The UK drinks trade has written to the Government highlighting “significant” concerns regarding the implementation of the Extended Producer Responsibility for Packaging (EPR) and calling for an urgent meeting with Defra Ministers.
In a letter signed by the UK’s top drinks trade associations – representing wines, spirits, beer, cider and hospitality – the Secretary of State is warned that the scheme is “flawed” and implementation is “unviable”.
The letter implores Government to resolve key issues and are calling on Defra Ministers, as a matter of urgency to:
• Confirm final illustrative fees: Currently, businesses will start to accrue a liability for fees from the start of the 2025/26 financial year in less than six weeks’ time – at which time actual fees will not be known. No business can be expected to sign up or account for unknown costs.
• Resolve the non-household exemption: EPR fees only apply to packaging disposed of in household waste streams. And yet, as things stand, many direct sales and all indirect sales to businesses in the hospitality sector will carry an EPR fee, despite hospitality businesses paying commercial contracts for waste collection. This is clearly inconsistent and should have been resolved much earlier in the scheme’s design.
• Encourage the use of recyclable materials: Glass is inert and infinitely recyclable. Disproportionately high fees for glass are discouraging its use and are likely to result in substitution for less recyclable alternatives, undermining the stated aims of EPR.
The confusion and escalating costs attached to EPR come at time when the drinks trade is facing further unexpected costs imposed at the Budget, such as employers’ National Insurance Contributions and increases in the national living wage, as well as another excise duty increase.
Defra’s latest estimate for forecast EPR fees for glass of £240 per tonne has come as an unwelcome shock after earlier estimates were much lower, at around £110 to £215 a tonne.
This amounts on average to 12p per bottle of wine, 5p on a bottle of beer, and 18p per bottle of spirits, and not including other packaging or closures. Without final fees being confirmed until July, at the earliest, many businesses may struggle to pass on these costs.
There’s some 2487k tonnes of glass sold in the UK each year (of which 1835k is consumer, and 653k is non-consumer). With about 85% of these being drinks bottles, meaning EPR could cost businesses half a billion pounds from 2,114,000 tonnes of glass.
Obligated businesses are also experiencing a doubling of their existing environmental payments, as the rest of the supply chain will no longer contribute to these from 2025 (the PRN value was about £600m in 2023).
These substantially higher estimates will not only impact businesses but will also mean consumers will be subjected to another round of price rises.
Miles Beale, Chief Executive of the Wine and Spirit Trade Association, said: “EPR fees are another nail in the coffin for UK businesses whose profits – and any growth – have been drained by a barrage of added tax levies and increased costs, which will hit hard especially for SMEs who have limited reserves.
The lack of clear information regarding costs means businesses can’t plan effectively – or at all. We want an urgent meeting with Defra Ministers to discuss delaying the scheme until it is fit for purpose – without which, there is a real risk that some businesses won’t survive.”
Kate Nicholls, Chief Executive of UKHospitality, said: “Hospitality is being hit twice as hard by this ill-thought through scheme. Businesses are being forced to shoulder unknown and incorrectly applied EPR fees through the supply chain, while also paying for commercial waste collection.”
“We have made clear to Defra the need to resolve this issue, through applying exemptions to products consumed and disposed of within hospitality venues. With less than six weeks to go, urgent action is essential.”
Emma McClarkin, CEO of the BBPA, said: “Government must recognise that these higher additional costs on brewers will land an extra £154m each year or 7p on every 500ml glass bottle of beer.”
“The unsustainable EPR fees and chaotic implementation will wipe out brewer margins on bottled beer, meaning double-payment for pubs and drive inflation.”
“The sector is committed to a more circular economy and sustainable packaging solutions, but Government must consider the full impact of these fees and wider packaging reforms which will diminish growth, could force brewers to leave the glass bottle market, and risk jobs.”