New figures from the British Retail Consortium (BRC) reveal that
over 80% of costs of the new packaging tax – the Extended
Producer Responsibility (EPR) scheme - are likely to be passed
onto already hard-pressed consumers. The new tax came into effect
at the start of the month.
The survey of leading retailers, published today, highlights the
significant financial burden that EPR fees will place on UK
retailers and households.
Following last year's Budget, where retailers were hit with £5
billion in extra employment costs due to higher employer National
Insurance and rising National Living Wages, the industry has been
left with little room to absorb additional costs. With EPR set to
cost industry billions, this new tax will be yet another
inflationary pressure, at a time when food prices are already
rising fast, with The Bank of England estimating that the policy
alone will add 0.5% to food inflation.
In addition to the financial impact, 85% of retailers said the
administrative and compliance burden they face has increased
significantly as a result of EPR. Firms are now required to
report extensive information on the composition and amounts of
packaging they are putting on the market. This creates further
pressure on businesses already grappling with rising costs and a
heavy regulatory burden.
The new packaging tax is levied on any company which produces
packaging bought and disposed of by households, this includes
retailers and brands. The fees are based on the materials and
amounts used. Retailers are making every effort to use more
recyclable materials and less packaging, with the survey showing
that:
- 85% of retailers intend to increase the proportion of
sustainable packaging placed on the market
- Almost four in five retailers (78%) intend to reduce the
total volume of packaging they place on the market
But, with prices set to increase as a result of the new tax, the
Government must provide greater clarity on how consumers and the
environment will benefit.
The BRC are calling on Government to put in place legal
restrictions (ringfencing) to ensure the money raised from EPR
can only be used by local councils to collect and operate local
recycling, as well as fund improvements to local recycling
systems.
Andrew Opie, Director of Food & Sustainability at the
BRC, said:
“Retailers support the polluter pays principle and are making
significant changes to reduce and improve their packaging. But
the packaging tax is also a multi-billion pound levy being paid
by consumers during a cost-of-living crisis. They will ask: what
are we getting for higher prices? Unless funds are spent
transparently and effectively, EPR threatens to just be another
burden on an already overtaxed industry with no tangible benefits
for customers or the environment.”
-ENDS-
Bank of England report, August 2025
“Bank staff estimate that the [EPR] scheme could add a little
over ½% to the level of food prices if these costs were fully
passed through to consumers.”
https://www.bankofengland.co.uk/-/media/boe/files/monetary-policy-report/2025/august/monetary-policy-report-august-2025.pdf
(p.92)
