UK retailers face sharp rise in packaging costs

UK retailers are calling on the government to reform packaging compliance charges after the cost of Plastic Packaging Recovery Notes more than doubled over the past year. New figures from the British Retail Consortium indicate that the average price of plastic PRNs increased from around £180 per tonne in 2025 to more than £370 per tonne in 2026.

The increase is expected to add more than £100 million to the retail sector’s annual packaging compliance bill, intensifying concerns about the growing number of overlapping environmental charges applied to packaging in the UK.

Three separate systems increase the cost burden

Retailers currently face costs under several different mechanisms. These include Packaging Recovery Notes, the Plastic Packaging Tax and the new Extended Producer Responsibility scheme for packaging, which is expected to raise around £1.5 billion annually.

The British Retail Consortium argues that this structure can result in businesses effectively paying several times for the same piece of packaging. While each scheme has a different regulatory purpose, the organisation believes the combined burden is becoming unnecessarily complex and expensive for producers and retailers.

BRC calls for PRNs to be absorbed into EPR

The BRC is urging the government to phase out the existing PRN system and integrate its functions into the Extended Producer Responsibility framework. The industry body argues that moving towards a single system could reduce administrative complexity while maintaining funding for recycling infrastructure.

Packaging Recovery Notes were introduced nearly three decades ago as evidence that businesses had met their packaging recycling obligations. Under the system, accredited recyclers and exporters generate certificates that producers purchase to demonstrate compliance.

Volatile PRN prices create uncertainty

Unlike fixed regulatory fees, PRN prices are influenced by supply and demand within the recycling market. When the availability of recycling evidence falls relative to demand, certificate prices can rise significantly, creating additional cost volatility for obligated businesses.

The sharp increase in plastic PRN prices during 2026 highlights this challenge. Retailers argue that unpredictable compliance costs make budgeting more difficult and can ultimately contribute to higher prices across food, beverage and consumer goods categories.

Calls for recycling funds to be ringfenced

The BRC is also asking the government to ensure that money raised through packaging EPR is specifically reserved for improving recycling systems. The organisation believes funds should be directed towards local authority collection, sorting and processing infrastructure rather than becoming part of general public spending.

Industry representatives argue that better recycling infrastructure is essential if higher producer fees are to translate into measurable improvements in packaging recovery rates and material circularity.

Packaging regulation remains a major cost issue

The debate illustrates the growing financial impact of packaging regulation on UK businesses. As EPR, recycling obligations and material-specific taxes operate simultaneously, companies are increasingly focused not only on packaging design but also on the cumulative cost of compliance.

For retailers and packaging producers, the next phase of UK policy will determine whether these systems remain separate or move towards a more integrated model. The BRC maintains that simplifying the framework could reduce costs without weakening the country’s recycling objectives.