Contribution
I totally agree with my hon. Friend: the continuation of the PRN scheme alongside the EPR scheme is one consideration.
We need to protect local and high street businesses. The lack of clear information about what the levy will be is really problematic. Since September 2024, the price has been estimated at between £110 and £330 per tonne—a huge variation. Businesses cannot plan their cash flow and how much they need to accrue without at least some certainty about the levy that will be introduced on a scheme that is already in place. I urge the Minister to nail down that final amount as quickly as possible, so that there is certainty for managing this difficult situation.
There is an enormous amount of bureaucracy involved in calculating the amount of packaging. For example, an importer of wine bottles sells bottles to the on-trade and the off-trade. Although the importer can make good assumptions about the off-trade, where people buy bottles for personal consumption, they have no idea what happens when bottles go to the on-trade—they have lost control, so how do they realistically accrue?
Some of DEFRA’s assumptions are not helpful, such as that a bottle of wine or beer bought from a pub will end up being recycled by the council just because it cannot be proven that the person who bought it did not take it home with them. That seems insane. Most pubs are paying huge amounts of money to get their waste recycled privately and they are not costing the council anything, but the producer—the importer of the product—is now having to charge them. They will be paying twice, which is not sustainable for most local pubs.
Small pubs will have to pay about £350 or more a year, a medium-sized pub will have to pay around £750 and larger ones will have to pay £2,000, on top of their excessive business rates. It is important to remember that pubs cannot absorb that, because of their tiny margins, so 85% of those costs are likely to be passed on to consumers anyway. The idea that the producer pays is not going to work in this instance because pubs cannot change the packaging they use, so the consumer will end up paying, which is extremely problematic. The cost will be about 5p to 7p on every bottle of beer and around 15p on a bottle of wine; that might not seem like a great increase for a one-off purchase, but it will cost consumers an extra £154 million a year to buy bottled beer, which is quite considerable.
It is crucial that businesses are supported in transitioning to this scheme, because they are already struggling with the employer’s national insurance hike, the business rate increase and, for wine merchants, the changes to the way that duty is paid. I call on the Minister to take a sensible, common-sense approach to this issue and to consider an exemption from EPR for pubs. We should also reconsider the scope and timeline of its implementation, because we are at risk of delivering a crippling blow to hospitality and the drinks industry, which are already struggling with huge headwinds.
In the time that I have left, I will mention the example of a wine merchant—Members may wonder how I know this information. The wine merchant in question has a turnover of £25 million and makes profits of only £500,000 a year. That is a 5% profit margin, and this wine merchant is unusual in that it is quite profitable. EPR is estimated to cost it £272,000, more than 50% of its current profit margin, so there is no way that it will be able to avoid passing that on to the pubs and the consumers that buy from it.
The increase in national insurance will cost the wine merchant £92,000, and the ABV changes a further £262,000. It is a highly profitable and successful business of enormous longevity, but there may be no alternative for it other than putting up prices and laying people off. I urge the Minister to take into account these really serious concerns about the viability of businesses and to reconsider the implementation of this tax.