Dismal return scheme: Why the DRS is under fire
It is 1985, a shopper is walking into a supermarket in Norway with bags of empty plastic bottles and cans. Angus MacDonald, who recently moved to the country from Scotland to work, is watching on as the man starts to feed the empties one after the other, into what appears to be a reverse vending machine.
The shopper then presses a button and takes something from the machine. Still unsure of what exactly has taken place, the future MSP inspects the machine for himself and quickly realises it is a return-for-money machine. Why don’t we have this in Scotland, he asks himself.
Scotland has had experience with return schemes in the past. Glass bottles produced by Irn-Bru-maker AG Barr were returned in their millions to shops for over a century. The affectionately known gingeys were a fabled method for children to gain some extra pocket money for sweets. And it was effective. In the 1990s over 90 per cent of bottles were being returned. But in 2015, after declining returns and a new £5m investment into bottling machinery, the ginger gold rush was brought to an end.
MacDonald subsequently moved back to Scotland and was elected to Falkirk Council in 1992. He suggested the scheme be piloted in the local authority, but the idea was rejected.
And now, almost 40 years since first seeing it in operation in Norway, the former MSP will finally see Scotland usher in its industry-led version: the Deposit Return Scheme (DRS). It is set to come into effect in August this year, but unlike the schemes Scotland has seen before, it is nationwide in scope, like the Norwegian example.
In short, a 20 pence deposit will be added to all single-use drinks containers made of PET plastic, metal or glass. The consumer will get their money back by returning the container to retailers and hospitality premises that sell such single-use products to take away.
But it has come under increasing criticism from the drinks industry, lobbying groups and MSPs for what appears to be a catalogue of ill-fated decision-making, regulation and timing. This month a cross-party group of MSPs including former rural economy secretary Fergus Ewing and SNP MSP Christine Grahame, wrote to First Minister Nicola Sturgeon expressing “extensive and wide-ranging concerns” about the scheme.
At what point did DRS, which was simply supposed to protect the environment and increase recycling rates, become so complicated and mired in criticism that could ultimately see it fail?
In 2009, the Climate Change (Scotland) Act made it possible for the country to establish its deposit return scheme. The SNP-led government then decided to commit to it in 2013.
Conservative MSP Maurice Golden, Shadow Cabinet Secretary for Environment, Climate Change and Land Reform between 2016 and 2017, has been critical of DRS, and fears that it is a “disaster emerging”. But he believes that even in 2013 the scheme was “flawed”.
“The question wasn’t asked how we increase the materials that we recycle,” he says.
The Scottish Government had a target of 50 per cent for household recycling rates by 2013.
Golden says that an “evidence-based approach would ask how do we improve this, and who pays for it?” He agrees that the approach would look at the materials covered in the DRS; metals, plastics, and glass, “but you would also focus on things like textiles, which aren’t covered in the scheme”.
“None of that happened,” he says. “What the Scottish Government did was, instead of asking how to increase the number of materials recycled, what is nice and shiny and new that we can introduce rather than enhancing kerbside recycling.”
Golden worked for Zero Waste Scotland in 2013 and says the Scottish Government did not ask at any point between 2013 and 2016 to do work on a deposit return scheme. “That I find very odd”, he says.
Despite this, “deposit return schemes do a very good job throughout the world of increasing the number of materials retained within the scheme”, Golden adds.
It was not until 2015, when the then Cabinet Secretary for Rural Affairs, Food and Environment, Richard Lochhead, began involving businesses in the conversation, that it turned into what would be an industry-led scheme. An industry insider, who wishes not to be named, says they were not on board with the scheme at this point.
“Scotland had reasonable kerbside collection at the time, and I thought that improving that would be a better way forward for all recycling,” they say.
The industry was at loggerheads with the government and by 2017, as pressure was mounting from campaigns and television programmes that highlighted the damage that plastics were causing the environment, the industry began to take notice “that the strength of feeling” was increasing on drinks containers and “companies began to say they were for it [DRS]”. The industry was finally getting on board.
In 2018, it was announced that England and Wales would launch their own deposit return scheme, separate from the DRS in Scotland. The industry insider suggests that the supply chain will be “greatly interfered with” thanks to the approach in Scotland, arguing that “a drink made in Manchester will not be easily sold in Glasgow”, due to the two schemes having separate barcodes that are used in the return process. They add that this is “an environmental necessity” but “breaking up the supply chain between Scotland, England and Wales is avoidable”.
Golden also has “great concerns” over the supply chain and says that the “industry’s number one ask is for a UK-wide scheme” which would allow “producers to make their products with the same barcode, and it doesn’t matter where it goes”.
