Industry bemoans 'April fool’s joke' as EPR introduced
Figures from across the drinks trade have reacted to the introduction of Extended Producer Responsibility (EPR) legislation which came into effect today (1 April). The new policy which was intended to introduce a “polluters pay principle” regarding packaging waste has faced significant backlash from the drinks industry due to a series of perceived flaws.
One of the leading criticisms of the policy is, as Alex Hunt MW, purchasing director at Berkmann Wine Cellars puts it, the “danger of double-counting packaging waste”. Bottles of wine, spirits and beers will continue to be classified as ‘household waste’, which means businesses like Berkmann will have to continue to pay a levy on this status, as well as incurring additional fees under the new EPR scheme. Although this flaw has been acknowledged by Defra, it is unlikely to find a resolution for another two years.
The estimated cost forecast by Defra for glass is £240 per tonne which members of the industry have noted is much higher than earlier estimates from the government department (£110 to £215 per tonne). The WSTA estimates that the additional cost to the trade due to EPR fees will be to the tune of approximately £500m.
The additional price shock comes at a time when the drinks trade is facing a number of headwinds, including recent February alcohol duty rises, as well as changes to National Insurance Contributions (NICs) which are set to be introduced from 6 April.
The policy is also unlikely to have its desired effect: in the OBR’s forecast which accompanied the Chancellor’s recent Spring Statement, Defra revealed “the policy is unlikely to have a material impact on rates of recycling or packaging waste volumes in the next five years.”
Miles Beale, chief executive of the WSTA channels much of the frustration of drinks industry.
He said: “The government's Extended Producer Responsibility fees make the cost of recycling a glass bottle almost seven times more expensive than for recycling the same sized plastic bottle.
“With businesses being charged this new 'green tax' from today, 1 April, the introduction of EPR could be mistaken as a misjudged attempt by Defra at an April fool’s joke. Sadly it is deadly serious.
“We are supportive of the ‘polluter pays principle’, but if you are asking businesses to pick up the tab, they need to be confident in the efficiency and effectiveness of the system they are being asked to fund and be given sufficient time to plan for the introduction of new costs.”
David Gates, CEO of Laithwaite, has been forced to contemplate a number of challenging decisions, as the policy reshapes the cost landscape for drinks businesses.
He commented: “EPR is an inflationary new tax that’s being implemented before it’s properly finished and shares a similar fiendish complexity with the big recent hikes in wine duty.
“Combine them both with the Chancellor’s increase in National Insurance and our family wine business is left facing an extra £10m in taxes year on year – a body blow that leaves us with little choice but to put up prices, look hard at the size of our workforce, postpone or cancel CAPEX projects and consider prioritising our other markets for investment.”
Founder and CEO of Global Brands, Steve Perez, added to the chorus of industry figures frustrated by the legislation. He foresees the policy hitting all parts of the trade.
“Current guidance is ambiguous and in my view, it fails to properly consider the stark differences between how the on-trade and off-trade operate in regards to waste management.
“Ultimately, the policy will lead to price inflation for consumers, as businesses will be unable to absorb the additional costs in their entirety and the impact of cost rises will be felt along the supply chain,” he said.
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