‘Poorly thought through’: UK food firms say packaging tax is pushing up prices | Packaging

A. packaging tax Designed to end our throwaway society, it has come under fire for inadvertently fueling food price inflation while increasing the cost of everything from sausages to soft drinks.

“A packet of sausages costs about 3p,” says Heck co-founder Andrew Keeble. extended producer responsibility (EPR) tax.

The family-run food manufacturer, which is based in Bedale, North Yorkshire and arrived in the country this month, had a packaging duty bill of £153,000 this year.

Heck, it has already covered increases in employer national insurance contributions and the “national living wage” announced by the chancellor a year ago, but Keeble argues that this new tax will have to be “pivoted to a pretty cash-strapped country”.

Designed to end excessive packaging and create a circular economy, the packaging tax transfers the cost of recycling the fast food containers and wine bottles in your kerbside bin back from councils to the companies that sell them.

“We all hate plastic,” says Keeble. “I wish we could live without this. But the truth is, this tax is really, really poorly thought out.”

Keeble says Heck has “looked around the world” for an alternative to the plastic tray and cardboard casing he uses for his sausages, but has yet to find a better option. “People don’t shop at the butcher shop where you wrap sausages in paper and deliver them. People shop at supermarkets.”

The preparation of the EPR has been going on for a long time. The idea was put forward by Michael Gove when he was environment secretary at the end of 2018, and the policy was the cornerstone of a new recycling regime for the UK.

That December, food inflation was at 0.7%. But now environmental action comes into play at the tail end of the cost of living crisis, where food price inflation has risen to over 19%.

While the latest cost of living data shows annual food inflation slowing for the first time since March (from 5.1% in August to 4.5% in September), this does not mean the cost has fallen, just that prices are rising at a slower pace.

In the summer, the Bank of England suggested that the EPR could contribute 0.5% to food price levels if the cost was fully passed on to consumers.

The tax works by charging businesses for the cost of collecting and recycling product packaging, in exchange for a fee. per ton Material specified by the Department for Environment, Food and Rural Affairs (Defra).

This year the charges are set at £423 per tonne for plastic, £266 and £192 for aluminum and glass respectively. The cost for paper and card is £196. The UK-wide scheme is expected to raise £1.4bn this year. (Steel, aluminum and PET plastic beverage containers are not included as they will have lids. deposit refund programs.)

The British Retail Consortium said last year’s budget resulted in an extra £5 billion in employment costs for retailers and left them with little room to cover the additional costs. It expects more than 80% of the cost of the EPR to be passed on to consumers, describing it as “a new inflationary pressure at a time when food prices are rising rapidly.”

But a letter published last week in support of the tax, signed by environmental groups including WWF-UK, Surfers Against Sewage and Sarma, declares it a “key foundation” policy for a circular economy.

The letter states that the tax will “reduce greenhouse gas emissions, reduce the impacts of resource extraction on the natural environment and strengthen local recycling and reuse markets, create jobs and deliver green growth.”

Defra says the EPR “shifts the cost of dealing with waste away from taxpayers”, adding: “We will continue to listen and work with the industry as these changes are implemented.”

The rumblings of pain in the food sector come mostly from the beverage trade and small and medium-sized food producers. Because glass is heavy, it takes a hard hit and Defra uses weight as a basic measurement.

Although glass charges were reduced ahead of the scheme’s introduction, the Wine and Spirits Trade Association says the revised charges are still “extremely high” and are likely to encourage producers to switch from highly recyclable glass to more environmentally damaging forms of packaging.

CEO Emma Vass says the impact of the tax on dessert brand Gü, famous for its frequently reused glass containers, has been “enormous”.

“We have chocolate, we have dairy products, we have national insurance costs, on top of that… we are exposed to all kinds of blows,” he says.

Although the production line at its factory in Bishop’s Stortford, Hertfordshire, is designed to fill glass containers with chocolate mousse and cheesecake, it is having to consider other options, including switching to plastic containers. Vass refuses to share Gu’s bill other than to say it is “huge.”

He says: “If you’re spending £10 on a bottle of wine, then the glass percentage isn’t that much more as a percentage of the cost of that product. “In the case of cheesecake in a glass ramekin, obviously the packaging is more of a percentage of the cost.

“We’re going to have to make cuts in other areas and pass on the rest, which we don’t want to do, especially when food inflation has been this high for so long. Reimposing a tax that affects food inflation seems very unfair to consumers.”

But he adds: “We are looking at alternatives. We will probably need to switch to plastic for food safety reasons. This tax does not seem to have been fully thought through.”

Vass says the ramekins are “iconic”; consumer surveys show 70% are reused. “Every home in the UK has these in their drawers for storing potted plants, candles or nuts.” The company is sticking with glass for now, as its customer survey revealed they prefer glass for quality and sustainability.

Pev Manners, managing director of cozy producer Belvoir Farm, says his bill was just over £860,000, equal to around 60% of the £1.4 million profit he made last year. The invoice is calculated based on packaging released in the previous calendar year.

“It’s so important that we have to pass the cost on to the consumer,” Manners says. In retail, EPR puts around 25p on a 750ml bottle of liquor because supermarkets see this as part of the cost, and then add the markup and VAT on top, he explains. To reduce the EPR bill, the company has now made its glass bottles lighter.

The tax “absolutely, absolutely” leads to food inflation, Manners adds, “because it covers everything in the food chain.”

Even if the timing is bad government says The EPR is “justified for businesses that produce packaging to pay their fair share of recycling costs”. This is also a policy used successfully by other governments, particularly in mainland Europe.

home recycling rates straight for years and large amounts of waste are still sent to landfills or incinerators, where packaging is a key component.

Defra will introduce “modulation” in its second year of operation, meaning charges will be higher for hard-to-recycle materials. Companies that switch to packaging rated “green” under Pack UK’s “recyclability assessment methodology” will benefit from the discount.

Companies using reusable and refillable containers will only pay for disposal when the packaging is first released to market.

Complaints from food businesses and trade associations ignore the fact that “employees are already paying for the packaging through their council tax bills,” says Catherine Conway, director and policy lead at sustainability consultancy GoUnpackaged.

He recommends that companies “stop complaining” and “recognize the obvious solution at their fingertips and start taking the necessary steps to move more of their single-use packaging to reuse.”

EPR is the cornerstone of broader packaging changes. Although this particular tax applies across the UK, countries have their own approaches as waste is a devolved area.

A new house in England recycling regime The requirement for councils to collect the same types of materials, including food waste, starts in March. Then, from 2027, the bottle and can return scheme, which also covers Northern Ireland and Scotland, will offer consumers a financial incentive to return empty drinks containers to collection points. Wales’ plan will also start in 2027, but contains glass.