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Firms facing increased costs from Plastic Packaging Tax

Six out of 10 companies that use plastic packaging have seen their packaging costs increase since the introduction of the Plastic Packaging Tax on 1 April 2022, according to new research.

The study, by packaging supplier Lindum Packaging, found that of those who have experienced cost increases, 7 in 10 had seen increases of up to 24 per cent. Some companies have even experienced cost increases of more than 75 per cent.

The research shows the increase in costs is likely to feed down the supply chain, with half of businesses confirming that they plan to pass the increase onto their customers.

Under the new Plastic Packaging Tax, producers or importers of most types of finished plastic packaging (whether filled or unfilled) have to pay £200 per tonne of packaging that does not include at least 30 per cent recycled content.

[Read our guide to the Plastic Packaging Tax]

Experts are urging manufacturers to treat the tax as an opportunity for competitive advantage, rather than as a cost. Designing out waste from packaging can not only reduce material costs, but also significantly reduce a product’s carbon footprint and improve sustainability credentials.

However, evidence suggests there is still a worrying lack of knowledge about the tax among affected businesses. Lindum Packaging’s survey found that 90 per cent of businesses are now aware of the tax, but only one in 10 fully understand the implications.

The company said in a statement:

“Our survey confirms 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.

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

SMEs in Greater Manchester can access fully funded support from our Manufacturing Service to improve the efficiency of packaging operations and reduce waste.

Our sister Resource Efficiency Service can also advise on how to tie packaging reduction into a wider net zero strategy.

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