The conservative case for extended producer responsibility

Not all regulation is created equal. There is bad regulation, a kind that is intrusive, blunt, and costly. And there is - at least occasionally - good regulation, the kind that preserves choice and market dynamics whilst correcting market failures.

Kitty Thompson | Head of Campaigns

When deciding what to do to show support for businesses facing more red tape, inflated prices, and a mounting employer national insurance contribution bill, Conservatives must recognise that extended producer responsibility (EPR) sits firmly in the latter camp and not turn their backs on this vital policy.

EPR is not some bureaucratic oddity dreamt up by meddling officials. It is a mechanism designed, championed, and legislated for by Conservatives as a means of applying one of the most classically conservative ideas in economics: the polluter pays principle. 

For decades, waste management has been funded through a socialised system. Regardless of how much packaging a company pushed onto the market, or how recyclable it was, the bill for dealing with rubbish arrived on residents’ doorsteps in the form of ever-rising council tax. Producers outsourced the full cost of managing their waste and taxpayers picked up the bill. Economists have a word for this: market failure. Conservatives have a word for it too: unfair.

EPR flips that system on its head. It does not create a new cost. It simply moves the existing one from an invisible, unavoidable component of council tax to a direct charge on those who actually produce the waste in the first place. In other words, we stop socialising the cost of waste and start privatising it. That should be the kind of sentence that warms a conservative heart.

By making costs visible, and tied to packaging design choices, EPR finally gives producers a real financial incentive to cut waste. The scheme’s system of modulated fees means non-recyclable, wasteful packaging attracts higher charges, while responsible design costs less. This is resource efficiency delivered through price signals, not indiscriminate bans, taxes, nanny-state nudges or taxpayer-funded awareness campaigns. This smarter regulation is expected to raise £1.43 billion in its first year, with money going to local authorities to pay for the waste and recycling services they already provide. That should mean less pressure on council tax, not more.

EPR addresses the root: the design, consumption, and disposal choices that create packaging waste. It presents an opportunity to rationalise our regulatory landscape, by pruning redundant or overlapping measures and integrating complementary ones. The plastic bag charge becomes superfluous if bags fall within scope. The Plastic Packaging Tax can be integrated within modulated fees rather than run as a parallel regime. The need for the now long-delayed Deposit Return Scheme can be questioned. And with producers funding the system directly, ministers can finally stop funnelling taxpayer money into ad-hoc grants that local authorities bid for, like the Resource Action Fund.

It was the Conservatives who first championed this policy back in 2018, enshrined it in the 2021 Environment Act, and made the case that the polluter pays principle is not some environmentalist invention but a deeply conservative economic tool. Labour may have pressed ahead with implementation, but Conservatives should not now run from a policy that is, in truth, one of the most conservative waste reforms of the last decade.

There are, of course, caveats. EPR must not become a stealth tax that producers pay while councils quietly keep council tax levels unchanged. The whole point is to shift the burden. Taxpayers should see the benefit. Nor should the system charge unnecessarily high fees or tolerate double-charging, where hospitality businesses pay both higher prices for glassware and disposal costs on top.

EPR must also not become an excuse to grow the size of the state. Councils are under immense financial pressure, most notably from soaring social care costs, but that does not justify absorbing every pound of money previously spent on what producers now pay for into the general budget. If they do, taxpayers will be paying more for less: once through the price of EPR that will be passed on to them, and again through the same - or even higher - council tax bills that do not pay for the elements of the waste system that it once did.

A conservative approach demands discipline. EPR savings should result in a visible, measurable reduction in the taxpayer burden. Councils should not treat EPR as a convenient windfall. A well-run EPR system therefore operates on two parallel tracks: it funds waste services and delivers the necessary investment into it. This should trigger a corresponding reduction in the portion of council tax currently required to pay for those services. Anything else betrays its purpose.

Fortunately, safeguards exist. From 2026, PackUK, the industry-led body administering the scheme, will have the power to reduce allocations if councils misuse funds. Private-sector expertise is embedded in the heart of EPR, not as a courtesy, but as a discipline mechanism.

Just as some Conservatives have decided EPR might be too much regulation for businesses to bear, the waste system is making huge strides away from state grants and toward producer-funded, market-driven design, collections, and pricing that reduce waste at source.

Conservatives should not abandon EPR. They should reclaim it. They should ensure the scheme works as intended, holds councils accountable, protects taxpayers, and delivers the kind of market-led environmental reform we should all be proud to champion.

First published by BusinessGreen. Kitty Thompson is CEN's Head of Campaigns.