The running costs of the government’s proposed
The report finds that the DRS is expected to cost almost £1 billion and £814 million per annum thereafter – to collect recyclables it says are worth just £37 million.
While the DRS is expected to increase recycling rates, it is unlikely to recover more than an extra 10-15% of beverage containers, the briefing states.
The IEA said in a statement: “Whilst it would be better to recover and recycle this waste than send it to landfill, the marginal cost is excessive; a relatively small proportion of cans and bottles should not be recovered at any cost.”
Head of lifestyle economics at the Institute of Economic Affairs Chris Snowdon – “It is a loss-making enterprise which consumers will ultimately pay for. In addition, everybody is going to have to start traipsing off to collection points with bottles and cans which would otherwise be recovered with a minimum of
hassle through kerbside collection.”
The government’s impact assessment puts what the IEA calls an “unfeasibly high” value on the intangible benefits of a modest reduction in littering, while “ignoring” the significant costs to consumers of collecting and returning their containers, according to the briefing.
The report suggests that the benefits of the policy are outweighed by its costs. A DRS would be a “loss-making inconvenience for consumers and retailers alike,” it says.
According to Defra’s Impact Assessment, a DRS would:
- produce recyclable materials worth £37 million
- reduce litter clean-up costs by £50 million
- produce ‘greenhouse gas emissions savings to society’ worth £12 million
This produces benefits of less than £100 million, for more than £800 million of cost, the report claims, and the IEA says the UK already has a “comparatively high” recycling rate with kerbside recycling, with the recycling rate for plastic drink bottles is 74% in the UK.
Parts of the USA, Canada and Australia which have had a DRS in place for many years have recovery rates that are similar to – or lower than – the UK, it says.
The IEA says: “The vast majority of the containers intended to be collected through the DRS are already being recycled via kerbside collection. Under a DRS, local authorities will lose the revenue they make from selling these materials.”
IEA expected costs (retailers)
The government’s impact assessment estimates that the cost in the first year will be £1,093 million, with running costs of £814 million per annum thereafter. These costs will be met by producer fees and unclaimed deposits and will ultimately fall on consumers.
Setting up and operating the system:
- Reverse vending machines: Approximately £30,000 per machine, plus around £62,000 worth of retail space
- Storing returned containers: £17.4 million per annum cost to the retail sector
- Operating manual return service: 114 hours of extra work per small retailer per annum
IEA expected costs (consumers)
Significant cost of unpaid work required of consumers to make the DRS function, the IEA says:
- Storage of DRS-compliant cans and bottles in their home
- Time and inconvenience of returning recyclables
The opportunity cost of just five minutes extra labour per week, per household would equate to £1,687 million per annum (based on the median hourly income of £14.31), the briefing finds.
Proposals
IEA says that unless a more “robust” economic case can be made for the DRS, the idea should be abandoned.
If the government does proceed with the policy, containers larger than 500ml should be excluded as they are rarely used outside the home and therefore will be recycled via kerbside collection, it says.
Glass bottles should also be excluded, the IEA says, as they have a “very low value” in the recycling market and an exemption could encourage manufacturers to switch from disposable plastic to reusable glass.
“Better street bins would make out-of-home recycling easier without resorting to an expensive and inefficient deposit system,” it says.
Defra – “In line with our usual evidence-led approach, we continue to build on our economic assessments of a Deposit Return Scheme.”
Commenting on the report, author and Head of Lifestyle Economics at the Institute of Economic Affairs Chris Snowdon said: “A bottle deposit scheme is a nice idea in principle, but it doesn’t make economic sense. The government’s own estimates show that it will cost over £800 million to collect recyclables worth just £37 million.
“It is a loss-making enterprise which consumers will ultimately pay for. In addition, everybody is going to have to start traipsing off to collection points with bottles and cans which would otherwise be recovered with a minimum of
“To make the scheme appear worthwhile, the government has put an unfeasibly large figure on the value of a modest reduction in littering while totally ignoring the unpaid
“Increasing recycling rates is a noble aim but it should not be done at any cost.”
[UPDATED 18 April]
A Defra spokesperson said: “We are committed to
“In line with our usual evidence-led approach, we continue to build on our economic assessments of a Deposit Return Scheme.”
Find out more about Defra consultation on a Deposit Return Scheme for single-use drinks containers.
