Industry bosses have hit out at the government and warned that food prices will rise by more than necessary as the packaging tax is set to be introduced.
The government had been scrambling to find ways to limit a price surge in the coming months, with Chancellor Rachel Reeves setting out incentives for families to get discounts to leisure destinations this summer.
But industry chiefs have slammed the government as the controversial Extended Producer Responsibility (EPR) regime would not be scrapped, according to reports, despite some speculation that it could be dropped.
The EPR will mean that taxes on some containers will increase by around 19 per cent while taxes on plastic would rise by 15 per cent, The funds would be re-distributed to local authorities to improve recycling, though councils could choose to spend more on social care and planning.
The Bank of England warned last year that the introduction of the new tax would add 0.5 percentage points to CPI inflation. Reports last week suggested the government was prepared to drop the tax if it could get guarantees that supermarkets would cap food prices.
Nick Kirk, federation director at British Glass, said he was “disappointed” by a government response on the tax “which fails to recognise the mounting evidence of harm to UK manufacturing”.
He told The Sunday Times: “The policy is already contributing to a sharp decline in domestic glass production, rising imports and growing uncertainty for investment across the sector.”
Tax rise to coincide with supply chain disruption
Vidrala, the owner of the glass manufacturing firm Encirc which employs 2,000 people across the UK, could also withdraw a huge £500m investment in greener blast furnaces at Encirc glass manufacturing, according to the newspaper.
A report suggested that the glass maker, which produces a third of bottles in the country, felt it would be disproportionately affected by the new tax.
Supermarket chiefs and food manufacturers have also been long-time critics of the tax, warning that food prices would surge by more than necessary as costs are passed onto consumers.
Manufacturers have warned that supply chain disruption from the Iran war and a energy price surge will lead to costs being passed onto consumers.
The government said: “EPR moves the cost of dealing with waste away from taxpayers and generates more than £1bn annually.
“It’s part of a major investment in the UK economy, helping create 25,000 jobs, and we will continue to work with industry as the changes are implemented.”
