Policy paper

Deposit Return Scheme for drinks containers: joint policy statement

Published 25 April 2024

This was published under the 2022 to 2024 Sunak Conservative government

Introduction

The UK government, the Department of Agriculture, Environment and Rural Affairs (DAERA) in Northern Ireland, the Scottish Government, and the Welsh Government want 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.

Across the UK, consumers purchase an estimated 31 billion single-use drinks containers each year – 12 billion plastic drinks bottles, 14 billion drinks cans, and 5 billion glass bottles. Yet current collection rates are between 70 to 75%, and a significant amount of these containers end up littered or in landfill. The UK government, DAERA in Northern Ireland, the Scottish Government, and the Welsh Government share an ambition to increase recycling rates of single-use drinks containers to at least 90%, to significantly cut littering, and to expand opportunities to collect and reprocess high quality materials.

We will achieve this by:

• introducing a Deposit Return Scheme (DRS) for drinks containers
• introducing Extended Producer Responsibility for packaging (packaging EPR)
• improving the effectiveness and consistency of packaging materials collected for recycling in each administration
• working with industry to support voluntary trials for reusable and refillable drinks containers

By further embedding the principle of producer responsibility, we also expect businesses to play their part, and recognise the opportunities for investment and innovation in a vibrant circular economy that can foster prosperity across the UK.

This policy statement provides an update on DRSs across the United Kingdom. The schemes will introduce a deposit on single-use drinks containers, which is refunded upon return of the container. The deposit provides a financial incentive for consumers to return drinks containers for recycling and is expected to boost recycling levels for in-scope containers to over 90% by year 3 of the scheme’s operation.

The responsibility for waste and recycling is a devolved competence in the UK. There will be three legally distinct deposit return schemes in the UK: one in England and Northern Ireland; one in Wales; and one in Scotland. However, together, we are committed to delivering DRSs that are as interoperable and as simple as possible for consumers and businesses across the UK, whilst achieving the economic and environmental goals of the scheme. To support this, the UK government, DAERA in Northern Ireland, the Scottish Government and the Welsh Government have agreed this policy statement to ensure maximum alignment and interoperability of DRSs across the UK, whilst still respecting the devolved nature of these policies.

This policy statement provides updates on:

• the DRS implementation timeline
• joint positions from the UK government, DAERA in Northern Ireland, the Scottish Government, and the Welsh Government facilitating interoperable schemes across the UK
• positions on returning containers across the UK
• other relevant updates on VAT, permitted development rights for reverse vending machines (RVMs) and how prices should be displayed
• clarity on the timebound exclusion of DRS containers from packaging EPR obligations next steps

Timeline

The January 2023 DRS consultation response outlined the intention of UK government, Welsh Government, and DAERA in Northern Ireland for DRS to go live from October 2025. Following the UK government’s decision on an UK Internal Market Act exemption for DRS on 7 June 2023, the Scottish Government confirmed their intention to align with this date.

To achieve interoperability across the UK, with schemes designed and operating as seamlessly as possible, the UK government, Welsh Government, Scottish Government, and DAERA have sought to agree a consistent policy framework which facilitates this.

Each administration has also undertaken significant engagement with industry and conducted a detailed review of the activity required by industry to launch the scheme, as well as learnings from Scotland and international schemes on their delivery experiences.

Following this work, the UK government, Welsh Government, Scottish Government and DAERA have agreed to a revised timeline to launch DRS in October 2027. The revised timeline is as follows:

Phase 1: Regulation and Deposit Management Organisation(s) (DMO) appointment - by Spring 2025

Regulations in place in all administrations, and DMO(s) appointed.

Phase 2: Deposit Management Organisation (DMO) set-up - Spring 2025 to Spring 2026

This phase allows time to establish the DMO(s) as an organisation that is capable of running DRS on behalf of industry in each administration and providing businesses with the information needed to prepare for DRS launch.

This will include:

• securing funding and appointing key delivery partners
• appointing CEO, leadership team and staff
• procuring IT and logistics or collection partners
• designing and publishing decisions on key operational areas, including deposit level, labelling, proposed producer fees, approach to cutover, and RVM specifications
• developing a delivery plan and operational blueprint for obligated businesses

Phase 3: Roll out - Spring 2026 to Autumn 2027

This phase allows time for businesses to make the changes required for DRS.

