Glass Packaging: Extended Producer Responsibility

Helen Morgan Excerpts

Wednesday 14th May 2025 Westminster Hall

[Helen Morgan (North Shropshire) (LD)]

It is a privilege to serve with you in the Chair, Mr Stringer. I thank the hon. Member for Rotherham (Sarah Champion) for securing this debate, and I congratulate her on opening it with such a comprehensive description of the issues that the industry is facing. I will start by declaring an interest, because my husband is the finance director of a wine merchant. I assure hon. Members that the impact of EPR on the wine industry has been described to me on many occasions—it is causing such great concern.

North Shropshire has a number of excellent breweries, in addition to wine merchants, including Joule’s, Stonehouse and Salopian. In fact, Salopian had one of its excellent products, Shropshire Gold, in Strangers Bar two weeks ago—I hope that everybody had an opportunity to sample it. The pubs that the breweries supply are at the heart of our rural communities, and are fundamental to both village and market town life.

The hospitality and drinks industry are facing a number of headwinds, and the EPR scheme threatens to have a devastating effect on them. We recognise that the principle of applying a levy to those products to encourage producers to reduce the amount of packaging, and unnecessary packaging, is absolutely sound. There are significant concerns with the EPR scheme, however, and it causes a significant issue for the industry.

[Lisa Smart (Hazel Grove) (LD)]

This is an important debate. I am lucky to have Robinsons Brewery in my constituency, as well as a number of pubs and the excellent bottling and packaging plant in the Bredbury industrial estate. They have been in touch with me about this issue, because they already pay for commercial waste collection and packaging recovery notes, and the threat of EPR will cost them an additional £500,000. The scheme is not only costly, but complex—does my hon. Friend agree that one of the concerns is unnecessary complexity, and that should be looked at?

[Helen Morgan]

I totally agree with my hon. Friend: the continuation of the PRN scheme alongside the EPR scheme is one consideration.

We need to protect local and high street businesses. The lack of clear information about what the levy will be is really problematic. Since September 2024, the price has been estimated at between £110 and £330 per tonne—a huge variation. Businesses cannot plan their cash flow and how much they need to accrue without at least some certainty about the levy that will be introduced on a scheme that is already in place. I urge the Minister to nail down that final amount as quickly as possible, so that there is certainty for managing this difficult situation.

There is an enormous amount of bureaucracy involved in calculating the amount of packaging. For example, an importer of wine bottles sells bottles to the on-trade and the off-trade. Although the importer can make good assumptions about the off-trade, where people buy bottles for personal consumption, they have no idea what happens when bottles go to the on-trade—they have lost control, so how do they realistically accrue?

Some of DEFRA’s assumptions are not helpful, such as that a bottle of wine or beer bought from a pub will end up being recycled by the council just because it cannot be proven that the person who bought it did not take it home with them. That seems insane. Most pubs are paying huge amounts of money to get their waste recycled privately and they are not costing the council anything, but the producer—the importer of the product—is now having to charge them. They will be paying twice, which is not sustainable for most local pubs.

Small pubs will have to pay about £350 or more a year, a medium-sized pub will have to pay around £750 and larger ones will have to pay £2,000, on top of their excessive business rates. It is important to remember that pubs cannot absorb that, because of their tiny margins, so 85% of those costs are likely to be passed on to consumers anyway. The idea that the producer pays is not going to work in this instance because pubs cannot change the packaging they use, so the consumer will end up paying, which is extremely problematic. The cost will be about 5p to 7p on every bottle of beer and around 15p on a bottle of wine; that might not seem like a great increase for a one-off purchase, but it will cost consumers an extra £154 million a year to buy bottled beer, which is quite considerable.

It is crucial that businesses are supported in transitioning to this scheme, because they are already struggling with the employer’s national insurance hike, the business rate increase and, for wine merchants, the changes to the way that duty is paid. I call on the Minister to take a sensible, common-sense approach to this issue and to consider an exemption from EPR for pubs. We should also reconsider the scope and timeline of its implementation, because we are at risk of delivering a crippling blow to hospitality and the drinks industry, which are already struggling with huge headwinds.

In the time that I have left, I will mention the example of a wine merchant—Members may wonder how I know this information. The wine merchant in question has a turnover of £25 million and makes profits of only £500,000 a year. That is a 5% profit margin, and this wine merchant is unusual in that it is quite profitable. EPR is estimated to cost it £272,000, more than 50% of its current profit margin, so there is no way that it will be able to avoid passing that on to the pubs and the consumers that buy from it.

