant price increases on commonly purchased goods.
Concerns Over Cost Increases
Pev Manners, managing director of cordial producer Belvoir Farm, expressed alarm at the costs associated with recycling glass under the EPR. He described the preliminary charges for glass packaging as “extremely high,” potentially adding 25p to the price of a bottle of elderflower cordial – a 10% increase. For Belvoir Farm, the recycling fees could wipe out its annual profits, forcing the company to pass the extra cost onto customers.
In response to the concerns, the Department for Environment, Food and Rural Affairs (Defra) acknowledged that the rates are only estimates and are subject to ongoing discussions. Defra stated that the EPR is crucial in moving the UK towards a circular economy and reducing waste.
Impact on the Drinks Industry
The UK drinks industry is among the sectors most affected by the EPR. The weight-based cost calculation has made glass packaging particularly expensive, causing companies like Fentimans, known for its ginger beer, to fear for their financial future. Fentimans’ CEO Ian Bray noted that the new tax could add up to 50p to a 750ml bottle of its soft drinks, a significant increase for consumers.
However, industry leaders remain hopeful that further negotiations will reduce costs. Bray suggested that switching from a weight-based to a volume-based calculation could cut costs for glass packaging by about a third, offering some relief to companies reliant on glass bottles.
Wider Impact on Consumer Goods
The British Home Enhancement Trade Association, representing suppliers of DIY, housewares, and electrical goods, also warned that the packaging tax will increase prices across various consumer products. Will Jones, the association’s COO, explained that producers will be unable to absorb the additional costs, which will likely be passed on to retailers and, ultimately, consumers.
As the UK grapples with high inflation, the new tax is expected to add further pressure to household budgets. While official estimates suggest the impact on inflation will be minimal, increasing the Consumer Price Index (CPI) by only 0.04-0.09%, industry experts believe consumers will feel the strain.
Looking Ahead: UK Packaging Tax
Despite the concerns, the EPR is designed to reduce the environmental impact of packaging. From 2026, packaging that is more environmentally friendly will incur lower fees, encouraging companies to adopt sustainable practices. By making producers pay for recycling, the government aims to reduce waste, increase recycling rates, and ensure that packaging is easier to recycle.
The packaging tax is part of a broader effort to standardise recycling services across the UK, with councils required to recycle a set list of items by 2026. As the country moves towards a greener future, the challenge will be balancing environmental progress with economic realities.
