The Scottish Government’s announcement on 7 June 2023 signalled significant changes to the hotly anticipated deposit return scheme (“DRS”).

With the aim of increasing recycling of single-use drinks bottles, the impending launch of the DRS has been the focus of considerable discussion and scrutiny by politicians and industry bodies in recent months. The recent changes announced by the Government will go some way to bring broader alignment across the UK and allow further time for parties in the supply chain to mobilise and prepare for the launch of the scheme.

What are the changes?

The launch of the Scottish DRS has been postponed multiple times, and the “go live” date will now be delayed further - from March 2024 to October 2025. There will also be an important restriction to the products falling within the scope of the scheme, with glass to be excluded. Qualifying products will now be limited to plastic and aluminium / metal containers.

This latest announcement means that the Scottish DRS is now due to launch alongside the equivalent schemes in England and Northern Ireland in October 2025. There is also synergy in the scope of the qualifying products, with glass similarly excluded from the schemes in England and Northern Ireland. Wales is also aiming to launch a scheme in 2025, with the scope of products to be confirmed.

Legislation to formally delay the launch of the scheme from August 2023 to March 2024 (the previous delayed date announced in April 2023) comes into force today, 30 June 2023. Further amendment legislation to delay the launch of the scheme to October 2025 and exclude glass is anticipated in Autumn 2023.

Why is the Scottish DRS controversial? 

The Scottish DRS will introduce a mandatory levy on drinks containers sold in Scotland; imposing significant obligations on parties at each stage of the supply chain - from manufacturers to consumers. Whilst the overall aims and general obligations of the scheme are understood, there remain a number of “known unknowns” concerning its operation and what is needed to comply with the obligations. This concern was amplified by the impending launch of the scheme and the shortage of time for businesses to plan and implement necessary processes.

An overview of the operation of the Scottish DRS and key obligations can be found in our article available here.

Why were the changes made?

Similar schemes to the proposed Scottish DRS have been devised across the rest of the UK. However, while the Scottish DRS sought to include glass containers, England and Northern Ireland’s deposit return schemes do not. This disparity in the qualifying products raised an issue regarding the free flow of goods across the UK.

Whilst the implementation of the Scottish DRS is a matter for the Scottish Government, the UK Government must first grant an exclusion from the UK internal market principles. The Scottish Government made its formal request in March 2023, but only a partial exemption was permitted. The Scottish Government was advised that it could proceed with the DRS in advance of the rest of the UK, but only if glass bottles were excluded.

Despite reports that the Scottish DRS could be viable excluding glass, the Scottish Government decided that it was not feasible to implement a structurally different version of the DRS within the original timescales. It was considered unreasonable for Scottish businesses to prepare for the March 2024 launch while the terms of the DRS were still being confirmed. Therefore, the launch of the scheme has been further delayed until October 2025.

What are the broader implications of the delay to the Scottish DRS?

A number of questions regarding the operation of the Scottish DRS remain. The delay to the launch of the scheme offers breathing space to both the Scottish Government and industry, and certainty that their preparations for adopting the scheme can be continued for another 2 years.

For businesses operating across the UK, the recent announcement will bring welcome confirmation that they can adopt a consistent (and more efficient) scheme across the UK. Indeed, several major retailers and drinks manufacturers had been lobbying for such pan-UK alignment.

However, a separate issue of costs has arisen. In anticipation of the Scottish DRS going live in early 2024 (previously delayed from August 2023 in April 2023) businesses operating in Scotland have incurred significant time and cost. For example, purchasing reverse vending machines, preparing ‘return points’, and adapting production to incorporate barcodes on containers. With the further delay and amendment to the scope of the scheme, there is concern about the costs that have been wasted and the level of future cost to be incurred. Several trade bodies have announced that they are looking to the Scottish Government for compensation, and prominent drinks manufacturers and retailers have stated that they are consulting on potential legal action against the Scottish Government.

Further, it was announced last week that the scheme administrator, Circularity Scotland, had gone into administration. The impact of this development on businesses who had signed up to these services and the operation of the DRS will unfold in the coming weeks.

Comment

The DRS will still go ahead in Scotland, but the launch will be delayed and, when implemented, will be more limited in scope than anticipated and as envisioned by the Scottish Government.

Although the recent announcement brings some clarity as to the scope and date for implementation of the scheme, there remains an absence of a clear trajectory for those businesses impacted by the DRS. A number of key questions remain outstanding, and further developments are anticipated.

Please stay tuned for further articles in this series which will explore the application of the DRS to businesses and the issues outstanding, and practical advice on how to prepare for the launch of the scheme.

If you would like to discuss any of the topics raised in this article, please contact Naomi Pryde or Jennifer Talbot.