A waste packaging tax which comes into effect from April 1st is not going to improve the UK’s recycling rates but will damage British businesses – warns the drinks trade.
In February the Wine and Spirit Trade Association joined forces with the UK’s leading drinks trade associations to write to Government to express their “significant” concerns regarding the implementation of the Extended Producer Responsibility for Packaging (EPR).
However, despite calls for the scheme to be delayed to resolve confusion over separating commercial waste (collected by private contractors) and household waste and to allow businesses to plan for the expected eye wateringly high fees, the scheme has gone live.
Drinks producers and retailers across the UK are frustrated that DEFRA has refused to delay even though it has acknowledged there are still major issues with the scheme and only last week admitted it won’t improve recycling.
In the OBR’s forecast accompanying the Spring Statement, DEFRA revealed: “the policy is unlikely to have a material impact on rates of recycling or packaging waste volumes in the next five years.”
The following day Secretary of State Steve Reed failed to acknowledge the confession and said: “Packaging Extended Producer Responsibility will begin later this year, incentivising businesses to remove unnecessary packaging and make their products more recyclable and refillable.”
The scheme introduces extortionately high fees for glass which the industry argues is likely to encourage producers to switch from highly recyclable glass to more environmentally damaging forms of packaging.
Miles Beale Chief Executive of the Wine and Spirit Trade Association said: “The Government’s Extended Producer Responsibility fees make the cost of recycling a glass bottle almost 7 times more expensive than for recycling the same sized plastic bottle. With businesses being charged this new “green tax” from today, 1 April, the introduction of EPR could be mistaken as a misjudged attempt by DEFRA at an April fool’s joke. Sadly it is deadly serious. As well as being another Government-inspired cost on businesses in the UK drinks sector, it’s wholly at odds with improving recycling – the aim of the EPR scheme.”
“We are supportive of the ‘polluter pays principle’, but if you are asking businesses to pick up the tab, they need to be confident in the efficiency and effectiveness of the system they are being asked to fund and be given sufficient time to plan for the introduction of new costs.”
“DEFRA Ministers need to engage on the design of these schemes. In practice they should delay EPR and bring it in at the same time as any Deposit and Return Scheme.”
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. These substantially higher estimates, fail to reassure WSTA members that the EPR scheme is in any way ready.
Around 2.5 million tonnes of glass packaging is placed on the UK market each year, of which about 85% of these are drinks bottles. The introduction of EPR fees on top of existing packaging fees will mean the drinks trade will be faced with a bill for some half a billion pounds.
Consumers will also feel the impact of EPR as prices will rise again on top of the alcohol duty hikes which landed on February 1, as well as the increased employment costs, and business rates bills announced in the October Budget.
David Gates, CEO of Laithwaites said: “EPR is an inflationary new tax that’s being implemented before it’s properly finished and shares a similar fiendish complexity with the big recent hikes in wine duty. Combine them both with the Chancellor’s increase in National Insurance and our family wine business is left facing an extra £10m in taxes year on year – a body blow that leaves us with little choice but to put up prices, look hard at the size of our workforce, postpone or cancel CAPEX projects and consider prioritising our other markets for investment.”