British Retail Consortium calls for DRS rethink as estimated costs near £2B

22 Aug 2023 --- Retailers are calling on the UK government to review its plans to introduce a deposit return scheme (DRS) for drink containers as new research from the British Retail Consortium (BRC) shows that the scheme is likely to cost the industry at least £1.8 billion (US$2.3 billion) annually starting 2025.

BRC says the figure does not include the “hundreds of millions of pounds” the industry requires to set up a body to run the scheme. Furthermore, start-up costs like buying machines are estimated to hit businesses “much earlier.”

The estimated £1.8 billion (US$2.3 billion) per year includes capital costs, including buying and installing return vending machines (RVM), labor 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.

Andrew Opie, director of Food & Sustainability at the BRC, comments: “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 (US$2.6 billion) per year, the government risks pushing up prices for ordinary households, just as inflation is coming down.”

BRC’s Opie warns consumers will have to pay the DRS’ price. Collection reforms
Opie says that, before installing DRS, the government must introduce its household collection and packaging levy reforms to 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.”

BRC says that time is needed to rethink current plans to prevent the introduction of an unnecessarily complex and costly scheme. The consortium asserts that in Scotland, the rushed implementation of a similar DRS scheme collapsed after governments failed to deliver a meaningful plan or realistic timelines for its introduction.

This has left the industry “footing the bill” for tens of millions in sunk costs. Without significant revision, the UK scheme risks facing many of the same problems as in Scotland, warns the consortium.

The UK government’s target of eliminating all avoidable waste by 2050, and all avoidable plastic waste by 2042, is supported by three pillars within its Resource and Waste Strategy: Its packaging levy, extended producer responsibility (EPR), the consistent collections of household and business recycling in England and DRS.

EPR first?
Retailers believe that the sequencing of the packaging reforms is essential. Reforms to household recycling collection and EPR must first be introduced together, and only then will it be clear on the exact role of a DRS in further improving recycling rates.

“We would suggest that EPR is put in place first, and then DRS is looked at carefully to see how it could be best used to improve the situation,” a BRC spokesperson tells Packaging Insights.

BRC says that the UK government’s recent decision to delay the implementation of EPR has provided an important opportunity to redesign policy aspects, which will see the industry pay 100% of the costs of collecting and recycling the packaging they produce. The delay is furthermore said to “soften” the policy’s inflationary part, adding an estimated £2 billion (US$2.6 billion) per year on its own.

While retailers may be able to absorb some of the costs of implementing the new policies, the consortium stresses that it is inevitable that introducing EPR and DRS together would place upward pressure on consumer prices, according to the BRC.

By Natalie Schwertheim

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