OPINION: ‘Will trickle-down economics deliver the goals of EPR?’

Mark Garrett, managing director at Clearpoint Recycling, discusses EPR and ‘trickle-down economics’
 

OPINION: The recent fire at Monoworld’s Northamptonshire Plastics Recycling facility highlights just how fragile the UK’s recycling infrastructure remains. With the ban on disposable vapes set to take effect in early June, there is hope that the rising number of waste site fires, up 71% since 2020, may begin to decline.

Unfortunately, this is unlikely in the short term, given the existing units in the supply chain and the industry’s desire to create workarounds. However, this is just one of many challenges facing our struggling industry.

Setting aside the question of whether vape importers will take meaningful responsibility for the waste their products generate, we must ask: will the next phase of Extended Producer Responsibility (EPR) bring real, tangible improvements to the sector?

This is where the reference to “trickle-down economics” becomes relevant. Starting in October 2025, large producers will begin receiving invoices, and local authorities are expected to receive EPR funding from April 2026. However, with councils under immense financial pressure, 14 are expected to issue Section 114 “bankruptcy” notices this year, making it seem unlikely that any of this money will reach the parts of the system where it is most urgently needed.

The recent Birmingham bin strikes made it clear that local authorities are being forced to tolerate the consequences of underfunded waste services. Rubbish was left uncollected in exchange for relatively modest budget savings, though the exact figures remain disputed. This situation underscores how low environmental services and waste management rank among council priorities, especially when they are also responsible for delivering social care, housing, and children’s services.

Recent estimates suggest that the UK faces a recycling infrastructure investment gap of approximately £6.9 billion, with total upgrade needs, including collection systems, sorting and reprocessing facilities, and rising incineration costs, amounting to around £8 billion.

In contrast, the £1.1 billion expected from EPR funding in 2025/26 covers only a fraction of this requirement. Especially if it remains ringfenced, meaning very little could go into collections and management, with nothing “trickling down”. Without significant additional investment, the scheme risks falling short of its goals at the first hurdle, as local authorities may lack the capital to modernise systems needed to send recyclable waste downstream.

Unfortunately, whatever funding does reach the system is likely to be temporary. While the EPR scheme is designed to shift the cost of waste management from taxpayers to producers, in practice, many brands are expected to pass these costs on to consumers. However, in a fragile economic climate, raising prices is a risky move. Higher costs could dampen consumer demand, which in turn may reduce sales volumes and ultimately, the revenue base from which EPR fees are drawn. This creates a feedback loop where the financial sustainability of the scheme could be undermined by the very market pressures it introduces.

It’s also worth noting that producers already contribute to recycling through the Packaging Recovery Note (PRN) system. Ironically, the same system via the National Packaging Waste Database (NPWD) will now provide the data PackUK needs to calculate the new waste fees. When the penalties for late or incomplete submissions outweigh the cost of buying PRNs in a functioning market, and now also include an additional waste fee, what incentive is there to comply?

At the heart of the EPR scheme is the goal of reducing packaging overall. However, in many cases, market forces have already optimized the balance between branding and packaging. Rather than lowering packaging, producers may switch to alternative materials, often prioritising cost over recyclability. This is particularly problematic for materials like glass and metals, which are penalised by weight-based fee structures.

It appears that, much like the Simpler Recycling initiative, the current government is continuing the rollout of a legislative programme inherited from the previous administration, without fully considering the broader recycling landscape it is entering. Funding is being directed to local authorities that are financially unable to prioritise waste collection. Meanwhile, the existing recycling infrastructure is under strain, with failures and fires becoming increasingly common. At the same time, volatile market mechanisms such as PRNs and EPR fees create uncertainty, discouraging long-term capital investment.

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