Why is Scotland’s deposit return scheme under fire?

Scotland is aiming to be the first part of the UK to introduce a deposit return scheme for single-use drinks containers. Ministers claim it would boost recycling – but the plan is controversial, with critics calling for a delay. So what do we know about the scheme – and why is it coming under fire?

Deposit return schemes (DRS) are used in many countries across the world to encourage people to recycle drinks containers such as bottles and cans.

Many older Scots will recall being able to get money back on their “ginger” (fizzy drink) bottles when they were children – and it works in a similar way.

Anyone who buys a drink in a certain single-use container is charged a small deposit which is returned to them when they take the bottle or can to a recycling point.

The aim is to incentivise recycling but also to reduce litter and help tackle climate change by reducing the amount of material going to landfill.

A 20p deposit would be added to all single-use drinks containers made of PET plastic, metal or glass. It applies to both alcoholic and soft drinks.

The consumer gets their money back by returning the container to retailers and hospitality premises that sell such single-use products to take away.

Some retailers will accept items over the counter while larger stores, shopping centres and community hubs will operate automated receiving points known as reverse vending machines (RVMs).

Payment may be made in cash over the counter, or via a voucher from an RVM. Vouchers can be used to pay for shopping or you can ask for cash instead.

Drinks producers and importers are responsible for delivering the scheme but, to help them, a private non-profit company called Circularity Scotland has been created to administer it on their behalf.

Producers have the option to administer the scheme themselves but in most cases working with Circularity Scotland will be more cost effective.

Retailers also have a key role to play by operating the container return points.

The way the scheme works, in more detail, is that producers are billed 20p by the administrator for every bottle or can they put on the Scottish market – but they get this back by adding it to the cost of their products.

This 20p deposit is passed on down the chain, through wholesalers and retailers – and eventually on to the customer who gets it back when the item is handed in for recycling.

In addition, producers are charged a small fee by the administrator to help cover the cost of running the service – about 2p per item for plastic or aluminium bottles and 4p per glass bottle.

Circularity Scotland will pay retailers a small handling fee for fulfilling their role as return points – roughly 2p or 3p per item depending on the collection method.

The retailers pay customers for recycled items out of their own funds, but are reimbursed by the administrator.

The scheme, which covers all drinks producers who sell their products in Scotland, is designed to be largely self-financing.

The Scottish Environment Protection Agency (Sepa) will act as regulator, carrying out inspections to achieve compliance.

The plan was first announced in 2019 and was due to start in July 2022 but this was pushed back after a review found that date “unachievable”, with Covid disruption being blamed.

It is currently scheduled to start operating from 16 August 2023.

Producers have until the end of February to register with Sepa and pay a flat rate £365 registration fee.

They can do this via Circularity Scotland but if they choose this route they are being urged to register sooner.

Some businesses fear it will place extra costs and other burdens on them at a time when they are already struggling.

Small producers such as craft breweries say they are not against the idea in principle – but warn that the timetable and details of the scheme are problematic.

Producers are being encouraged to label items destined for sale in Scotland with a special Scottish barcode – and if they choose not do this, they face a surcharge of just over 1p per item.

Smaller firms argue that the cost of adding new barcodes or paying a flat rate registration fee will have a disproportionate impact on them.

Retailers can ask for exemption from providing a collection service – but only if they can demonstrate a nearby collection point is willing to accept material on their behalf, or if collecting material would breach other rules such as fire safety or environmental health.

They are also worried they will have to pay higher prices to producers but there will be a delay in recouping that money from customers, hitting their cashflow.

A leading lawyer recently claimed that the Scottish scheme could create an unlawful trade barrier with other parts of the UK, as it would result in different prices being charged either side of the border.

Aidan O’Neill KC also warned that it may prove impossible to enforce the rules on imported products – which would leave Scotland-based producers at a disadvantage.

Similar schemes are due to be introduced in England, Wales and Northern Ireland in 2025 (although in England the scheme is not expected to include glass bottles).

The Scottish government insists it is listening to concerns but some now argue it would be wiser to delay the Scottish scheme once again, allowing more time for preparation and better alignment with the rest of the UK.

Circular Economy Minister, Lorna Slater, says she is confident the scheme won’t be paused.

She told BBC Scotland’s The Nine programme: “Scotland’s deposit return scheme is such an important part of how we tackle the blight of litter on our streets and in our parks and how we reach net zero. And last year we gave businesses a whole extra year to prepare in the wake of Covid. So I am confident of a successful launch in August this year.

“The UK government has been working with us on this scheme for years. Only last week I received correspondence from the UK Treasury that clarifies the VAT rules but also said that the UK government fully supports the environmental objectives of the Scottish Deposit Return Scheme and is committed to ensuring that it functions effectively.

“We’re at the moment working to support businesses to be able to sign up to the scheme by the deadline, but we’ve always said we will take a pragmatic approach so that businesses really do have the information that they need and are able to fully participate in this scheme.”