Scotland’s minister for green skills, circular economy and biodiversity, Lorna Slater, has confirmed that the country’s Deposit Return Scheme (DRS) will roll out as planned next year on 16 August.
Under the scheme, premises that sell drinks to consumers in Scotland from 16 August 2023, must provide a return point to accept empty bottles and cans. Consumers will pay a 20p deposit when purchasing a drink contained in plastic, steel, aluminium or glass. The deposit will then be refunded when the bottle is recycled at a return point.
Despite two previous delays to the scheme due to the impact of the Covid-19 pandemic and Brexit; coupled with concerns from the food, drink and hospitality sector, and the successful delivery of the project still in doubt, Ms Slater confirmed in an open letter to Members of the Scottish Parliament that the DRS ‘will go live in August 2023’. The letter details actions that would “help to make the scheme more efficient and reduce costs, while ensuring that environmental benefits are still delivered.”
Reduced producer fees
Ms Slater said that Circularity Scotland has, this week, published significantly reduced producer fees and Day 1 payments. The changes reflect updated assumptions, enabled by the Scottish Government’s revised guidance regarding return point exemptions and by an ongoing review of the scheme operating costs.
Circularity Scotland has also reviewed the timing of cashflows from producers to the scheme administrator for deposits and the producer fee. The revised profile of payments will mean producer costs are reduced at the point the scheme goes live.
The changes mean producer fees will be 8%, 30% and 40% lower for glass, PET plastic and metal containers respectively. The Day 1 payments for producers using UK-wide barcodes will also be reduced by two thirds, from 2.4 months of fees to 3 weeks of fees.
Ms Slater confirmed that Circularity Scotland has also committed to continue to work on initiatives to seek to further reduce the financial impact of the scheme on producers and return point operators and optimise the cost of operating the scheme while still supporting consumers to return their empty containers.
Online takeback exemption
Ms Slater has also confirmed that only the biggest supermarkets would be required to fulfill the online takeback requirement of the scheme when it is launched, and all other businesses will be exempt. The takeback obligation on those supermarkets would be phased in, with a set date for takeback being made available to the public in 2025.
Day 1 regulatory compliance approach
Ms Slater acknowledged the concerns from industry about having enough time to prepare and be ready for DRS to go live on 16 August 2023 and the risk of non-compliance with the DRS Regulations on Day 1.
Ms Slater continued that while she could not speak on behalf of SEPA, as the independent regulator, the Scottish Government is encouraging joint working between it and Circularity Scotland to support industry with compliance as they transition towards full DRS operations.
She said that SEPA, with support from Circularity Scotland, is working on a proactive and managed approach towards compliance where there are clearly evidenced operational challenges to industry readiness for go live in August 2023.
Return point exemptions
On return points exemptions, Ms Slater said updated online forms will make it easier for retailers to apply for an exemption and will streamline the process for retailers and hospitality providers, while also making sure that people across the country can still easily access a return point. Furthermore, she said these changes and processes should also speed up the decision-making process and provide clarity to retailers on the outcome of their application at an earlier stage than currently.
VAT
"The application of VAT to DRS deposits is reserved policy determined by the UK Government", said Ms Slater. She confirmed that while she had "asked for much needed clarity on its approach to the application of VAT on deposits by July, to date, this clarification has still to be provided."
Ms Slater also confirmed that much was being done to get HM Treasury's final decision on the treatment of DRS deposits but the issue remains unresolved at this time. She will provide the Committee with an update as soon as one becomes available.
If you would like to read the open letter, please click here.
