The UK plastics policy landscape is undergoing major changes. While consultations stress the importance of avoiding harm to SMEs, policies often lack concrete measures against such harm. Research by the University of Manchester indicates that current and forthcoming plastics policies, shaped by these consultations, would affect stakeholders across the plastic supply chain differently, with SMEs suffering the most. In this article, Dr Adeyemi Adelekan and Professor Maria Sharmina examine the unintended consequences of these emerging policies and how they could be mitigated.

• SMEs form 90% of businesses in the UK and worldwide, making their meaningful engagement essential for advancing the circular economy and achieving the UK’s net zero target.
• Despite good intentions, emerging plastics policies disproportionately affect SMEs, disrupting both their business models and their operating environments.
• Plastics policies should be designed to be clear and accessible, with detailed guidance to help SMEs to navigate compliance.

Plastics policies in the UK aim to reduce waste and promote a circular economy. While these policies are well-intentioned, evidence suggests they are exacerbating supply chain inequities. Small and Medium-Sized Enterprises (SMEs), which make up 90% of businesses globally and annually contribute up to 160 million tonnes of greenhouse gas emissions, are pivotal to achieving the UK’s net zero target. Yet, instead of levelling the playing field, emerging policies seem to leave smaller brands struggling to access the recycled plastic feedstocks needed to comply with legislative requirements, placing them at a disadvantage compared to larger companies. Our research investigates these challenges and suggests potential policy adjustments to mitigate their effects.

Impacts of UK plastics policies on SMEs

Building on the success of our award-winning ‘One Bin to Rule Them All’ project, we interviewed representatives from the UK plastics sector. These discussions provided insights into the unintended consequences of the UK’s plastics policies for SMEs and covered policies such as Packaging Recovery Notes (PRN)—evidence that packaging waste has been recycled—the Plastic Packaging Tax, Extended Producer Responsibility (EPR), Simpler recycling, and the Deposit Return Scheme (DRS), among others.

Policies: broad-brushed and weakly enforced

Our research participants described the emerging plastics policies as “blunt instruments” that lack the precision and flexibility necessary to address the nuanced realities of the plastics ecosystem. For instance, the Plastic Packaging Tax places heavy emphasis on post-consumer recycled (PCR) content, overlooking the industry practice of blending PCR with cleaner post-industrial scrap to produce quality recycled pellets. This omission creates unnecessary challenges for recyclers and manufacturers and misaligns policy requirements with the way recycling systems operate.

Similarly, the tax mandate of 30% recycled content penalises certain sectors, such as flexible packaging, which comprises nearly half of the market but in many cases the product remains technically unrecyclable. What’s worse, the absence of government-approved accreditation schemes for validating recycled content claims, adds to the confusion, weakens enforcement and opens the door to fraud.

Participants felt that an anti-plastics narrative in mainstream media heavily shapes policy decisions, leading to blunt measures that overlook the crucial need for infrastructure and consumer education to enable the circularity of plastics.

Key impacts on SMEs

Approximately 70% of participants identified the PRN system, the Plastic Packaging Tax, EPR, and DRS as significantly impacting their operations. A central challenge is the misalignment and overlapping nature of these policies, creating systemic barriers for SMEs. Market volatility in the PRN system, driven by fluctuating prices, poses a particularly acute problem. Although PRNs are designed to support UK recycling by certifying domestic activities, it is often more profitable to export waste for recycling under ePRNs, which certify materials sent and processed abroad. This practice not only reduces local recycling capacity but also leads to PRN shortages, driving up costs that SMEs struggle to cover.

The limited availability and poor quality of recycled feedstocks in the UK further compounds these challenges. SMEs often face inflated prices for domestic materials or incur higher operational costs by sourcing and importing recycled content to meet the requirements of the Plastic Packaging Tax. Moreover, UK-based manufacturers are at a disadvantage compared to overseas producers, whose recycled content claims are harder to audit. The fragmented regulatory framework creates additional hurdles, with SMEs struggling to determine which certifications to adopt to satisfy both regulatory and corporate requirements.

Many participants expressed frustration over the narrow focus of existing policies on current materials, with little attention to emerging innovations. This regulatory gap can stifle progress by discouraging the development of new sustainable materials.

Participants highlighted that the operational and administrative burdens of compliance—described as expensive, complex, and resource-intensive—disproportionately affect SMEs. The rigid nature of these policies was seen as a barrier to innovation, investment, and the exploration of sustainable alternatives, fostering a sense of frustration and apathy among smaller businesses.

Addressing the unintended consequences

To mitigate these challenges, the Department for Environment, Food and Rural Affairs (DEFRA) and HM Revenue and Customs (HMRC) should take a more inclusive and proactive approach to designing and implementing policies, ensuring that the perspectives of SMEs are given equal weight to those of large companies. Maintaining communication throughout the policy lifecycle is essential, seeking feedback from SMEs through direct visits, consultations, and invitations for input. Policymakers should also leverage industry networks, such as trade associations and waste management providers, to ensure diverse SME voices are heard. Establishing a dedicated SME taskforce to review current and future plastics policies could help address misalignments and identify unintended consequences early.

Policy clarity and accessibility are equally important. Aligning policies with industry practices and using straightforward, industry-specific terminology would make compliance more achievable for SMEs. Participants suggested using visual aids, such as infographics, to simplify complex policies, moving beyond text-heavy formats. User-friendly IT systems and simple manuals could streamline processes like PRN reporting. Policy decisions should prioritise science-based evidence over general bias against plastics, while providing early notifications of policy changes to ensure SMEs have sufficient time to adapt.

Some participants proposed transformative solutions, such as unifying reporting requirements into a single platform allowing data to be uploaded in one format, which could significantly reduce compliance burdens. DEFRA should consider this suggestion, while also prioritising the  reform of the PRN system to prevent market volatility and fraud. They should also increase investment in recycling infrastructure, and coordinate policies across devolved nations to further enhance local recycling capacity and streamline compliance processes.

While the new policies have driven important conversations about sustainability and plastics recycling, sparking technological innovation and collaboration, they also risk creating an inequitable market. Without intervention, SMEs may face growing pressures to consolidate, finding it increasingly difficult to thrive unless absorbed by larger companies. By addressing these barriers, policymakers have an opportunity to create a more inclusive plastics sector—one that supports SMEs while advancing the UK’s goals for a circular economy and net zero.