Less than six months before the EPR scheme starts, producers are still in the dark on a number of vital issues.
In particular, producers still don’t have sufficient information on the costs of the scheme, which will involve charges for each material they place on the market.
Because costs are expected to be significant, obligated businesses need time to make the necessary commercial decisions on pricing, including the extent to which they will pass new costs onto customers or adjust pricing or contracts with retailers.
The lack of information available was highlighted by the Public Accounts Committee last year, which warned businesses and local authorities “still do not have the clarity they need from the department to prepare for the changes that will be required, which risks increasing costs and delaying implementation”.
This is causing anxiety for all businesses, especially SMEs. According to Defra, final fees will only be known after the scheme begins. This is nonsensical, unfair and could be anti-competitive – as well as undermining confidence in the scheme. It is not credible for Defra to expect SMEs to find large sums of money with no advance warning. They have lower cash reserves and limited access to financing, and will therefore be disproportionally affected.
Confusion over fees
Another major problem relates to confusion over non-household exemption. While direct sales to hospitality can be exempt from EPR, many producers sell to the hospitality industry via wholesalers. There is no workable exemption process for this packaging, meaning a lot of hospitality produce will be subject to EPR costs, while also paying for private collections to waste contractors. They are effectively double-charged, which is unfair and highly costly.
How fees are calculated (the RAM) and what modulated fees will be in the second year of EPR are still to be finalised. Modulated fees could increase the costs of packaging formats that are difficult to recycle, and producers need to know – long in advance – what methodology and costs will be applied so they can mitigate these fees, pass on costs, or improve packaging. It is only fair obligated businesses have enough time to prepare for these important changes.
Lack of confidence at Defra
Defra has released a timetable for the implementation of key milestones for its waste and resources policies, yet it tells us these are subject to change. If Defra is not confident in meeting its own timetable, then the credibility of all other dates – and of the system itself – is undermined.
Lack of confidence is a significant barrier to EPR’s success, especially after the experiences of a failing PRN system and the costly implosion of DRS in Scotland. The government should delay EPR until all information is available and only then set out a credible timetable.
The government has predicted EPR costs will be over £1.3bn over the next 10 years. This doesn’t include PRN costs. This is an eye-watering amount of money to pay each year – bearing in mind the cost of PRNs for 2023 was £600k.
Letter to government
All this is why more than 80 businesses have signed a letter calling on the government to delay the launch of the scheme. But there are thousands of companies affected by EPR. While registration closed last year, there are still many companies that have not registered for the scheme – they simply are not aware of their obligations. This is indicative of a scheme that has been rushed and is simply not ready for launch in 2025.
WSTA and its members, as well as a host of other businesses and organisations, are not opposed in principle to EPR and want it to be successful, but have neither sufficient information nor time to deliver EPR – let alone in 2025.
It will affect the ability for some businesses to plan for the year ahead, set pricing, or even to remain solvent. If there isn’t a delay to EPR to allow all the problems to be ironed out, the confusion and escalating costs will have a negative impact on jobs and growth, as well as environmental outcomes.
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