From October 1, 2025, businesses across the UK, including those in Gloucestershire, are facing a new wave of cost and compliance burden through the implementation of the Extended Producer Responsibility (EPR) scheme. Designed to shift the financial responsibility of packaging waste management from local councils to producers, this policy is now drawing sharp criticism from the packaging industry—particularly from small and medium-sized enterprises (SMEs).

The EPR scheme, introduced under the Environment Act 2021, mandates that any company with a turnover above £1 million and that handles over 25 tonnes of packaging annually must report packaging data and pay fees based on the material's recyclability. Initial rates are set at £196/tonne for paper/card and £423/tonne for plastic. These costs are intended to cover the full lifecycle of packaging waste, including collection, sorting, recycling, and disposal.

Yet, industry voices are raising red flags. A packaging firm based in Gloucestershire—speaking anonymously due to concerns over regulatory scrutiny—called the policy’s implementation a sign of “alarming disregard for how small businesses operate.”

“Our company has just three non-production staff, yet we face the same compliance demands as multinational corporations with entire departments dedicated to regulation,” the firm stated.

One of the core complaints is that the policy has created an artificial market of compliance schemes and consultancies, which add service charges but deliver little practical value. “This parasitic industry is symptomatic of the UK’s productivity issues,” the firm claimed.

Moreover, businesses are required to classify packaging by its eventual waste stream—household or commercial. For many SMEs further up the supply chain, this is data they simply don’t have. “We don’t know if our packaging ends up wrapping a sandwich in Tesco or catering to an industrial client,” they explained. “The regulation assumes omniscience from businesses, taxing them if they cannot prove the unprovable.”

The implications go beyond accounting headaches. The Bank of England noted in its August 2025 monetary report that EPR could increase food prices by over 0.5% if costs are passed fully to consumers. The British Retail Consortium (BRC) was even more forthright, estimating that over 80% of the levy’s cost would be transferred directly to shoppers, further burdening households already facing a cost-of-living crisis.

The administrative toll is significant too: 85% of retailers surveyed by the BRC reported increased compliance burdens, with SMEs spending up to 25 working days per year on regulatory paperwork. The result, many argue, is that these regulations act as a handbrake on innovation and growth, particularly for UK manufacturing firms trying to remain globally competitive.

Despite these criticisms, DEFRA (the Department for Environment, Food and Rural Affairs) remains resolute. It says the EPR will “enhance the green economy,” create green jobs, and drive demand for recyclable and reusable materials. The policy aligns with broader reforms, including simplified recycling collections and a Deposit Return Scheme set to launch soon.

But the Gloucestershire firm sees darker consequences ahead. It warns that the policy may accelerate offshoring of production to countries with looser environmental laws—undermining the UK’s sustainability goals while increasing global emissions through transport and inefficiencies.

The firm concluded: “We support the polluter pays principle. But if the objective is to reduce carbon impact, these policies may instead become a spectacular failure.”

As the packaging sector braces for year two of EPR—when costs will rise for harder-to-recycle materials—the industry’s message is clear: environmental responsibility must be balanced with operational realism. Without thoughtful implementation and targeted support for SMEs, the risk is a policy that punishes the very firms already striving to be part of the solution.