UK retailers are to pass on most of the costs from the UK’s new Extended Producer Responsibility (EPR) legislation, the country’s principal retail trade body has said.
According to a new survey from the British Retail Consortium (BRC), which says the EPR is set to “cost industry billions”, more than 80% of costs from the new regulations are likely to be passed onto consumers.
Under the EPR scheme, producers must report how much packaging they put into the market and pay associated rates per tonnage. The legislation necessary to enact EPR came into force on 1 January while the fees kicked in on 1 April.
Announcing the results of the survey today (1 October), the BRC said the EPR scheme will be another “inflationary pressure” for UK shoppers at a time when food inflation stands at around 5%. The BRC claimed The Bank of England estimates ERP will add 0.5% to food inflation.
In addition to the financial impact, the BRC survey revealed that 85% of retailers said the administrative and compliance burden they face has “increased significantly” because of EPR.
The BRC claims the retail industry has been “left with little room to absorb additional costs”. It pointed to what it said was £5bn ($6.73bn) in extra employment costs due to higher national insurance costs and rising wages following last year’s UK budget.
With EPR fees based on the materials and amounts used, the BRC said that retailers are making “every effort” to use more recyclable materials and less packaging.
The BRC survey found 85% of retailers intend to increase the proportion of sustainable packaging placed on the market, and around four in five retailers (78%) intend to reduce the total volume of packaging they place on the market.
The BRC is calling on the UK government to provide greater clarity on how consumers and the environment will benefit.
It is also requesting the Government put in place legal restrictions 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 and 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.”
