Deposit return scheme: why the delay?

Scotland’s deposit return scheme has been put on ice yet again, and is now set for a UK-wide roll out in 2027.

*This feature was originally published in the May 2024 issue of The Spirits Business magazine.

After being announced in 2018, Scotland’s controversial deposit return scheme (DRS) has officially been delayed for the fourth time, and is now set to be launched in 2027.

In a statement on 25 April 2024, the UK’s Department for the Environment, Food and Rural Affairs (Defra) confirmed the planned DRS – which had been set to go live in October 2025 – is now slated for launch in October 2027. A month earlier, Steve Barclay, secretary of state for Defra, suggested a 2027 implementation, rather than 2025, “would be more likely” when asked about the timing.

The proposal for the Scottish DRS, which was originally due to come into effect on 16 August 2023, would require consumers to pay a 20p deposit when buying a drink in a single-use container made from polyethylene terephthalate, glass, steel, or aluminium, sized between 50ml and three litres. The plans have faced backlash from the drinks sector because of uncertainty about the implementation of the scheme.

Scotland takes the lead

There are deposit return schemes also planned for England, Wales and Northern Ireland, but Scotland forged ahead with its plan earlier than the other nations. Defra said the latest delay was due to the need to achieve interoperability of the DRS to ensure it operates “as seamlessly as possible” across all four countries, with each devolved authority responsible for overseeing the introduction of their own scheme.

In the statement, the government said it wanted to “ensure that the UK has a world-class collection and packaging system that champions the reduction and recycling of materials. By doing so, we will ensure that resources are kept in use for as long as possible, minimising the environmental impacts of packaging, and maximising the contribution that packaging reform can make to net zero and the protection of our environment,” it said.

Speaking ahead of the confirmed move to delay to 2027, whisky consultant Blair Bowman said the postponement was likely to do with the “disconnect between Scotland and the rest of the UK”, as Scotland was only given the go-ahead for the scheme if it excluded glass. Last summer, the Scottish government slammed the October 2025 delay, claiming it had been ‘sabotaged’ by the UK government, which requested that glass be excluded in line with proposals for a DRS in England and Northern Ireland.

Bowman said there needed to be “one whole calendar year for every minute detail cemented and concreted into the plan”.

He also called for a “future-proof digital DRS” whereby a deposit could instantly be returned to the consumer through a unique code that can’t be scanned multiple times. Bowman noted that such a move would also provide enormous amounts of useful data to show “how bottles and cans move around the UK market”. Bowman claimed that the government had failed to contact any hospitality businesses in their consultation for the scheme.

Timeline agreed

The UK and devolved governments have also agreed on a timeline to establish a deposit-management organisation (DMO) company from spring 2025 to oversee the launch and operation of the DRS, Defra said. Last year Circularity Scotland, the company behind the rollout of the country’s DRS, went into administration.

The DMO aims to secure funding, appoint a leadership team, CEO and staff, and procure IT, logistics and collection partners. Furthermore, it would design and publish decisions on key operational areas, including deposit level, labelling and proposed producer fees.

The latest announcement also cleared up that VAT would only be collected on deposits that are not redeemed.

Colin Wilkinson, managing director of the Scottish Licensed Trade Association (SLTA), said the disagreement over the inclusion of glass in schemes across the UK is a “major stumbling block”. He also believes there should be a UK-wide scheme with glass excluded. “It doesn’t surprise me that the delay is by two more years. I think they’ll be lucky if that’s the case. Look at the time it took to put it together in Scotland, or get as far as we did.”

One significant move from the announcement was that hospitality venues would no longer be required to act as a return point, but can instead voluntarily host one. Trade body UKHospitality said this was among its “key asks”, and will “avoid unnecessary complexity and cost for businesses”. Kate Nicholls, chief executive of UKHospitality, said: “I’m pleased that all governments across the UK have listened to the concerns of UKHospitality, and will be pursuing schemes that ensure maximum alignment and interoperability across the UK.”

Defra said it aimed to introduce legislation for the DRS that would confirm requirements for supermarkets and convenience stores across the country to register to act as return points for the scheme, and to therefore install reverse vending machines for consumers to return their used drinks containers in exchange for rewards and in-store discounts.

Trading disadvantage

The move to delay the scheme was also welcomed by Michael Kill, the CEO of the Night Time Industries Association, who said the decision “underscores the necessity for further consultation on its nuances, particularly concerning its impact on businesses”.

He said: “Alignment across the UK is crucial, with consistent rules and materials adopted simultaneously. The disparity in materials, exemplified by Wales’ inclusion of glass, presents a significant challenge, penalising small businesses and potentially impacting, disrupting or placing businesses at a trading disadvantage.”

Kill also noted that the “discrepancy” in schemes across the UK would drive up costs and “limit the choice and availability of independent products, detrimentally affecting both businesses and consumers”.

Kill continued: “We welcome the government’s engagement at all stages of implementation to address these issues comprehensively, ensuring that the deposit return scheme functions equitably for all stakeholders involved.”