The increase in national insurance will cost the wine merchant £92,000, and the ABV changes a further £262,000. It is a highly profitable and successful business of enormous longevity, but there may be no alternative for it other than putting up prices and laying people off. I urge the Minister to take into account these really serious concerns about the viability of businesses and to reconsider the implementation of this tax.

--- Later in debate ---

[Mary Creagh]

I am going to make some headway.

DRSs cut litter, boost recycling rates to more than 90% and create high-quality materials that industry can reuse. Since it launched in 2024, the Republic of Ireland’s DRS has seen over 1 billion containers returned and a near 50% reduction in drinks container litter. Last week, I met Timmy Dooley, the Minister of State for Environment, Climate and Communications in the Republic of Ireland, who he said he had been sceptical of the DRS but now has the zeal of a convert.

This challenge is changing the way in which retailers and producers think about eco-design. Walkers is starting to use paper-based packaging for crisp multipacks, and many supermarkets are now using paper rather than plastic trays for fresh food. Our vision is to become world leaders in circular design, technology and industry.

These reforms were started by Michael Gove, late of this parish, back in 2018—seven years ago. I remember successive Secretaries of State for DEFRA coming to the Environmental Audit Committee, when I was Chair, and promising these reforms and deposit return schemes. There has been extensive engagement and consultation with business on pEPR, including public consultations in 2019 and 2021. Businesses have had a clear indication, and the scheme has already been delayed twice.

My officials run monthly packaging engagement forums, which regularly draw more than 1,000 attendees, to provide updates and test policy development with stakeholders. I have met British Glass several times to hear its concerns. I met Heineken last September. I met British Glass in October 2024, and then in January at a glass reuse roundtable hosted by the British Beer and Pub Association at the Budweiser Brewing Group. On 11 February, the Minister of State, Department for Energy Security and Net Zero, my hon. Friend the Member for Croydon West (Sarah Jones), joined me to discuss the glass sector. We have engaged on this issue.

The glass sector lobbied extensively to be excluded from the deposit return scheme. We respected that position, and kept that approach during the final passage of the DRS and pEPR legislation. Legislation on pEPR was supported on both sides of the House, but sadly the DRS was not. My officials have talked with businesses that make and use glass packaging, and we have listened to feedback to ensure that the fees are set fairly. I am very aware of the issues that the glass sector has raised about dual-use items—items that can be disposed of in either business or household waste streams. It has been difficult to find an answer that works for everyone, and because of the issues raised in the debate, I have asked my officials to consult with industry immediately to find the fairest solution.

There has been a lot of talk about small businesses. Many international pEPR schemes offer no exemption for small business. We responded to UK small business concerns by putting in place some of the most generous exemptions of any scheme globally. The exemptions mean that businesses with a turnover of below £2 million, or that place less than 50 tonnes of packaging on the market, are not obliged to pay fees. Those exemptions apply to approximately 70% of UK businesses supplying packaging in the UK. There are quarterly payment options to help with cash flow for larger businesses, and we will watch the de minimis thresholds carefully. If we raised the thresholds, that would put costs on to the remaining businesses, because local authority collection costs would remain the same.

The pEPR fees for glass are lower than those for aluminium and plastic. Because glass packaging is heavier, it costs more to handle per unit than some other materials. We have worked closely with industry and local authorities to make sure that the costs used to set producer fees accurately reflect the on-the-ground waste management operation costs that every taxpayer currently has to pay. Weight is a driving factor in waste management and it is the most common basis used to determine costs for public and private sector collection; that is why it is central to our approach. But the scheme relies on all producers paying their fair share. As my hon. Friend the Member for Ealing Southall said, there was a range, but there was unhappiness with that, so in December we introduced a set point of £240 per tonne. The fewer free riders there are in the system—

[Helen Morgan]

Will the hon. Member give way?

[Mary Creagh]

Let me finish my point; I have not made it yet.

The fewer that do not report and pay on their packaging, the lower the fees will be for everybody. That point was raised by my hon. Friend the Member for Rotherham in previous debates: some people do not report their packaging. I have instructed my officials to work with regulators. We have done a sprint on that and tracked down about 1,800 suspected free riders, with a little over 200 companies under review. I pay tribute to the Environment Agency officials up in Sheffield who have done that, and to agency officials and the Met police, who last week arrested two individuals in London for packaging export note fraud and suspected money laundering. We are going to keep this under review. This work is having a real impact. We will publish the year one base fees in June, and I am optimistic that the result will be an improved picture.

I am happy to give way if Members still have questions.

[Helen Morgan]

Businesses really need to know what that rate will be as soon as possible. The financial year has already started, they have very little headroom in their cash flows and they need to be able to plan. Will the Minister commit to give us that number as soon as possible?

[Mary Creagh]

That number will be published by the end of June and businesses are aware of that timescale.