Over the past several months we have had a number of teaser statements from the Scottish Government hinting at a possible delay to the DRS implementation.
We now have clarity - something that businesses have been crying out for as they strive to prepare for the impact that the recycling scheme will have on their operations – with a 'go-live' date of 16 August 2023.
The DRS will remain the UK’s 'first' deposit return scheme, with a similar system in England - currently under consultation by DEFRA - targeting late 2024 as the earliest introduction date in other parts of the UK.
What does the announcement mean for producers and retailers?
- The DRS is now scheduled to 'go-live' on 16 August 2023.
- No substantial changes to the DRS regulations have been announced and the ambitious target of achieving 90% collection rates by 2024 will be maintained.
- The Scottish Government anticipates working with retailers on a voluntary basis to enable people to start returning their bottles and cans for recycling from November 2022.
- Orkney will be working with the Scottish Government, Circularity Scotland and Zero Waste Scotland to 'go early' in its implementation of the DRS
Outstanding issues
This latest announcement is welcome, giving industry a new target to work towards. However, there are still a number of challenges.
- There continue to be concerns around whether, and to what extent, the DRS in Scotland could differ from any DRS system implemented at a later date in other parts of the UK. It is neither fair nor efficient to ask businesses to comply with two or more completely different DRS schemes operating in the UK.
- There have been concerns that producers, retailers and consumers have been looking to the 'big brands' to lead the way on DRS – an uncomfortable position for those brands to be in when official guidance is limited and questions around the logistics of the operation of the DRS (including how Circularity Scotland will be operated) remain outstanding. We welcome the Scottish Government's plan to start a public awareness campaign from August 2022, as the burden to educate should not rest solely on big business.
- There is still much that businesses need to do to prepare for the DRS, particularly for those with complex supply chains. Despite the delay, the timetable remains ambitious. Logistics and practical matters remain of huge concern: labelling requirements, transition of stock, bar codes and the thorny issue of the obligation to operate a take back services, all need consideration and further guidance.
- We continue to await a definitive landing on whether and how VAT may apply to the deposit. This has remained an ongoing point of discussion between UK and Scottish governments and HMRC for some time. The UK Government has recently indicated that, in order to ensure that new drinks deposit return schemes being introduced across the UK operate effectively, they will explore and make any necessary legislative changes to the VAT regulations. However this is not a conclusive statement by any means, albeit an indication that a solution may yet be found. Concerns being raised about VAT are real and firmly rooted in the impact on cash flow, the consumer and ensuring the DRS cycle completes.
Key Dates and 'Milestones' for the delivery of the DRS:
- March 2022: Circularity Scotland will have entered into signed contracts with partners to deliver its logistics, operations and IT systems
- August 2022: launch of a public awareness campaign; counting & sorting centres will start to be built
- Summer 2022: expectation that retailers will start rolling out the return infrastructure with the hope that such infrastructure will start to be used on a voluntary basis from November 2022
- November 2022: a community-run return scheme in Orkney will start operating
- January 2023: Circularity Scotland and SEPA to begin the process to register producers
- July 2023: end-to-end testing of containers through the system
- August 2023: go-live
If you require any advice on the implications of DRS for your business please contact: Caroline Colliston or your usual DWF contact.
Authors: Freya Gibb, Caroline Colliston and Dominic Watkins