A Scottish-specific scheme would mean that there “would be two production lines for every product, which increases costs” Golden argues. But he admits that in 2013, there was no possibility for a national approach “because it wasn’t on the UK Government’s agenda”.
Then, in 2019, delegations from the Scottish Parliament, including MacDonald, and the Scottish Government went over to Norway to see how their deposit return scheme worked. The chief executive of Infinitum, the country’s scheme administrator, told the delegations that glass should not be entertained in the scheme. Behind the scenes there was also a lot of deliberation on whether it should be included.
The Scottish Government had three options: limit the scheme to plastic and cans; add in glass at a later date once the scheme had gone through a bedding-in period; or include it at the start. They chose the latter.
Deputy head of the Scottish Retail Consortium (SRC), Ewan MacDonald-Russell explains why the inclusion of the material could cause issues for the industry.
“There is a complexity to it, partly because glass is heavy, but also it isn’t worth very much when you capture it, and the way it is recycled is quite different to the other materials, so you don’t get the same benefits,” he says.
“As well as that, for lots of businesses, if you are looking at new breweries and distilleries it tends to be glass that they use first.”
The scheme needed an administrator. So, in 2021, the Scottish Government set up Circularity Scotland, a privately run company, to do just that. This decision puzzles Golden, and he argues it has allowed blame to be passed away from the government.
“The Scottish Government could have set up a non-departmental public body or used Zero Waste Scotland as an existing agency to be the scheme administrator in some new shape or form with a board comprising of industry,” he says.
“They took the unusual move of creating this private company, Circularity Scotland, to become the scheme administrator, and there is therefore a lot of secrecy around that. They won’t reply to any of my Freedom of Information requests. It could be that they are doing everything perfectly well, but when there are lots of concerns raised by the industry over how they are procuring the payment of senior executives, and whether it is journalists or myself who begin to ask questions, none of them is answered. It just creates a real stench.
“It appears when the government are asked tricky questions, they say that is nothing to do with us, that is to do with Circularity Scotland. Circularity Scotland has said this month that the Scottish Government set the rules and they just apply them. Therefore, if that is the case, it is not an industry-led scheme – it is a secretive pseudo-government scheme that no one really takes responsibility for any part of, which I think is one of the problems with the delays and the implementation.
Golden admits that it is “a mammoth task” to deliver a scheme “that will handle 10 million containers every day”.
He adds that it has been made even more complex because Circularity Scotland had to get through logistics contracts, collection contracts and IT before getting the scheme off the ground.
“I do have sympathy for Circularity Scotland, but even with that they could help to deliver by being far more transparent with industry and politicians,” he says.
Fixing the issue of transparency is simple in Golden’s eyes: “The Scottish Government could issue a Section 5 order, which basically means they would have to comply with FOIs. But they have written to me and said they won’t do this.”
Between June and October 2022, SRC wrote three letters to the circular economy minister, Lorna Slater, outlining 19 areas that needed urgent clarity, explains MacDonald-Russell.
“We needed that [clarity] in the middle of October 2022, although we are talking about the February deadline [to register for the scheme], we are already far beyond where we would have hoped to have been,” he says.
“There are some things in this that I think could have been resolved much earlier, and failure to resolve them has made this quite challenging.”
Last week, Circularity Scotland announced £22m of support for Scottish brewers, distillers, importers, and drinks manufacturers. The package, which is designed to particularly help SMEs, comes just one week before the deadline to register for the scheme. The administrator hopes that it will remove up-front charges for lower sales volumes, improve payment terms for lower sales volumes, and offer a simple labelling option for niche products, which aims to alleviate the administrative burden.
There are six months until DRS goes live in Scotland and businesses still do not have all the information on how the scheme will work. Golden believes that “at a stretch” businesses will need one year from when the information is provided to allow “industry to put in the mechanisms to deliver it”.
“It is utterly bizarre that this hasn’t been configured in, and it rests with the Scottish Government over a very long period of time that we are now in a state of play where we have got a disastrous situation emerging,” he says.
Golden believes that an immediate step that has to be taken is “extend the registration phase to allow for an impartial review of DRS to see how we can properly roll it out”.
“If they don’t do this, from 1 March, producers are liable for up to £1.5m a month for every month that it doesn’t launch,” he says.
Although some of the worry around costs for SMEs could be alleviated by the last gasp support package, businesses are still threatening to withdraw from the Scottish marketplace altogether. The simple proposition first seen by Scottish eyes 40 years ago in a shop in Norway has become less about promoting recycling and cashing-in on empties and more of an expensive white elephant.