Pack it in Food and drink producers cry foul over new packaging levy

A packaging tax designed to end our throwaway society is under fire for inadvertently adding to food price inflation as it raises the cost of everything from sausages to soft drinks.

- Zoe Wood

“It’s about 3p on a pack of sausages,” says Andrew Keeble, the co-founder of Heck, of the new extended producer responsibility (EPR) tax. This year’s packaging tax bill for the family-run food manufacturer, based near Bedale, North Yorkshire, which landed this month, is £153,000.

Heck has already absorbed the increases in employer national insurance contributions and the “national living wage” announced a year ago by the chancellor, but Keeble suggests this new tax will have to be “passed on to a fairly cash-strapped nation”.

The EPR - designed to end excessive packaging and create a circular economy - transfers the cost of recycling the ready meal containers and wine bottles in your kerbside bin from councils back on to the companies that sold them.

“We all hate plastic,” Keeble says. “We wish we could live without it. But the reality is this tax has been really poorly thought through.”

Heck has “looked around the world” for an alternative to the plastic tray and cardboard sleeve it uses for its sausages but is yet to find a better option, Keeble says. “People don’t shop in a butcher’s shop where you wrap sausages up in paper and hand them over. People shop in supermarkets.”

The EPR has been a long time in the making. The idea was introduced by Michael Gove when he was environment minister at the tail end of 2018, a key plank of a new recycling regime for England.

That December, food inflation was running at 0.7%. But now the environmental measure is kicking in at the tail end of a cost of living crisis in which food price inflation peaked at more than 19%.

While the latest cost of living data shows the annual rate of food inflation has slowed for the first time since March - down to 4.5% in September, from 5.1% in August - it does not mean the cost is falling, just that prices are rising slower.