13 System ownership (Q32–Q34)
13.1 Three questions in the consultation paper addressed the issue of system ownership, asking about the type of organisation that should ‘own’ or run the deposit return scheme and act as scheme administrator, the basis on which the scheme administrator should operate and the roles that they should carry out.
Question 32: Which option do you think offers the best system ownership model to ensure the primary goals of a deposit return system are met? [Industry-operated not-for-profit / Privately owned and operated commercial operation / Public ownership / Combination of the above]
Question 33: How much emphasis should be placed on the system administrator achieving secondary benefits like ensuring Fair Work practices are followed and that the material collected is reprocessed in Scotland?
Question 34: What do you see as the main roles for a scheme administrator?
System ownership (Q32)
13.2 Question 32 asked for views on the best model for scheme ownership. It offered three discrete options – industry-operated not-for-profit, privately owned commercial operation, public ownership – each of which was briefly outlined in the consultation paper, as well as a fourth option of ‘a combination of the above’. Those who selected ‘a combination of the above’ were asked to provide further details of the combination envisaged.
13.3 Table 13.1 shows that there was no clear consensus on the best model for system ownership. However, public ownership was the most popular option selected by 44% of respondents, while industry-operated not-for profit was selected by 26% of respondents and privately owned commercial operation by 3%. A quarter of respondents (27%) selected a combination of these options. Organisations were more likely to favour the industry-operated not-for profit model, with 45% of organisations choosing this option. Food and drink producers (77%), the hospitality / restaurant trade (80%) and retailers (59%) were particularly likely to favour this option. By contrast, individual respondents were more likely to favour public ownership (46% chose this option). A majority of public sector organisations (57%) also preferred this option.
Table 13.1: Q32 – Which option do you think offers the best system ownership model?
|Industry-operated not-for-profit||Privately owned commercial operation||Public ownership||A combination of the above||Total|
|Public sector organisations||3||14%||–||0%||12||57%||6||29%||21||100%|
|Food and drink producers||17||77%||1||5%||3||14%||1||5%||22||100%|
|Recycling / waste mgmt orgs||8||53%||3||20%||–||0%||4||27%||15||100%|
|Hospitality / restaurant trade||4||80%||–||0%||–||0%||1||20%||5||100%|
|Total (organisations and individuals)||363||26%||39||3%||598||44%||374||27%||1,374||100%|
Percentages may not total 100% due to rounding
13.4 Although the second part of the question was targeted at those who selected ‘a combination of the above’, respondents who selected each of the individual options also provided comments explaining their views. Thus, the sections below cover views in support of each of the options as well as covering the views of those who favoured a combination approach. Across all options individuals tended to make single, brief points in their comments, while organisations provided fuller explanation of their preference and how they envisaged the different models might operate. It was clear that many respondents viewed scheme ownership and governance as closely related if not inseparable issues. Scheme governance (including regulation) is covered in more detail in Chapter 14.
Views of those favouring a public ownership model
13.5 A public ownership model was particularly popular among individuals and some, but not all, public sector bodies. Respondents thought that this model would (i) allow wider environmental and community benefits to be prioritised, (ii) ensure transparency, accountability and good governance, and (iii) encourage scheme support and ‘ownership’. Some respondents explicitly argued that public sector agencies were able to run efficient and effective businesses.
13.6 There was a widespread view among respondents in this group that the focus of the scheme should be on environmental concerns and not on maximising profit, and that the public sector was best placed to deliver this. Conversely there was concern that a private organisation would run the scheme in a way that maximised profit, and would be tempted to manipulate the scheme for their own advantage.
13.7 Some respondents envisaged a public sector model which involved stakeholders from all sectors, and some thought local authorities had an important role to play given their experience of refuse collection and recycling and their existing infrastructure. (There was also an alternative view that local councils did not have the resources to take on this role.)
Views of those favouring an industry-owned not-for-profit model
13.8 An industry-owned not-for-profit model was popular among organisations – food and drink producers, retailers, and those representing the hospitality trade, in particular. Respondents argued that industry stakeholders had the necessary knowledge and expertise, as well as having access to existing supply chains and logistics infrastructure needed to run a successful scheme. They also thought that this model would encourage buy-in and compliance from industry stakeholders and ensure a cost-effective scheme which would give the best return to communities. Some respondents (including those from the food and drink and packaging manufacturing sectors) thought this model was appropriate given that a deposit return scheme represented a form of EPR.
13.9 It was common for respondents to discuss wider governance and accountability arrangements which they saw as important to the success of this model. They highlighted:
- Scheme framework, objectives, rules and governance set by government
- Public accountability provided via oversight by a board
- The involvement of a wide range of stakeholders – e.g. representatives from all points in the supply chain; producers; retailers; local authorities.
13.10 It was also argued that industry-owned not-for-profit models were common in existing successful schemes – there were specific references to schemes in the Nordic countries.
13.11 Individuals selecting this option tended to emphasise the ‘not-for-profit’ aspect of the model, and did not generally provide detail about how they envisaged it operating.