It includes:

• the DMO(s) establishing the necessary national collection infrastructure, including counting and sorting centres, equipment and collection vehicles, recruiting staff and planning logistics routes
• the DMO(s) setting up the necessary digital and IT infrastructure for the registration and reporting of over 20 billion containers
• retailer activity to make decisions on return point locations and design, procurement and installation of reverse vending machines (including securing planning permissions and reconfigure stores), and training staff,
• producer activity to develop labelling and artwork; make preparations for collecting data; make changes to invoicing systems
• system-wide testing and readiness support
• commencement of consumer engagement campaigns

October 2027: DRS launch

Deposit Return Schemes across the UK are operational. Deposits are applied to in scope drinks containers, which can be redeemed upon return of the container for recycling.

Post Implementation Review

Deposit Return Schemes will be reviewed once they have been operational for enough time to allow data to be available. This review will consider the effectiveness, costs and benefits of the deposit return scheme, including progress towards the environmental objectives.

Interoperability of Deposit Return Schemes across the UK

Background

The UK government, DAERA in Northern Ireland, the Scottish Government, and the Welsh Government agree that DRSs should be as interoperable as possible, whilst meeting the specific needs of each administration and recognising the devolved nature of waste and recycling policy. This section sets out the policy approach that will be taken to deliver interoperable schemes.

Deposit management organisations

Some of the operational decisions on how the schemes work together will be the responsibility of the relevant scheme administrators, who will be responsible for coordinating and operating DRS in each administration. We refer to each of these organisations as the deposit management organisation (DMO).

Deposit management organisations will be separately appointed for the schemes in England and Northern Ireland, Scotland, and Wales, and will operate under the relevant legislation in each administration.

Whilst not a condition for appointment, the UK government, DAERA, the Scottish Government, and the Welsh Government recognise the benefits of having the same organisation appointed to administer DRS across the UK and we would encourage industry to form a DMO which reflects this model.

The UK government, DAERA, the Scottish Government and the Welsh Government are working to ensure that the application process is joined up, with applicants required to demonstrate how they intend to cooperate with the DMOs appointed in the other UK jurisdictions.

Containers in scope across the UK

Materials in scope of scheme

Deposit Return Schemes in England and Northern Ireland, Wales, and Scotland will include drinks containers made of polyethylene terephthalate (PET), steel, and aluminium cans. The position on glass containers will be set out in separate statements issued by each administration.

Size of container

The size of containers within scope of DRS across the UK will be 150ml to 3 litres. Any containers outside of this range will be in scope of the Extended Producer Responsibility for packaging (packaging EPR). Setting the minimum level at 150ml will improve the efficiency and effectiveness of the returns process from scheme launch, as very small containers can be challenging to label, or may cause issues with reverse vending machines. This will make returns simpler and easier for consumers and support a positive DRS experience. We estimate that only a very small proportion (around 0.5%) of plastic and metal drinks containers sold in the UK are below 150ml.

The Republic of Ireland launched a deposit return scheme in February 2024, which covers single-use drinks containers from 150ml to 3 litres. Aligning container size with the Republic of Ireland will make it easier for businesses and consumers to engage with DRS across the UK and Ireland.

We will ask the DMO to consider any potential for changes to consumer purchasing behaviour, or producer changes to packaging format, so that DRSs across the UK do not result in market distortion based on packaging material or size. We will review the size of in-scope containers once the scheme is operational to ensure the scheme is meeting its environmental objectives.

Low volume sales exemption

Producers may choose to register product lines with less than 5,000 units placed on the market across the UK per annum as a “Low Volume Product”. These Low Volume Products will be exempt from specific DRS obligations, such as the requirement to pay fees, apply deposits, and carry DRS labelling. Producers of Low Volume Products will still register with the DMOs and report the number of containers placed on the market for each product.

This exemption is designed to support producers with very specialist or low volume sales products (such as those being sold at a farm shop or market) who would find DRS requirements disproportionately burdensome. Low Volume Products are estimated to make up far less than 0.05% of in-scope drinks sold across the UK each year. Nonetheless, producers of Low Volume Products are encouraged to adopt best practice on their use of drinks containers.

The Low Volume Product exemption will be reviewed once the scheme has launched, and we will consider whether to adjust or remove the exemption over time. Low Volume Products will still have obligations under the DRS, so will not be in scope of packaging EPR.

Other interoperability positions

Reciprocal takeback of containers

Return point operators and DMOs will be required to accept returns of DRS drinks containers which have been purchased anywhere in the UK. However, we want to avoid complexity and additional costs for return point operators, so we will not require them to accept containers that are out of scope in the administration in which they trade.

