Will ‘grocery tax’ really add £70 to your food bills?
The Government estimates the levy will cost households between £28 and £56 a year
The UK’s biggest supermarkets have warned that a new “grocery tax” will force them to raise their prices, adding £70 to the average annual household food bill.
Known as the Extended Producer Responsibility (EPR) scheme, the levy will charge retailers and manufacturers for the cost of collecting and disposing of packaging waste.
The British Retail Consortium (BRC), which represents over 170 major retailers, claims it will cost the industry about £2 billion a year – but the Government estimates a lesser impact.
What is the grocery tax?
The Extended Producer Responsibility scheme aims to shift the cost of managing packaging waste onto businesses and away from cash-strapped councils.
From next autumn, large companies will be required to collect packaging data for a given year and report it to the Government.
The Department for Environment, Food and Rural Affairs (Defra) will use this information to calculate how much each company owes.
On Friday, published a series of “base fees” to indicate how much food manufacturers and retailers will be charged.
Plastic packaging will be levied at £485 per tone, with “fibre-based composite” the second most expensive material at £455 per tonne.
Paper paper or board packaging will cost companies £215 per tonne, while bamboo or hemp will be charged at £280 a tonne.
The payments will be passed onto local authorities, helping them cover the cost of processing household packaging through waste management services.
The levy was originally devised by Michael Gove during his time as environment secretary, only to be put on hold after a backlash by Tory MPs.
Labour resurrected the scheme after coming to power and passed legislation this month that will bring it into force at the start of 2025, with the first charges arriving in the autumn.
Will it add £70 to food bills?
The British Retail Consortium claims the tax will cost the industry around £2bn a year.
If this figure was passed entirely onto consumers, the average household food bill would rise by £70 a year, according to the BRC.
Last month, the bosses of Tesco, Sainsbury’s, Morrisons, Asda, Lidl and Aldi wrote to the Chancellor calling on her to delay the levy.
The EPR is due to come into force within months of the rise in employers’ national insurance contributions and the increase in the minimum wage.

The BRC says these measures will jointly cost the industry £7bn, making price rises “inevitable”.
“For any retailer, large or small, it will not be possible to absorb such significant cost increases over such a short timescale,” the letter to Rachel Reeves read.
“The effect will be to increase inflation, slow pay growth, cause shop closures, and reduce jobs, especially at the entry level. This will impact high streets and customers right across the country.”
However, the Government’s impact assessment estimates the industry cost to be lower, at £1.4bn a year.
This would increase prices by between £28 and £56 a year for the average household, adding 0.07 per cent to inflation.
Household bills will only rise to the extent that retailers choose to pass on their additional costs to customers.
Supporters of the scheme argue that it will incentivise large companies to minimise packaging waste and use recyclable materials.
A spokesperson for Defra said: “This government will end our throwaway society and stop the avalanche of rubbish that is filling up our streets by increasing recycling rates, reducing waste and cracking down on waste crime.”