Views of those favouring a privately owned commercially operated model
13.12 This was the least popular model. On the whole, those who provided comments explaining their preference (mainly organisations) thought that this would ensure the scheme operated on a competitive, commercially viable and sustainable basis, within a framework set by government. They also highlighted perceived weaknesses of public ownership – e.g. red tape, bureaucracy and political interference – which they wished to avoid.
Views of those favouring a ‘combination’ ownership model
13.13 The most common combination model suggested was that of industry-owned not-for-profit and public ownership. However, most respondents who favoured a ‘combination’ model did not specify in any detail the combination envisaged; instead they discussed the advantages that a combination model – generally seen as a public / private partnership approach of some type – would offer. These included:
- The optimum combination of skills, experience and expertise to achieve a successful scheme and the best outcomes.
- The nimbleness and business instincts of the private sector and the integrity, accountability and scrutiny of the public sector.
- Cross-sector commitment and buy-in, and public confidence.
13.14 Organisational respondents in particular discussed a range of possible working models involving various arrangements of public, private and third sector input. Most commonly, however, the public sector was envisaged as adopting an oversight or governance role – setting the framework for the scheme and providing scrutiny and accountability. (Some organisations (mainly packaging manufacturers) provided further comment to this effect at Questions 35 to 39 which looked specifically at governance arrangements.) Thus, the views of respondents stating a preference for a ‘combination’ model were, in most cases, not dissimilar to the views of those who favoured an industry-owned not-for-profit model (see paragraphs 13.8 to 13.11). Less often respondents suggested more direct public sector involvement – e.g. joint public / private sector ownership, or public sector representation on an industry-led body at board level.
13.15 Some respondents (mainly individuals) argued for models based on social enterprise, cooperative or community ownership principles, or wished to see locally based solutions and a role for the voluntary and public sector.
13.16 There was a broad consensus among the individuals who selected this option about the importance of a not-for-profit approach, regardless of the model adopted.
Other comments on scheme ownership
13.17 Some respondents did not express a preference, but instead said the model adopted should be the one best able to deliver a successful scheme or meet the scheme objectives. Others suggested learning from the models adopted in schemes elsewhere.
13.18 Finally, in a few cases, respondents said they did not think there should be a separate scheme operator, or thought that this represented unnecessary bureaucracy.
Achieving secondary benefits (Q33)
13.19 Question 33 (an open question with no initial closed question) asked respondents for their views on the emphasis that should be placed on the system administrator achieving ‘secondary benefits’. The question made reference to ensuring that fair work practices are followed and ensuring that the material collected is reprocessed in Scotland, but there was no further explanation or discussion of ‘secondary benefits’ in the consultation paper.
13.20 Around half of those who responded to this question made only very brief comments, consisting of a few words or a single sentence indicating the extent to which they thought that secondary benefits should be emphasised by the scheme administrator. Most commonly, respondents thought that secondary benefits should be emphasised within the scheme, offering comments such as ‘100%’, ‘a lot’, ‘a great deal’, ‘high emphasis’, ‘these should be a priority’, and ‘this is vitally important’. Some, however, indicated more qualified support saying that there should be ‘quite a lot’ or ‘some’ emphasis, or that any emphasis should be ‘reasonable’. Others indicated reservations about pursuing such an agenda, offering comments such as ‘minor’, ‘low emphasis’ or ‘low importance’, or simply stating ‘none’. These respondents did not explain their views further.
13.21 Other respondents did, however, explain their views, and the remainder of this section explores the issues raised in these comments. These related to: general views on the pursuit of secondary benefits (support for and opposition to); fair work practices; ensuring reprocessing in Scotland; and other secondary benefits. A final section covers other comments on the issue of secondary benefits.
13.22 As noted above, the wording of Question 33 made specific reference to ‘fair work practices’ and ‘ensuring that the material collected is reprocessed in Scotland’ as examples of secondary benefits. Those who explained their views in more detail tended to focus on these two issues in their comments.
Support for the pursuit of secondary benefits
13.23 Those wishing to see a strong emphasis on secondary benefits included most individuals, as well as organisations from the public, voluntary and community sectors. These respondents typically wished to see a scheme that was ethical; that supported the circular economy and Scottish businesses; that provided maximum benefit at local, community and individual level for the people of Scotland; and that set high standards and led the way for other sectors and other nations.
13.24 Respondents in this group thought that such values should be fundamental to the scheme (i.e. they should not be seen as ‘secondary’) and should be incorporated into the scheme from the outset.
13.25 Some also suggested that an emphasis on secondary benefits would help build confidence in the system and encourage consumer buy-in and participation.
13.26 Among those offering qualified support for pursuing such benefits, there were suggestions that such aims were ‘important’ but should continue be regarded as ‘secondary’ to the main aim of improved recycling.
Opposition to or reservations about the pursuit of secondary benefits
13.27 A range of mainly organisational respondents questioned the pursuit of secondary benefits. They argued that the aim for the scheme should be increased recycling and efficient and cost-effective processing of materials. They believed that DRS operators should be free to make their own decisions on a commercial basis and were concerned that any obligations to pursue secondary benefits would detract from this aim, and increase the burden on consumers, and / or distort the market. This view was particularly linked to the potential aim of ensuring reprocessing in Scotland, as discussed in paragraphs 13.32 to 13.34 below.
