Diving back into the Deposit Return Scheme: reactions and expectations

12 March 2021

In December 2018, the Government published its Resources and Waste Strategy for England which included proposals for a Deposit Return Scheme (DRS) for drinks packaging. The strategy set out a number of aims for a DRS, notably to reduce litter, increase recycling rates, and collect high quality materials for recycling. In 2019, the Department for Environment, Food and Rural Affairs (Defra) consulted on the DRS proposals, presenting two options relating to the size of containers in a potential DRS: an ‘all-in’ DRS, including containers of any size, and an ‘on-the-go’ DRS that would include single format containers smaller than 750ml, targeting those most often sold for consumption outside of the home.

This almost seems another lifetime ago – after all, we’ve faced a global pandemic since then – but earlier this year, the Government announced they would launch the next round of consultations (on DRS, as well as on Extended Producer Responsibility (EPR) and consistency in recycling collections) in ‘the Spring’ and it appears they plan to deliver on their promise, even earlier than expected. With the second DRS consultation imminent, it’s a good time to revisit the first consultation: how it was received by local authorities, key developments since then, and what we can expect next.

In the first DRS consultation, the proposals were generally well received by local government, with two-thirds of local authorities responding in agreement with the principles of DRS, and only five per cent disagreeing. The majority of the respondents (69 per cent) preferred the ‘all-in’ option, compared with 15 per cent who preferred an ‘on-the-go’ scheme.

There were concerns, however, on the quantity of materials diverted from kerbside collections and how this would impact local authorities. LARAC, in its response, highlighted councils that had modelled the impact saw their costs increase by an average of £126,000 under the ‘all-in’ scenario. It also stated that a DRS on top of existing collection services could lead to confusion among the general public on how to recycle materials and may not deliver the gains required. Another response frequently heard, is that EPR and consistency of collections should be implemented first, with a DRS considered at a later date.

An area of the consultation that I have been following carefully is unredeemed deposits: the deposit value of beverage containers that will be collected by local authorities through either the existing residual or recycling streams. The consultation sought views on what should happen to these deposits. This included proposals for a ‘funding formula’ approach whereby local authorities could be paid the deposit amount on drinks containers by the Deposit Management Organisation (DMO) without having to physically return them via a designated return point. Although the majority of respondents to the consultation stated unredeemed deposits should be used to operate the DMO, many local authority respondents did highlight that this could be passed to the local authorities to fund kerbside collection schemes and cover any potential reductions in revenue.

Though the DRS conversation seemingly went quiet for a while, the last few months has seen a resurgence in DRS news. The Aluminium Packaging Recycling Organisation (Alupro) recently launched research on whether a flat or variable deposit should be placed on beverage containers. The research found that a flat deposit rate would incentivise plastic packaging with 60 per cent of shoppers opting for larger container alternatives to avoid the initial extra cost of purchasing multi-packs with a fixed fee applied to each container. Alupro proposes a variable rate based on container size, which would ensure demand for aluminium containers remains and increase the return volumes from the scheme.

Resource Futures has been working closely with local authorities to model the impact of both an ‘all-in’ and ‘on-the-go’ DRS. Using our extensive local authority composition data, we have been able to examine the types and sizes of beverage containers collected both at the kerbside and via street cleansing services. This has provided unique insight on the reduction in tonnes and volume of material collected at the kerbside, how these impact on vehicle resourcing and, crucially, the consequences for disposal and treatment costs. Our modelling has also shown that unredeemed deposits play an important role in the impact on local authority costs.

As we look at the state of play across the UK, we’ve seen the launch of a couple of digital DRS trials (notably in Whitehead, Northern Ireland and Conwy, Wales) whereby householders scan containers to receive a reward and continue to place these in their recycling collections, negating the need for separate return point infrastructure. The results of these will be fascinating. The Scottish Parliament has already voted in favour of an ‘all-in’ DRS and had planned to launch it in July 2022. But as recent as Monday 8 March, the Minister for Rural Affairs and the Natural Environment, Ben Macpherson, said this would now be reviewed.

In the upcoming consultation for England, we should expect to see the ‘final proposals’ for a DRS (as stated recently by Recycling Minister Rebecca Pow), including a steer on the final scheme type, an update to the impact assessment which will help local authorities to understand any consequences on their services, as well as any developments on the timescale for implementation, previously stated for 2023.

At Resource Futures, we will closely analyse the proposals and the implications for local authorities. Please get in touch with Will French at will.french@resourcefutures.co.uk if you would like to receive and discuss these insights.