UK packaging sector seeks budget breaks for SMEs facing EPR, cost crunch

UK – The British Contract Manufacturers and Packers Association (BCMPA) has pressed the UK government to shield small and medium-sized enterprises (SMEs) from further tax hikes and regulatory burdens as the November 25 Budget looms. 

Representing more than 200 firms in contract manufacturing, packing, fulfillment, and logistics across food, beverages, personal care, chemicals, and pharmaceuticals, the BCMPA highlighted how rapid policy shifts are overwhelming many of its SME members.

According to Emma Verkaik, the association’s chief executive, recent employer National Insurance contribution increases have triggered a sharp slowdown in hiring and limited pay adjustments. 

These moves, she noted in a statement, complicate efforts for SMEs to expand or invest amid existing staff shortages. 

Companies are now deferring automation upgrades, with several BCMPA members reporting paused capital spending to manage escalating expenses.

The strain extends to workforce development, as firms hold back on new positions, including essential apprenticeships. 

Verkaik explained that these higher costs often flow through to consumers, fueling inflation in an already tight market. 

“SMEs form the backbone of the UK economy, delivering essential income and stability to local communities,” she said. 

Yet, she added, these businesses carry an outsized load that shows few signs of easing.

Energy costs add another layer of difficulty, remaining at record levels despite promised aid for major users. 

While relief may arrive by 2026 or 2027, Verkaik pointed out in her remarks, smaller packaging operations stand to gain less than larger energy-heavy manufacturers. 

This gap erodes their edge against global competitors, forcing cutbacks in operations.

A key flashpoint is the rollout of Extended Producer Responsibility (EPR) for packaging, aimed at boosting recycled content use. 

The policy pushes brands toward sustainable materials, but it has spiked prices for recyclables and imposed heavy reporting demands on suppliers. 

Compliance schemes, Verkaik observed, are spawning fresh administrative workloads and fees for firms already stretched thin. 

Though EPR marks a vital step in industry-wide sustainability efforts, it risks overwhelming teams tasked with tracking and verifying data.

The BCMPA urges Chancellor Rachel Reeves to prioritize reductions in National Insurance rates, streamlined regulations, and faster drops in energy tariffs. 

It also advocates for mandatory SME Impact Assessments on every new policy to prevent uneven fallout on smaller players. 

In a pre-Budget address, Reeves offered scant reassurance, deepening unease among business leaders and curbing investment appetite.

Verkaik stressed the human element behind the numbers. Entrepreneurs, she said, thrive on glimpses of opportunity amid challenges. 

“Let’s hope the Chancellor recognizes this drive before pressures mount even higher across the UK,” she concluded. 

With the Budget days away, the packaging sector watches closely for measures that could unlock growth without adding to the squeeze

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