Ensuring containers can be returned across the UK will make it easier for consumers to engage with DRS.

The DMOs will work together to agree a process to ensure timely and fair distribution of payment for containers returned outside the administration in which they were sold.

Registration and reporting

The DMOs across the UK will work together to develop a single registration and reporting process where producers can register for all schemes through a single system. This will reduce the administrative burden on drinks producers.

Producers will not be required to pay an upfront annual registration payment. This removes the need for producers to pay separate registration fees for each part of the United Kingdom in which they trade, and ensures that the contribution each producer makes towards covering the operation and regulation of DRS is proportional to the number of containers that producer places on the market.

DMOs will recover the costs associated with operating DRS, including the fees charged to them by the relevant UK environmental regulators, through 3 key revenue streams:

• producer fees changed on a per container basis
• revenue from the sale of collected materials
• unredeemed deposits

Labelling

DMOs will be expected to work together to determine:

• a logo to be used on all DRS containers across the UK
• a consistent approach for the use of an identification marker such as a barcode or a QR code placed on all DRS products

A logo allows consumers to easily identify drinks containers that are in scope of the scheme. The use of an identification marker such as a barcode on in-scope containers ensures that containers can be accepted by a reverse vending machine or scanned at a manual return point, and helps to reduce the risk of fraudulent returns of containers that have not had a deposit paid on them (such as containers placed on the market before the DRS go-live date).

Producers will be able to use UK wide or local barcodes, based on their own business needs, without any penalty from any DMO. This means there will not be different charges for UK wide and administration specific barcodes. Producers will be able to use a single barcode on their product everywhere in the UK with no extra charges from any DMO.

Deposit level

We intend that there will be an aligned deposit level across the UK. This could be a flat or variable rate (such as based on the size or material of the container) and will be determined by the DMO based on relevant evidence and research.  A common deposit level will make it easier for consumers and businesses participating in the scheme. This will make it as easy as possible to claim back a deposit, and ensures that DRS will look and feel like a single scheme across the UK for consumers. It will also ease the production and distribution costs for businesses and limit the risk of fraud.

Through our regulations and the design of our application process for the appointment of the scheme administrators, the UK government, DAERA in Northern Ireland, the Scottish Government, and the Welsh Government will ensure that DMOs work together to inform a consistent deposit level that is agreed by for all administrations and is based on evidence.

Some stakeholders have raised concerns that the deposit may have a disproportionate impact on the cost of drinks in multipacks, though we are aware that there are a range of views on this matter. In setting the deposit, the DMO will be required to consider the likely impact of the amount of the deposit on the ability of scheme consumers to purchase deposit items, and balance this with litter reduction benefits of the scheme. This work with be informed by international best practice, and will be set out before the scheme launches.

Updated position on returns across UK  

Return points

DRS regulations will require supermarkets and convenience stores to act as return points from day 1 of schemes across the UK. These drinks suppliers must register as a return point.

Other types of organisations that sell in-scope drinks containers including hospitality venues, food to go stores, schools, gyms, sports or recreation centres, community centres, and mobile caterers that sell in-scope drinks containers will not be required to host a return point, but will be able to apply to host a voluntary return point. Experience from international schemes shows that hosting a voluntary return point is popular, as organisations see the benefit of increased footfall.

In addition, any retail premises in an urban area that is 100m2 or less will not be required to operate a return point. The definition of urban may differ in each area of the UK, due to area specific conditions.

Obligated stores will be able to apply for an exemption from the obligation to host a return point, on grounds of either:

• breach of health and safety requirements (such as footprint impedes walkway safety)
• close proximity to another return point

Retailers will not be required to accept containers that are broken, soiled or not empty. Where a retailer does not sell alcohol due to religious reasons, they will not be required to accept alcoholic drinks containers.

Further work is required to consider adequate spatial distribution and planning of return points, in particular looking at areas with high littering and high footfall such as shopping centres, and considering access needs, for example in rural and island areas.

It is critical that there is a balance between ensuring sufficient coverage of return points and ensuring that the schemes are cost effective. This will help support a successful day 1 rollout. Return point obligations will be kept under review as the schemes become more established, to ensure the network is appropriate and accessible.

Online takeback

Online takeback is when an online retailer selling in-scope drinks containers provides a take-back service for empty drinks containers. For example, a supermarket could collect empty drinks containers when they deliver a customer’s next online shop.

