Analysis by the British Retail Consortium (BRC) estimates the cost of implementing a deposit return scheme (DRS) for the UK retail sector to be between £0.6 – £1.7 billion.
BRC’s research estimates the annual cost of DRS on retailers will be at least £1.8 billion from 2025. This estimate includes capital costs, including buying and installing Return Vending Machines (RVM); labour costs, including staff training and time for processing returns; and other operating costs, including service and maintenance for RVMs, IT costs and cleaning of containers used for collection.
The analysis by BRC follows CIWM (Chartered Institution of Wastes Management) saying implementing DRS at the same as consistency reforms and extended producer responsibility for packaging (pEPR) may “ultimately be unnecessary”.
BRC says reforms to household recycling collection and pEPR must be introduced together first, and “only then will it be clear” on the exact role of a DRS in further improving recycling rates.
BRC’s report, “Deposit return schemes (DRS) in the UK: Implications for retailers”, found collecting glass in DRS could add £0.6 billion to the cost of implementation. The analysis states this is because glass is “bulky” which contributes to storage, handling and transportation costs. BRC says including glass also creates additional operational challenges and health and safety risks.
By driving up costs by almost £2 billion per year the government risks pushing up prices for ordinary households.
The analysis found premises cost to be the most significant contributor to DRS expenses. The report also suggests costs could be higher if retailers implement additional spare machines and space around deposit points.
BRC’s report estimates retailer costs for Scotland to be between £50 – £140 million – based on an allocation by the relative population of Scotland to the UK.
BRC claims the “rushed implementation” of a similar DRS in Scotland collapsed after governments failed to deliver a “meaningful plan or realistic timelines” for its introduction. The Consortium continues that without significant revision, the UK scheme risks running into many of the same problems as in Scotland.
The study does not monetise the benefits of DRS, which BRC classified in its analysis as the benefits to the economy of recycling and avoided disposal, customer loyalty/additional retail footfall and the reduction in litter costs. The report also does not account for the impact of DRS on kerbside collection revenue for local authorities.
Government must first introduce its household collection and packaging levy reforms so that it can assess the best way forward on a DRS.
Andrew Opie, Director of Food & Sustainability at the British Retail Consortium, said: “The proposed DRS is costly, complicated and cannot deliver the step change in recycling needed to justify it.
“By driving up costs by almost £2 billion per year the government risks pushing up prices for ordinary households, just as inflation is coming down.
“Government must first introduce its household collection and packaging levy reforms so that it can assess the best way forward on a DRS. On its current course, it will be consumers who will pay the price of this unnecessarily hasty, expensive and complex scheme.”
In response to the BRC’s latest statement on a UK DRS, Polytag commented: “It’s important to consider alternatives that are both cost-effective and efficient.
It’s imperative for industry leaders like BRC to align with progressive recycling solutions and not ‘pause’ any longer.
“The BRC’s call for a pause contrasts with recent innovative efforts from Polytag, which has been adopted by retailers like Ocado and Co-op, and presents a promising solution. Their Digital Deposit Return Scheme (DDRS) demonstrates that leveraging mobile technology can offer consumers the flexibility to choose between convenient kerbside returns and retail options. This alternative challenges the assumption that ‘return to retail’ is the only model.
“An eco-friendly DDRS utilising QR codes, and a user-friendly app is already proven and ready to implement. Government endorsement of adaptable regulations is crucial to stimulate recycling innovation. With environmental urgency in mind, it’s imperative for industry leaders like BRC to align with progressive recycling solutions and not ‘pause’ any longer.”
Defra’s response to BRC’s DRS estimates
In response to the report, a Defra (Department for Environment, Food and Rural Affairs) spokesperson told Circular Online: “We are committed to introducing our reforms to reduce waste and improve our use of resources. Our DRS is an important part of this, which is why we are working with the supply chain to design a simple and effective system that benefits businesses, consumers, and the environment.
“We are confident in our analysis. Many drinks manufacturers welcome the DRS and are confident it will help them access more and better recycled packaging materials, save them money and deliver shared environmental benefits. Furthermore, the wider economic benefits of DRS are significant, including estimated benefits of £8.5 billion up to 2032 from litter reduction alone.”
We are committed to introducing our reforms to reduce waste and improve our use of resources.
DRS is a producer responsibility scheme, which will be funded through a combination of revenue from the material the Deposit Management Organisation (DMO) collects and sells to reprocessors, unredeemed deposits, and producer registration fees.
Retailers operating a return point will receive a retailer handling fee from the DMO to compensate for costs incurred in hosting a return point, which Defra states is not reflected in the BRC analysis.
Defra also said the BRC analysis focuses on the costs to retailers not the benefits to businesses nor the wider economic and social benefits.
