Deposit Return Scheme: letter to Minister

To: Cabinet Secretary for Net Zero and Energy
cc/ Deputy First Minister and Cabinet Secretary for Economy and Gaelic

From: Professor Russel Griggs OBE, Chair – Regulatory Review Group

8 April 2025

Dear Ms Martin,

I am writing as Chair of the Regulatory Review Group (RRG) to provide independent advice on the Deposit and Return Scheme (DRS) which will cut greenhouse gas emissions by reducing the number of drinks containers sent to landfill or incineration through the introduction of a deposit scheme on select drink containers.

This note provides an overview of the RRG’s role and details recommendations on definitions, use of funds, enforcement and communications considerations.

Regulatory Review Group (RRG)

The independent RRG was re-established by the Scottish Government as part of the New Deal for Business to support Scottish Ministers in improving the regulatory environment for businesses and their involvement in that process. The RRG’s membership is detailed in the Annex. The RRG consider upcoming regulatory developments and as part of its work programme identified the Deposit and Return Scheme as a scrutiny priority.

The RRG’s objectives are to:

1. Work constructively with the Scottish Government to ensure that policy officials and relevant Ministers are sighted on implementation challenges with regulations early in development.

2. Deliver purposeful and targeted written and verbal advice to the Scottish Government, drawing upon extensive expert insight from business and regulators across Scotland.

3. Support the delivery of the New Deal for Business by ensuring that the potential barriers to the success of Scottish Government policies are removed through an improved understanding of the practicalities of implementation.

The RRG’s remit is to examine and identify implementation challenges and appropriate mitigations of regulation. The RRG does not provide a view on the appropriateness of substantive policy or decisions to be taken on legislative priorities.

Deposit and Return Scheme

Along with RRG members, I met with your officials on Thursday 06 February 2025. Your officials provided an insightful presentation on the policy issue and provided detailed responses to our questions. These regulations provide the potential to significantly improve Scotland’s circular economy, and it is in the spirit of supporting that endeavour that this advice is provided.

The following recommendations have been made by the RRG for consideration as part of the policy development and legislative process:

1. Cost of living for consumers: This Scheme will see increased costs for consumers. Producers must pay to run the scheme through producer fees, which may be passed on to consumers via price increases. However, products within a DRS are exempt from Extended Producer Responsibility (EPR) fees. While consumers will be able to claim the deposit back on return of the drink container, the initial cost of a drink will be higher. Consumers are already facing impacts from the high cost of living and this additional cost will add to that burden. Communication on why this scheme helps reach Scotland reach Circular Economy goals will be helpful in getting consumer buy-in and understanding.

2. Cost to businesses: Drinks producers will need to change their packaging to incorporate the deposit logo and code. They will pay producer fees, set by the Scheme Administrator (SA), for each in-scope container placed on the market; these fees will part-fund the not-for-profit scheme along with the SA’s income from unredeemed deposits and material revenues. Under the Low Sales Exemption, products selling fewer than 5,000 units across Scotland, England and Northern Ireland will be exempt and producers will only be required to report their sales to the SA. The cost to business must be set out in the BRIA, which should have been published by now.

Additionally, under the DRS, consumers may choose to purchase drinks that are not made from polyethylene terephthalate, steel or aluminium and this may mean that sales for some drinks may reduce. If this happens, businesses may decide to change their drinks containers which will result in significant costs to them.

3. Implementation implications: Retailers will have to ensure the deposit is clearly displayed and charged at the point of sale. Retailers’ main costs will be incurred as return points, for which they will be compensated by the SA with Handling Payments for each container they take back but this will not be instantaneous and the time may affect business cash flow.

The details and spec of the Reverse Vending Machines (RVM) must be decided ahead of time to ensure retailers have enough time to purchase any necessary machinery required to adhere to the regulations.  

The RRG invites your policy officials to return to the RRG once this work has progressed, and planned amendments are included to further explore implementation challenges and constructively engage on mitigations, highlighting that the delay of the BRIA publication is bad practice.

A copy of this letter will be published on the RRG’s webpage and has been sent to your Ministerial colleagues with an interest in this area.

The RRG would be happy to discuss the above recommendations with you and would welcome an update on how the Scottish Government intends to take this forward during the policy development and legislative process.

Yours sincerely,

Professor Russel Griggs OBE
Chair, Regulatory Review Group

Annex - membership of RRG

• Chairman, Professor Russel Griggs OBE
• Fiona Richardson, Convention of Scottish Local Authorities (CoSLA)
• James Fowlie, Convention of Scottish Local Authorities (CoSLA)
• Brian Lawrie, Environmental Health
• David MacKenzie, Trading Standards
• Ewan Macdonald-Russell, Scottish Retail Consortium (SRC)
• Susan Love, Association of Chartered Certified Accountants (ACCA)
• Douglas White, Consumer Scotland

Members are representatives of business, regulators and consumers, however, are acting independently in their RRG involvement.