Previous consultation and ongoing stakeholder engagement have considered whether there should be mandatory requirements for online takeback and, if so, which retailers should be required to provide a service.

Although there are some examples of online takeback in other countries, these are primarily small scale and voluntary, and we have not found a proof-of-concept for a mandatory online takeback service on the scale required across the UK. There is therefore insufficient information to understand the costs and potential unintended consequences of requiring retailers to provide an online takeback service at this scale.

The UK government, the DAERA in Northern Ireland, the Scottish Government, and the Welsh Government have therefore decided that there will not be a requirement for retailers to operate a takeback service for drinks containers sold online from day 1.

Instead, we will work with retailers and prospective DMO candidates via an industry working group to investigate options, including voluntary solutions. We will keep the obligation under review.

Ensuring access to returns for all

Irrespective of how consumers purchase in-scope drinks, it is our aim that access to returns is as broad as possible, and no one is excluded from participating in the scheme and unable to redeem their deposit. In order to support consumers who may find it difficult to return drinks containers to a physical return point, we will set out specific criteria that requires the DMOs to ensure equal access to the scheme for all consumers no matter of their location, including for groups of people who may be disproportionately impacted by a DRS, such as those that are housebound. The DMOs will be required to set out how they plan to meet this in their operational plan, and we will work on this with prospective DMO candidates as they develop their application, in order that the relevant governments are satisfied that the proposed action addresses the issue at the time of appointment.

Prior to the DMOs appointment, and to support its thinking in this area, we will bring together a working group in 2024, consisting of industry and organisations representing vulnerable groups to consider the issues and their potential solutions, and use these findings to inform prospective DMO candidates of the options available.

Exclusion of DRS Containers from Extended Producer Responsibility for Packaging (packaging EPR)

Extended Producer Responsibility for Packaging (packaging EPR) is due to commence in October 2025, with annual disposal costs payable by producers from financial year 2025 to 2026.  This is two years before the launch of DRS in October 2027. Given the updated timelines set out in this paper and in recognition of the financial investment needed to establish a DMO to administer DRS by October 2027, drink containers made of PET plastic, aluminium, and steel will be excluded from disposal cost fees and labelling obligations under packaging EPR. However, if the plan set out earlier is not delivered and therefore a DRS has not been established by 1 January 2028, producers of drinks containers meeting the definition of DRS packaging material will be subject to the full range of packaging EPR obligations, until a DRS is operational for this material.

Other relevant updates

VAT

The UK government legislated for the VAT treatment of deposits that are issued under specified DRS schemes in the Finance Act (No. 2) 2023.  Between 29 March and 17 May 2023, HM Revenue and Customs (HMRC) ran a technical consultation on draft regulations that will provide more detail on how VAT will be accounted for on specified DRS deposits.  Secondary legislation introducing the regulations will be introduced in due course and HMRC will also publish guidance on accounting for VAT on DRS supplies. The rules will ensure that VAT will only be collected on deposits that are not redeemed.

Price Marking Order

How retailers display prices for consumers in England, Scotland. and Wales is governed by the Price Marking Order 2004 (the PMO), and for Northern Ireland, the Price Marking Order (Northern Ireland) 2004. We have been working with the Department for Business and Trade (DBT) (which is responsible for the PMO in England, Scotland and Wales) and the Department for the Economy (DfE) in Northern Ireland to review how deposits should be treated.

From 4 September to 15 October 2023, the UK government ran a consultation on potential changes to how pricing information is displayed as part of the smarter regulation programme. The response to this consultation was published on 24 January 2024, setting out that retailers should display the cost of the DRS deposit separately to the cost of the drink, so consumers know how much money they will get back if they return the eligible item to a return point. The unit price of the drink should also be calculated exclusive of the deposit, so consumers can more easily compare the unit cost of all drinks.

We continue to work with DBT as it updates the PMO to reflect these changes for DRS. We will continue to engage with DfE in Northern Ireland to understand how this will be carried forward in Northern Ireland.

Permitted development rights

Update for England

UK government are working to ensure the permitted development rights are in place for the installation of Reverse Vending Machines (RVMs) in England.

