Senior figures across the UK’s manufacturing, retail, and hospitality sectors have issued a strong warning over the government’s new packaging tax, calling it “horrific” and economically harmful. The finalised version of the Extended Producer Responsibility (EPR) scheme, released by the Department for Environment, Food and Rural Affairs (Defra) on Friday, requires producers to cover the full cost of recycling their packaging from October.
While Defra confirmed the final fees would be slightly lower than earlier estimates, business leaders argue the financial burden remains excessive and could force companies to pass higher costs on to consumers or even relocate operations overseas.
In a rare joint statement, industry lobby groups representing the glass, spirits, wine, pubs and hospitality sectors accused the government of disregarding repeated warnings. “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,” the groups said.
The British Retail Consortium (BRC), which had called for a delay in implementation, warned the tax could drive up prices during a fragile economic recovery. “It’s inevitable this will add pressure on prices, adding to inflation,” said Andrew Opie, BRC’s director of food and sustainability. The organisation estimates the scheme could cost retailers up to £2 billion, following a recent £5 billion hit from employer national insurance hikes.
The EPR is intended to bolster council-led recycling programmes by shifting responsibility from taxpayers to producers. Following concerns from industry, Defra confirmed that all revenue from the scheme would now be ringfenced for recycling — a move welcomed by the BRC and the Food and Drink Federation.
However, critics argue the fees disproportionately penalise glass packaging. Although glass is taxed at a lower rate per tonne than plastic or aluminium, its greater weight makes it costlier in practice. William Fugard, CEO of Gusto Organic, warned the policy would force his company to switch from UK-sourced glass bottles to imported aluminium cans. “It’s a rotten piece of policy, ill thought out and serves only to raise money for the Treasury,” he said.
Fugard also criticised the government’s failure to offer exemptions for small businesses, despite earlier promises. “DEFRA, in all their wisdom, have not supported SMEs with this tax as they said they would,” he said, warning that the result could be fewer choices for consumers and further strain on export-led firms.
With just months to go before the scheme takes effect, business leaders are urging ministers to revisit the design of the EPR or risk undermining UK manufacturing and competitiveness during a period of rising costs and economic uncertainty.
