With an array of challenges currently facing the UK restaurant sector, the last thing operators need are new regulations that force them to pay twice for the same service.
However, that’s exactly what is about to happen to hospitality businesses as part of the impending Extended Producer Responsibility (EPR) scheme.
The scheme, which we have been campaigning against for over a year, will have an unfair and costly impact on hospitality businesses.
It is poised to significantly impact restaurants across the country and effectively force operators to pay twice for recycling.
Under EPR, restaurants and other food service venues will be required to pay for their existing business waste collection for materials like glass, while also incurring additional costs passed on by their suppliers. This double payment mechanism could translate to millions of pounds in extra outgoings for the sector.
A key flaw in the policy design is the incorrect classification of items such as beer and wine bottles as “household waste,” making them subject to a packaging levy, despite the fact they do not leave the restaurant premises.
We have voiced our profound concerns regarding this, as well as the unnecessary additional costs, the operational impact EPR will have on already stretched businesses, and the slow progress of the Department for Environment, Food & Rural Affairs’ (Defra) in addressing these issues.
Thankfully, our concerns have now been heard by the Government and will be acted upon, as it agreed to explore an alternative approach to its strategy.
We have been campaigning on this issue for over a year, warning about the unfair and costly impact it will have on hospitality businesses. We have put forward clear proposals, including an exemption for closed loop operators, and we hope we can work at pace with the Government to put something in place for the second year of the scheme.
There can be no doubt that the lack of clarity surrounding EPR is negatively affecting investment decisions and business confidence within the UK restaurant market. Ultimately, these additional costs are likely to be passed on to customers, something that is considered to be a last straw measure by most restaurateurs, particularly since it will follow years of blood, sweat and tears trying to avoid just that in the face of the soaring costs of doing business.
Our proposed solution includes that direct supply of packaging to hospitality businesses and exclusive wholesalers is made exempt from EPR. Furthermore, where a premises sells packaged products for consumption both on- and off- premises, there needs to be a mechanism that allows for EPR to be paid on only the volume taken off-premises.
In our recent letter to the Prime Minister and Chancellor, we highlighted that EPR comes at a time when there are cumulative issues affecting the sector, including changes to employer National Insurance Contributions (NICs). Indeed, Defra has confirmed that EPR will operate in an unfair manner for at least a year.
The consequences of the flawed scheme are now being felt by the hospitality sector. Medium-sized outlets are seeing increases nearing £750, and a small venue up to £350-per-year. Larger venues will see increases of around £2,000. This comes on top of their commercial waste contracts.
It’s worth noting that this comes at a time when the devastating change to NICs is already reaping its worst on the economy, contributing to the loss of more than 100,000 jobs since the beginning of April, according to the latest ONS Labour Market Overview.
EPR has been designed to recover costs for the collection of so-called household waste. The vast majority of packaging supplied to restaurant businesses is not leaving the premises so, therefore, should not be considered as ‘household’ waste.
While EPR might not be the most immediate concern for every restaurant operator right now, this undeniably unfair levy could impose yet another significant financial burden on a sector already grappling with numerous pressures.
We have affirmed our commitment to fighting this policy every step of the way to protect the interests of restaurant operators across the UK, and reach a solution that isn’t unfair and costly for hospitality.
Kate Nicholls is the chair of UKHospitality