Village pubs are bearing the brunt of a new government scheme aimed at cutting down on packaging waste.

One Devon MP told a Westminster debate that the system was “unfair, out of touch and economically harmful”.

Extended Producer Responsibility legislation means manufacturers must pay a levy based on the amount of packaging they use on their products. The money is then spent collecting and recycling the waste.

Local councils have eagerly snapped up the new income from the ‘packaging tax’. Exeter City Council stands to collect around £1.4-million in the first year of the scheme while Teignbridge Council has put the figure at £1.8-million and Torbay expects up to £2-million.

But while councils have been pleased to pocket the money towards their recycling costs, the hospitality industry has pushed back.

It says the rules have been poorly drafted and mean that suppliers are passing the fees down by increasing prices.

South Devon MP Caroline Voaden raised the issue during a Westminster debate on rural businesses.

She said: “It is hitting local hospitality businesses hard. I welcome the Government’s efforts to make manufacturing more sustainable, but that must not come at the cost of adding further financial uncertainty for small businesses.”

She said the brewery supplying the historic New Inn in Moreleigh was putting up prices by 7p per bottle of beer and up to 21p per bottle of wine to cover the cost.

The proprietor told Mrs Voaden the pub trade was being unfairly targeted, and was effectively paying twice – once through the increased cost of bottled beer and again to dispose of the bottles afterwards.

She said the landlord told her: “I am beginning to wonder if after 14 years it’s really worth it any more.”

Mrs Voaden went on: “These pubs are not major polluters. They are local employers and community hubs. Yet under this scheme they are treated the same as massive supermarket chains. That is unfair, out of touch and economically harmful.”