According to research conducted by packaging suppliers Lindum Packaging, six out of 10 companies using plastic packaging have seen an increase in their packaging costs since the introduction of the Plastics Packaging Tax on 1 April 2022.
The company undertook research to understand the impact of the new tax, ‘which applies to pallet wrap as much as PET bottles’.
Also revealed through this research is that, of the companies that have experienced cost increases, 70 per cent have seen cost increases of up to 24 per cent, whilst two in 10 companies have seen their costs increase by more than 75 per cent.
The Plastics Packaging Tax came into force at the start of April and applies to plastic packaging with less than 30 per cent recycled content. Companies have to pay £200 for every tonne of plastic packaging they use that does not contain the minimum recycled material. It has been estimated that the tax affects around 20,000 producers and importers of plastic packaging.
Lindum Packaging also found that, whilst 90 per cent of the businesses surveyed were aware of the tax, only one in 10 say they fully understand the implications of the tax on their business.
The company's research further revealed that to cope with an increase in price, most businesses have made efforts to reduce the level of plastic packaging they use, switched away from plastic or swapped to recycled content material. Findings of the survey highlighted that several companies have adopted all three of these measures.
Lindum’s research shows that cost increases are likely to ‘feed down the supply chain’, with half of businesses confirming they plan to pass the increase onto their customers. The company stated that this survey confirmed its assumption that short-term effects of the tax will have had serious effects on supply chain costs.
Discussing the effects of the Tax, Lindum Packaging commented: “Understandably there’s been a rush to source recycled plastic packaging products, but stocks are limited and high demand is driving prices up and up. This has been accentuated by the global demand for oil.”
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How will the government and DMOs address the challenges of including glass in DRS while ensuring a level playing field across the UK?
There's no easy solution to include glass in the DRS while maintaining a level playing field. Potential approaches include a phased introduction of glass, potentially with higher deposits to reflect its logistical challenges. The government and DMOs could incentivise innovation in glass packaging design and subsidise dedicated return points for glass-handling. Exemptions for smaller businesses unable to handle glass might also be necessary. Any successful solution will likely blend several approaches. It must address the differing priorities of devolved administrations, balance environmental benefits with logistical and cost implications, and be supported by robust consumer education campaigns emphasizing the importance of glass recycling.