Businesses in Stoke-on-Trent and Staffordshire could be hit by huge bills totalling hundreds of thousands of pounds if Government plans to introduce a new packaging levy are implemented.
Fenton-based RKW, a leading distributor and manufacturer of small domestic appliances and houseware products, says it could face costs of £850,000, while natural insulated packaging specialists, Woolcool, based in Stone, also stand to pay ‘hundreds of thousands of pounds’.
Staffordshire Chambers of Commerce has written to Steve Reed, Secretary of State for Environment, Food and Rural Affairs, to raise concerns about the implementation of the extended producer responsibility (EPR). Businesses are warning that imposing the new charges could stifle innovation or threaten jobs and growth.
EPR is designed to promote sustainable packaging practices by making producers pay the full net costs of managing and recycling packaging waste.
The EPR regulations apply to UK organisations that supply or import packaging, including manufacturers, importers, distributors and online marketplaces.
Affected businesses must comply with the new regulations by collecting and reporting accurate packaging data by April 1. Fees will then be calculated based on the reported data with invoices expected to be issued in early summer.
Josie Morris, Managing Director of Woolcool, which uses sheep’s wool to make temperature-controlled packaging, called for the Government to rethink their plans and engage with affected businesses.
She said: “I have no problem paying more for recycling but this scheme penalises anything that doesn’t fit within the current setup.
“We’re using a natural material that simply doesn’t fit in, yet we’ll be charged retrospectively based on last year’s figures as if wool is polystyrene or silica gel, without knowing the amount in advance. You can’t plan for that as a business.
“If we have to pay out hundreds of thousands of pounds, that’s money we can’t invest in the business or in staff. We’re not trying to dodge tax – businesses should pay – but it mustn’t stifle innovation or hurt SMEs. It’s a tough time and there could be business that go under because of this.
“This is a government scheme which has been badly thought out without thorough consultation. I would like to see them delay it for at least a year, staggering payments so companies can adjust. I feel it is being rushed through on top of rising energy costs and increased National Insurance.
“We’ve reached out to MPs and DEFRA, but many companies may not even realise they’re affected.”
Peter Sherratt, Operations Director at RKW, told Daily Focus that a phased transition would have allowed businesses to manage ‘this very significant cost’.
He said: “We support measures to drive recyclability of household packaging, however, the reality is this is a costly challenge for businesses during a year of spiralling costs. We have the minimum wage increase, the change to employer National Insurance contributions, and again energy prices are ticking upwards.
“Even now, costs still aren’t finalised for the scheme, meaning we don’t fully know what the impact will be. How are we able to strategically plan for this when there is this level of uncertainty?
“At the last estimate, we calculated that the impact would be circa £850,000. To mitigate these costs, we will look for cost savings in the business and scale back some investment plans. I also see that this tax will increase prices at the till for consumers. What will this do to the inflation figure?
“Shifting to a model where businesses cover total recycling costs in year one is very costly. A phased transition to the new model over a number of years to allow businesses to evolve and manage this very significant cost would have been more sensible.”
In her letter to DEFRA, Staffordshire Chambers of Commerce CEO Rachel Laver warned that businesses might pass on the cost of EPR via higher prices, or could choose to cut costs through job losses or pausing future investment plans.
She also expressed concerns that a ‘significant’ number of businesses will have ‘little or no awareness’ of the EPR legislation, and said that the Chambers had been in touch with colleagues at the British Chambers of Commerce, who had made representations to DEFRA on this issue.
Rachel wrote: “We call for the brakes to be applied on any implementation of EPR. Lack of awareness and lack of clarity around the costs involved (businesses are having to make loose estimates around costs), is extremely unhelpful and does little to boost business confidence.
“EPR has the potential to grow a UK circular economy and support sustainability aspirations but let’s take the time to get it right and develop guidance which is clear and unambiguous.”
The British Retail Consortium wrote a letter to the Chancellor in November to raise concerns about the scheme, estimating that the measure would cost the sector £2 billion.
- DEFRA will deliver a webinar on EPR exclusively for members of the Chamber of Commerce network at 2pm on Tuesday, 25 March. Any members who would like to attend can book via this link.
- If your business is concerned by the impact of EPR, if you need further guidance on it and what it could mean for your business, please contact declan.riddell@staffordshirechambers.co.uk
