Amid concerns that Scotland’s deposit return scheme (DRS) will not be deliverable by its intended launch date of August 2023, Lorna Slater, Minister for Green Skills, Circular Economy and Biodiversity, has written to MSPs to say the scheme “will go live”.
The intended DRS will see people pay a 20p deposit when they purchase a drink made of plastic, steel and aluminium or glass, with the money returned when the bottle is recycled at a return point. The aim is to reach 90% collection rates.
The scheme has already seen two delays and in November, more than 500 figures from across the food, drink and hospitality sector signed an open letter to Ms Slater, calling for a pause to its introduction.
According to reports by The Scotsman, an internal review of the implementation of the scheme “casts significant doubt” over the planned launch date of August 16 next year.
In the open letter to MSPs, Ms Slater (pictured above) said the industry has been making good progress on preparations for the scheme, which “will go live in August 2023”.
Acknowledging concerns from business “on some outstanding issues”, Ms Slater said the Scottish Government is committed to a “pragmatic approach to implementation”.
She set out a number of actions which she said will help to make the scheme more “efficient” and reduce costs, while ensuring that environmental benefits are still delivered.
Reduced producer fees
Circularity Scotland has 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 cash-flows 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 said 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 exemptions
Ms Slater says she has considered the concerns presented by online retailers regarding the takeback element of DRS, and is proposing to bring forward amendments to the regulations so that initially only the largest grocery supermarkets will be obliged to provide a takeback service and all other businesses will be exempt.
In addition, the takeback obligation on those supermarkets will be phased in: a date will be set for takeback to be available to the general public in 2025.
Before the amending regulations are introduced, Ms Slater said she intends to undertake further work to investigate steps that may make the takeback obligation easier to discharge.
Day 1 regulatory compliance approach
Ms Slater said: “I understand that there are concerns from industry about having enough time to prepare and be ready for DRS go live on 16 August 2023 and the risk of non-compliance with the DRS Regulations on Day 1.
“While I cannot 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 evidenced operational challenges to industry readiness for go live in August 2023.
Return point exemptions
Updated online forms will make it easier for retailers to apply for an exemption and will streamline the process for retailers and hospitality providers, Ms Slater says, while also making sure that people all across the country can still easily access a return point.
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.
On VAT, Ms Slater said that the application of VAT to DRS deposits is reserved policy determined by the UK Government.
She said: “While I 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.
“We continue to do all we can to press HM Treasury for a final decision on the treatment of DRS deposits but the issue remains unresolved at this time. I will provide the Committee with an update as soon as this becomes available.”
The news follows reports the statement from Scottish police, who warned that there is the “potential” for Scotland’s DRS to be open to fraud.