Why we are publishing open letters about the Packaging EPR scheme

A short explanation from the Foodservice Packaging Association (FPA)

We represent packaging suppliers operating across the UK supply chain. Our members broadly support the principle of Extended Producer Responsibility (EPR): that producers should bear the cost of managing the environmental impact of packaging.

That principle is not in dispute.

What concerns us is whether, in practice, the current design of the UK Packaging EPR scheme can reliably achieve its stated aims.

This is a design issue, not an allegation of non-compliance

We have published these letters to Defra, PackUK and the Environment Agency openly because the issues we raise focus on a design flaw: namely that the scheme relies on a self-registration de minimis boundary which currently cannot be independently verified by buyers, regulators or the public.

This research does not seek to determine intent or attribute non-compliance. However, members have raised concerns that uneven participation may be occurring in parts of the market. If true, this would create significant cost distortion for compliant businesses and further underscores the need for robust oversight.

Additionally, PackUK has confirmed that a funding shortfall was identified in Year 1 following revised tonnage submissions. Government has intervened on a one-off basis to close this gap, and disposal fees for Year 1 will remain as set out in producers’ Notices of Liability. While this provides short-term certainty for compliant businesses, it does not remove the underlying concern. If the full obligated producer population is not consistently captured within the scheme, funding pressures may re-emerge in future years, with costs continuing to concentrate on those who report and pay correctly.

In any cost-allocation system, the most basic requirement is that people can identify who is in scope. If that cannot be done reliably, then cost allocation becomes fragile, enforcement becomes inconsistent, and trust erodes.

What we are seeing

Over the past weeks, we have conducted an analysis of public Companies House data to understand how market behaviour has changed since the introduction of the Packaging EPR scheme.

We have observed:

• A sharp, time-compressed surge in the formation of micro-entities across packaging-adjacent sectors.
• Particularly large increases in wholesale and distribution categories.
• A conservative matched cohort of newly formed packaging-adjacent firms that do not appear on public producer registers.

Additional analysis shows that many of the new businesses forming in packaging-related parts of the market are very small, newly created companies, typically run and controlled by just one person.

Businesses structured in this way are not unusual on their own. However, when large numbers of responsibility-bearing activities move into very small, single-person companies, it creates practical challenges for any system that relies on self-registration and thresholds.

Such companies can be harder to identify, harder to monitor, and more difficult to pursue if problems arise. This means responsibility can accumulate in parts of the market that are less visible, while larger, established businesses remain easier to find and regulate.

In itself this does not prove wrongdoing. What it does demonstrate is a verifiability gap: the system currently cannot show which businesses should be in scope, only which ones have chosen to register.

That distinction is crucial.

The issue we are raising is about how the system is designed and enforced, rather than about the conduct of any specific business. However, members are increasingly reporting concerns that some obligated producers may not yet be captured within the system. This highlights the importance of effective enforcement and accurate identification of all in-scope businesses.

Why this is important

A central factor in this issue is the interaction between the de minimis threshold, the self-registration model, and limited scope verification.

The current system design unintentionally creates a structural incentive for economic activity to sit within micro-entity structures that fall outside effective cost allocation, monitoring, and enforcement.

In practice, this means responsibility can accumulate in parts of the market that exhibit low governance depth, high churn potential, and low recoverability – while visible, compliant companies carry a growing share of the system’s costs.

EPR distributes a fixed total cost across a defined population. If that population is incomplete, the maths does not adjust itself. The burden on visible, compliant firms automatically increases.

Our members are already reporting that visibility is becoming a commercial disadvantage.

The companies that are easiest to find are becoming easiest to charge and easiest to enforce against.

That was never the policy intent.

Why we are publishing these letters openly

We have chosen to publish our correspondence openly for three reasons:

1. Transparency

These issues affect market fairness, regulatory credibility and public trust. They deserve to be discussed openly.

2. Clarity

This explainer exists to prevent misinterpretation. We want it to be clear that this is about the design of the EPR system, not behaviour.

3. Constructive engagement

These letters set out specific, practical steps that could strengthen the scheme and make it more resilient.

We will also be bringing this matter to the attention of the chair of the All-Party Parliamentary Group (APPG) for Packaging and MPs who have packaging businesses in their constituencies.

What we are asking for

We are not calling for more red tape. We are calling for the scheme to work as intended.

Our analysis suggests the system is currently dealing with a rapidly growing population of very small, lightly governed companies that are hard to see, hard to verify, and hard to enforce against. The scheme was not designed with this scale or structure in mind.

To protect compliant businesses, ensure fair competition, and maintain confidence in the policy, across the three letters we are asking government and scheme bodies to take practical steps to strengthen the system’s foundations by taking the following actions:

1. Check the scope
Commission an independent audit of who is likely to be in scope compared with who is actually registered. The system must be able to test whether it is capturing the right population.

2. Review how the de minimis threshold operates in practice
Thresholds are meant to reduce burden, not create structural blind spots. Government should assess whether the current threshold unintentionally allows significant packaging activity to sit outside effective oversight.

3. Introduce verification tools for buyers
Compliant businesses should be able to check that suppliers claiming to be out of scope or registered are genuinely so. This protects fair competition across the supply chain.

4. Strengthen register quality controls
Public registers should not only show who has registered, but support checks on completeness, anomalies, and unusual patterns in company structures.

5. Align the system with enforcement reality
A large share of new companies in this space are single-controller micro-entities. Government and regulators should publish how enforcement, recoverability, and monitoring will operate in that environment.

6. Improve data matching between systems
Better reconciliation between Companies House, customs/import data, and EPR registration data would improve visibility without increasing burden on compliant firms.

7. Pause further complexity until the foundations are sound
Before additional modulation or system changes are layered on, the core question, ‘Do we know who is in scope?’, must be answered with confidence.

What happens next

The FPA will continue to engage constructively with policymakers, regulators and parliamentarians, because a scheme that is not trusted, not verifiable and not enforceable cannot succeed – no matter how well intentioned it may be.