Deposit return scheme: government response

To: Professor Russel Griggs OBE
From: Gillian Martin, Cabinet Secretary for Net Zero and Energy

Deposit and return scheme for Scotland

Thank you for your letter of 8 April regarding Scotland’s Deposit Return Scheme (DRS). As you know, DRS is a long standing commitment of this government. DRS will reduce the litter on our streets, increase the recycling of single-use drinks containers and support our net zero ambitions.

I am pleased to advise you that I have laid before the Scottish Parliament drafts of the Deposit and Return Scheme for Scotland (Amendment) Regulations 2025, and the Deposit and Return Scheme for Scotland (Designation of Scheme Administrator) Order 2025. These statutory instruments align Scotland’s DRS with the equivalent schemes in England and Northern Ireland, and – subject to the agreement of Parliament – will designate UK Deposit Management Organisation Limited as the scheme administrator of the DRS for Scotland.

I wish to thank you and the Regulatory Review Group (RRG) members for your continued consideration of this important policy and welcome the recent RRG recommendations to support the development and delivery of DRS in Scotland. I would like to take this opportunity to provide RRG members with an update regarding the points raised.

1.  Cost of living for consumers: The scheme administrator will recover the costs associated with operating DRS, including the fees charged to them by SEPA, through three key revenue streams: producer fees changed on a per container basis; revenue from the sale of collected materials and unredeemed deposits. I acknowledge the possibility that DRS could potentially result in increased costs for consumers if producers passed on the costs of operating the scheme to consumers through price increases. However, the DRS scheme administrator, as an industry-led body, will be motivated to keep the costs of operating the scheme as low as possible, therefore we do not anticipate significant price increases for consumers in the event that producers did choose to pass on those costs. Full consideration of the impacts of this proposal on consumers is considered within the previous and recent impact assessments. This analysis suggested that DRS would result in an initial additional outlay of around £1.40 for those individuals falling within the lowest 10% household income group, rising to approximately £1.80 for the second lowest household income decile (as defined by the Office for National Statistics). I welcome the RRG’s recommendation to ensure that we communicate to consumers why DRS helps achieve Scotland’s Circular Economy goals and I can confirm that this is reflected in our DRS project communications strategy. UK Deposit Management Organisation Limited have also committed to undertaking a comprehensive communications campaign which will ensure consumers understand the benefits of the scheme.
2. Cost to businesses: A full Business and Regulatory Impact Assessment (BRIA) was published in 2020 which fully assessed the impact of a DRS in Scotland. Updates to this BRIA have been published with subsequent amending DRS regulations. A draft partial BRIA was also published in January 2025 on the World Trade Organisation’s website, along with drafts of the Deposit and Return Scheme for Scotland (Amendment) Regulations 2025, and the Deposit and Return Scheme for Scotland (Designation of Scheme Administrator) Order 2025. The links to the draft regulations and the draft BRIA were shared widely with DRS stakeholders upon publication in January. As both instruments have now been laid before the Scottish Parliament, the final BRIA and other updated DRS impact assessments which have been published on our website. Regarding the possibility that consumers may switch to materials which are not included in DRS, we have not seen evidence that this has happened in other DRS internationally. However, Scottish Ministers are under an obligation to review the operation of DRS by October 2032. That review must include the materials within the scope of DRS. Ministers will therefore have an opportunity at that point to consider whether there is evidence of material switching, and if so, what action should be taken.
3. Implementation implications: I also accept your recommendation to ensure businesses have the appropriate information and sufficient time to make the changes required for DRS. The priority for the scheme administrator once designated, subject to Parliament approval, is to establish itself as an organisation that is capable of running a DRS on behalf of industry and providing businesses with the information needed to prepare for DRS launch. This includes designing and publishing decisions on key operational areas, including deposit level, labelling, proposed producer fees, retail handling payments and RVM specifications. This is well understood by the proposed scheme administrator, UK Deposit Management Organisation Ltd, and was reflected in their application to operate the DRS. I therefore expect the scheme administrator to develop and communicate detailed plans for the delivery of DRS in a timescale which allows businesses enough time to respond and will monitor its progress.

I have asked my officials to ensure the RRG’s recommendations are embedded into the development and implementation of DRS in Scotland. My officials will continue to keep the RRG informed and would be happy to return to the RRG once this work has progressed. I look forward to continued engagement with the RRG as we progress towards launching the scheme in October 2027.