Packaging costs rise in wake of plastics tax

By Gwen Ridler contact

- Last updated on GMT

The Plastics Packaging Tax has already affected packaging costs for businesses
The Plastics Packaging Tax has already affected packaging costs for businesses

Related tags: Packaging & labelling

Packaging costs have risen for six out of 10 businesses since the launch of the Plastics Packaging Tax in April, according to new research by Lindum Packaging.

Of the companies that experienced cost increases, 70% said the increases were up to 24%, while two in 10 companies said these costs were up by more than 75%. 

Most businesses said they were aware of the tax (90%), but only one in 10 said they fully understood the implications of the tax on their business.  

To counter the cost increases, most businesses said they had taken steps to reduce the plastic packaging they used, switched away from plastic or swapped to recycled content material – several companies said they had done all there.  

Feeding down the supply chain 

However, no matter what choices have been taken to mitigate the impact of the tax, the cost will likely feed down the supply chain. Lindum found that respondents planned to pass on the price increases to their customers.  

Bernard Sellers, managing director of Lindum Packaging, said the survey confirmed that the short-term effects of the tax have had a serious effect on supply chain costs.  

“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,” ​he added.  

“It’s encouraging to see so many of the companies surveyed taking steps to reduce the amount of packaging they use. Forward thinking businesses will make further reductions which makes good environmental and business sense.” 

Pallet wrap  

Sellers pointed out that the use of pallet wrap was an area that was often overlooked by businesses and that there were significant savings and performance improvements to be had with the product.  

Lindum estimated UK businesses use 150,000 tonnes of stretch wrap a year and that could be reduced by 45,000 tonnes per year, reducing Plastics Packaging Tax liability by up to a third. 

Meanwhile, the government’s Extended Producer Responsibility response should be applauded as a positive step towards incentivising UK businesses to play their part in the circular economy, but missed a golden opportunity​ to create a cohesive, UK-wide approach to producer responsibility for packaging waste, according to Polytag chief executive Alice Rackley. 

Related topics: Packaging & Labelling

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