UK government consulted on introducing permitted development rights for reverse vending machines in 2021 and concluded that permitted development rights will be bought forward for England. Regulations will be put in place to allow for the following:

• there should be no limit on the number of RVMs that can be installed within the curtilage of a shop
• when an RVM is installed in the wall of a shop, any part of the development must not protrude 2 metres beyond the outer surface of that wall
• the RVM must not exceed 4 metres in height
• the footprint of the RVM must not exceed 80 square metres
• the RVM will not be allowed where it would face onto the road and be within 5 metres of the road
• the RVM must not be situated within 15 metres of the curtilage of a building used for residential purposes
• the permitted development right would not apply in a Site of Special Scientific Interest or the curtilage of a listed building or scheduled monument, or on Article 2(3) land
• require machines to be removed and land to be restored to its former condition where the machine is no longer in operation

UK government will be looking to take forward legislation reflecting above once the DRS secondary legislation is in force.

Update for Northern Ireland

The Department for Infrastructure will bring forward legislation to introduce a new permitted development right for reverse vending machines in Northern Ireland, subject to the conditions and limitations detailed in the October 2022 consultation on changes to planning permitted development rights and June 2023 consultation response. These align with current proposals in England. The timing of these new permitted development rights will be dependent on the UK government’s subordinate legislation coming into force for the Deposit Return Scheme. The Department for Infrastructure will continue to liaise with DAERA to ensure the legislation is made at the appropriate time.

Update for Wales

The Welsh Government will be undertaking a consultation on permitted development rights relating to Deposit Return Scheme infrastructure to inform the next steps in Wales.

Update for Scotland

There are already permitted development rights for the installation, alteration or replacement of RVMs in the wall of, or within the curtilage of, a shop in Scotland. The relevant provisions came into force in October 2020 (SSI 2020 269). In summary, the Scottish permitted development rights apply for RVMs:

• up to 3.5m in height
• with a footprint up to 80sqm
• that do not protrude more than 2m beyond the surface wall (in the case of wall-mounted installations)
• not within 15m of a residential building
• that face onto and are within 5m of a road

The permitted development rights do not apply in areas of archaeological interest, National Scenic Areas, historic gardens or designed landscapes, historic battlefields, conservation areas, National Parks, or World Heritage Sites. RVMs no longer in operation must be removed and the site reinstated to its prior condition as soon as reasonably practicable.

In summer 2023, the Scottish Government consulted on extending these to cover on-street RVMs. However, given the delay to the roll out of the DRS, it was decided not to make changes to the permitted development rights at this time.  Further consideration will be given to the need for additional permitted development rights as DRS policy develops.

Next steps

Legislation

A key next step is taking forward legislation to bring the schemes into existence across the UK, and amending the existing Deposit and Return Scheme for Scotland Regulations 2020 in line with the positions set out in this paper.

Powers in the Environment Act 2021 will be used to establish DRS in England, Wales, and Northern Ireland. The UK government will be taking secondary legislation through Parliament to cover England and Northern Ireland. Welsh Government will be bringing forward legislation for the scheme in Wales to the Senedd. These regulations will reflect the policy outcomes set out in the January 2023 consultation response to Introducing a Deposit Return Scheme for drink containers in England, Wales and Northern Ireland and this policy statement. During the drafting process the UK government, Welsh Government, and DAERA held two review sessions with key stakeholders which provided the opportunity for them to feedback on the draft regulations.

The Deposit and Return Scheme for Scotland Regulations 2020 established the legislative framework for a DRS in Scotland. The Scottish Government will make amendments to the legislation, where required to give effect to the policy positions set out in this statement. Any such amending legislation will require approval by the Scottish Parliament.

DMO appointment

The UK government, DAERA in Northern Ireland, the Scottish Government, and the Welsh Government are now asking industry to form a prospective DMO candidate(s) and present these candidate(s) to administrations. This will enable detailed discussions on the appointment process to commence, and we intend to pursue discussions with the prospective DMO applicant(s) on a joint basis. The sooner an industry-backed candidate is presented to government, the quicker these discussions can commence. This will support our ambitions to receive a quality and comprehensive DMO application that leads to a swift DMO appointment and commencement of the initial stages of DMO set-up and implementation.

The UK government, DAERA in Northern Ireland, the Scottish Government, and the Welsh Government will invite applications for a DMO. For England and Northern Ireland, the DMO will be appointed to run the DRS through an application process set out in the England and Northern Ireland regulations. DMO candidates will be invited to apply to the UK government and DAERA. This is the same approach being applied for the Welsh DMO, with applications going to the Welsh Government. A similar approach will be taken in Scotland, with Scottish Ministers considering applications.

Stakeholder engagement

We will continue to engage with industry, including through our industry forums and sector-specific working groups, to support and monitor business readiness where required.