New plastic packaging levy could add £56 a year to bills

Grocery bills could rise by up to £56 a year, because of a new levy plastic packaging.

Signed off by Sir Keir Starmer on 21 December, the “grocery tax” will likely cause retailers and manufacturers to raise their prices as they pass the costs on to customers.

Major retailers like Tesco, Asda, Sainsbury's, Morrisons, Lidl, Aldi, M&S, Waitrose, Iceland and Farmfoods are all set to be hit by the tax.

An assessment suggests that the levy could bring in £1.4bn in its first year. But customers’ bills are expected to rise anywhere between £28 and £56.

Politicians’ concerns

Reform deputy leader Richard Tice voiced his concerns, telling the Sun: “Labour’s unrealistic Net Zero plans are being exposed for what they are — a farce that makes life more expensive for working people.”

Lord Craig Mackinlay, chairman of the Net Zero Scrutiny Group, shares similar concern , warning that this “little noticed” tax would add “unnecessary costs for consumers”.

Conservative peer Lord David Frost said that the idea was rightly abandoned in the past when it became clear that it was too expensive.

Government's defence

Defending the grocery tax, a spokesperson for the Department for the Environment, Food and Rural Affairs said the packaging reforms would create 21,000 jobs and raise over £10bn in recycling investments over the next decade.

While these figures may sound promising, many are left wondering who will bear the burden of these costs in the meantime, especially as low-income households are hardest hit by rising food prices.

How to cut your grocery bill

As well as shopping at one of the cheaper supermarkets and following our money-saving tips, there are other ways you can keep your grocery costs down: 

Buy own brands

Choosing own-brand products can save you money. People have been buying more of these lately, with sales up nearly 10% from last year.

Use free or discounted food apps

The Too Good to Go app sells unsold fresh food for about a third of the price. Other apps like Olio let you to pick up free food from local shops and cafes.

Choose frozen food

Frozen fruits and vegetables can be just as nutritious as fresh ones. And they’re often cheaper and last longer too – an all-round win.

Eat less meat

Eating less meat can lower your grocery costs and help the environment. Even cutting back once or twice a week can make a difference.

Find a local food bank

If you’re struggling to afford groceries, you may be able to get help from a food bank.

In the first half of 2024, we directed over 21,000 people to food banks – more than 50% more than the same time last year.

Read our guide to find out how a food bank can help you.

Benefits

Make sure you’re receiving all the benefits you’re entitled to. You can check online or give us a ring.

Get money advice

Our free and impartial advice is here to help you tackle your money troubles, from offering budgeting support to applying for grants.

We can also advise you on debt solutions if you’re struggling to keep up with repayments.  Some solutions are free and others have a fee.