The Deposit Return Scheme in the UK explained

Introduction

Deposit Return Scheme (DRS) systems make producers of single-use drinks packaging legally responsible for the collection and preparation for recycling of the containers they put on the market. Government have confirmed that DRS’ in England, Wales, Northern Ireland and Scotland will be fully implemented by 1 October 2027.

Two government consultations have been held on developing the DRS in England, Wales and Northern Ireland, with the latest government response released in January 2023. Scotland underwent a separate consultation process. This article outlines the current information we have about the design of the scheme, and the associated responsibilities for drinks producers and return-point operators.

Scheme operation

Scheme articles

Consumers will pay a deposit on every single-use drink container between 150ml and 3L that are made of:

• PET plastic, steel or aluminium (in England, Scotland and Northern Ireland)

• PET plastic, steel, aluminium or glass (in Wales, pending confirmation)

Waste management is a devolved policy area, hence the lack of consistency between the four nations. The deposit amount in England, Wales and Northern Ireland has not been decided and will be finalised by the yet-to-be-established Deposit Management Organisations (DMO), although it will be capped by an upper limit set out in the legislation. The existing Scottish regulations set out a flat 20p rate deposit, but this may change as the systems develop.

Consumers will be encouraged to return containers with any caps/lids, but this will not be mandatory.

Scheme management

There will be three legally distinct DRS’ in the UK, for England and Northern Ireland, Scotland and Wales. However the four nations have stated they are committed to ensuring interoperability.

The DRS will be an industry-led scheme. After legislation is laid for the systems, DMOs for the three sets of DRS legislation will be appointed. The DMOs will be established from the private sector and will be responsible, amongst several other obligations, for:

• Outlining how retailers can comply with their take-back obligations

• Establishing the deposit level and producer fees

• Exploring the implications of regulatory misalignment between the four nations

Although the collection target for in-scope containers will legally rest with producers, they will be obliged to contract the DMOs to fulfil these obligations on their behalf. This means the DMOs will be responsible for achieving collection rates of 70% in Year 1, 80% in Year 2, and 90% in Year 3.

The DMO will be appointed by Summer 2025 through an application process set out in the regulations and will be not-for-profit.

Financial flows

There will be three key financial flows in the DRS:

• The producer fee per container will be set by the DMOs and will part-fund the management of the scheme. This means producers of in-scope containers are more financially responsible for the packaging they place on the market, implementing the ‘polluter pays principle’. The fees will be set with consideration of business size and material use.

• Unredeemed deposits will part-fund the scheme to whatever extent they remain in the system. In short, where containers are not returned by consumers, the value of the deposit will be retained by the DMOs. The higher the collection rate, the lower this revenue stream.

• The deposit amount, once set by the DMOs.

The DMOs will make up the remainder of its income through the material it collects and sells to reprocessors and recyclers.

Producer required actions

Producers will be defined in the legislation as brand-owners, manufacturers or importers of drinks in in-scope containers that are then sold in the UK. Retailers will only be defined as producers when selling their own-branded drinks containers, but will have additional obligations described below. Producer obligations will include:

• Placing the deposit amount on the container when it is sold.

• Registering with and reporting placed on market data to the DMO.

• Paying producer fees per container to the DMOs.

There will be a mandatory labelling requirement too. This will be two-fold: a label to indicate the container is part of a DRS; and an identification marker – such as a QR or barcode – so it can be recognised at return points. The specifics will be decided by the DMOs in the future, but will be consistent across all four nations.

Low-volume sales exemption

Government policy statements also specify that there will be an exemption for producers who place less than 5,000 units of product lines on the market a year. These producers will be exempt from all financial and labelling obligations, but will still need to report data to the DMOs.

Retailer required actions

Supermarkets and convenience stores in the UK will be required to host return points. Other business types selling in-scope containers, such as leisure facilities or hospitality venues, will not be required to do so but may wish to voluntarily to increase footfall.

Supermarket and convenience store requirements will include:

• Charging consumers the deposit value on all in-scope containers sold, and ensuring this additional cost is clearly displayed.

• Operating a return point for the scheme, unless eligible under an exemption criteria that will be set out by the DMOs. Retailers will be able to receive returns either manually, or via reverse vending machines.

There will be grounds for which a retailer can refuse returns. These may include where a container is soiled, not empty, or unidentifiable as a DRS scheme article.

Handling fee

A handling fee will be paid to retailers to compensate them for the non-recoverable expenses of hosting return points. This fee will be funded by the DMOs revenue streams outlined above.

The following criteria will be considered by the DMOs when calculating the fee:

• Costs of purchase, lease, maintenance or upkeep of any collection and storage infrastructure. This might include reverse vending machines, or collection vehicles

• Space requirements of return points

• Additional staffing

• Utility costs

Online sales take-back

Previous consultations have outlined government’s intention to ensure distance/online supermarkets or convenience stores are also required to accept DRS containers. However, given ‘insufficient information to understand the costs’ of this and a lack of comparable case studies this will not be the case in the early years of implementation. However, the DMOs will be mandated to ensure maximum accessibility of return points so consumers are not excluded from participating.

Hospitality businesses

Where containers are being sold in a closed-loop environment – for instance in pubs or restaurants – those operators will not have to charge the deposit where the drink is consumed on site. However, they will be obliged to arrange collection and return of the containers to the DMOs. If these businesses do charge their customers deposits, or sell drinks for off-site consumption, they will be obliged to host return points.

Exemptions

There will be two criteria set out in the legislation by which a retailer can apply for an exemption. These will be:

• Where there is a breach of safety. For instance, lack of space.

• Close proximity to another return point.

• In addition, any retail premises in an urban area that is 100m2 or less will not be required to operate a return point. The definition of urban has not yet been outlined.

The DMOs will be responsible for managing the application process. Exempted retailers may still have obligations, however, which might include displaying signs to the nearest available return point. The legislation will require exemptions to be reviewed every three years.

Interoperability and interaction with other packaging policy

As stated in the packaging EPR consultation response in 2022, producers of in-scope DRS containers will continue to meet recycling obligations by purchasing Packaging Waste Recycling Notes (PRNs) and Packaging Waste Export Recycling Notes (PeRNs) until the DRS is live.

However, they will not be obligated to pay EPR local authority waste management fees, once they are implemented in 2025. This is because producers of in-scope containers are expected to help fund DRS pre-implementation costs instead. To be clear, unless the DRS is further delayed beyond 2027, producers of steel, aluminium and PET drinks containers between 150ml and 3L will not pay EPR waste management fees in 2025 onwards, but those of glass containers will.

How Ecosurety can support you

We can help ensure that you have the necessary high-quality data captured to enable future reporting requirements. This data can also enable our data specialists to provide you with early DRS cost modelling, based on the information we currently have from government.

We can conduct this work alongside other services such as EPR and plastic packaging tax preparation and modelling, to help you achieve a holistic understanding of your future exposure to costs, and opportunities to mitigate those costs.

Ultimately this can help you to improve the environmental credentials of the packaging that you produce.

Find out more here about our data services that can help you prepare.

Any other questions you may have

If you have a question on DRS which is not captured in this article, our team of experts will be happy to help you. Please contact your account manager directly, call us on 0333 4330 370 or send an email to info@ecosurety.com.

External resources

Government response to the DRS for England, Wales and Northern Ireland consultation

Page updates

9 May 2024 - We have updated all sections of the article with the update that the DRS will be implemented across the UK in 2027, including clarification of producer and retailer requirements.