13.28 Other respondents suggested that people were more concerned about consumer costs than achieving secondary benefits, or that including obligations regarding secondary benefits risked making the scheme too complicated.
13.29 Some respondents, including some individuals, suggested that while it might not be appropriate to pursue secondary benefits from the outset, this was something that might be introduced at a later point once the system was up and running.
Fair work practices
13.30 There was general agreement across all respondent types about the importance of fair work practices. Individuals and some organisations (from the voluntary, community and public sectors) saw the development of a Scottish-based industry as an opportunity to enhance fair work practices, and for employers in the sector to set an example regarding good practice. They stressed the importance of the living wage, unionisation, good training, and effective health and safety regimes, and the value that good practice in this area could bring to any business. They argued that adherence to fair work practices should be a contractual requirement for any organisation working as part of the scheme, and that the scheme administrator should have a role in overseeing and enforcing this.
13.31 However, across all respondent groups there was a common view that this was not an issue that should be (or needed to be) addressed via the proposed DRS, with respondents also questioning whether ensuring fair work practices should be classified as a ‘secondary benefit’. It was pointed out that existing legislation covering issues such as employment rights and health and safety at work was already in place and would apply to DRS-related employment in the same way as it applied to any other sector.
Reprocessing in Scotland
13.32 There was a high degree of support among individuals for the principle of reprocessing in Scotland. Respondents often stated that this would be good for jobs and the economy and thought that Scotland had an opportunity to take a leading role in developing the reprocessing industry. Respondents also saw this approach as environmentally and ethically sound, and important in furthering the ‘circular economy’. Less commonly individuals said that ensuring efficient, effective and environmentally sound recycling was the priority and that this might be best achieved by exporting material for processing, or that local processing was preferable but should not be pursued ‘at any costs’.
13.33 While it was common for organisational respondents of all types to highlight the current lack of capacity in the reprocessing sector in Scotland, there was a range of views from different sectors about the implications of this, as follows:
- Commercial organisations generally did not think it was realistic for Scotland to develop a fully self-sufficient cost-effective reprocessing industry. While some were supportive of increasing and using local reprocessing ‘where practical’, there was also a view that any obligations regarding in-country reprocessing would impact on the commercial viability of the scheme and the profitability of individual operators. Respondents frequently stressed the benefits of a UK-wide reprocessing industry.
- Other organisations (e.g. public sector, voluntary and community bodies) felt that there was scope for Scotland to further develop its recycling and reprocessing industry – at least in a selective way – with some suggesting that this should be pursued via a cross-sector (possibly cross-border with the rest of the UK) strategic approach. However, they also thought a pragmatic approach to using reprocessing facilities elsewhere was important.
13.34 It was common for respondents to link the issue of fair work practices and ensuring reprocessing in Scotland – those who did so thought that a locally based industry governed by Scottish (or UK) legislation would make it easier to ensure fair work practices.
Other possible secondary benefits
13.35 Occasionally, respondents suggested other goals that might be pursued as secondary benefits. These included minimising energy use, promoting a reduction in packaging, creating markets for reprocessed materials, supporting the involvement of smaller outlets in the scheme, and generating increased funding for cleaning up plastic pollution.
Arrangements for delivering secondary benefits
13.36 There was a range of views put forward about how the pursuit of secondary benefits might be affected by different possible scheme ownership and governance arrangements. For example, it was suggested that:
- Public ownership or the adoption of a social enterprise model would facilitate the delivering secondary benefits
- Commercial operators should not be restricted by ‘political’ aims
- Any requirements regarding secondary benefits should be included in scheme legislation, and operators would need to adhere to this
- The proposed delivery of secondary benefits could be assessed as part of any tendering process, and built in to contractual arrangements
- Performance regarding secondary benefits would need to be monitored and reported.
13.37 Some respondents thought that the question of secondary benefits could not be addressed until the system ownership and design was agreed.
Suggested role(s) of scheme administrator (Q34)
13.38 Question 34 (an open question) addressed the role of the scheme administrator. The consultation paper described the type of activities that might be undertaken by the organisation managing the DRS (i.e. the administrator), but also said that exact roles and responsibilities would depend on the final scheme design.
13.39 Respondents offered a wider range of general and more detailed points on the potential role and functions of the scheme administrator. Individuals in particular often simply said that the administrator should be responsible for running the scheme, overseeing the scheme, or ensuring its smooth and efficient operation. Those respondents offering more detailed comments identified the following main areas of responsibility for the administrator:
- Overall scheme delivery: Ensuring the overall successful running of a joined up, coordinated and accessible scheme across the whole of Scotland
- Scheme objectives: Ensuring the scheme met its objectives, as set out in legislation and any associated rules and arrangements
- Working principles: Ensuring the scheme operated in accordance with wider ethical and environmental principles, and delivered community benefits
- Maximising scheme success: Maximising the success of the scheme in terms of recycling, waste reduction and littering, and packaging innovation; maximising financial return
- Scheme design and development: Working with stakeholders to establishment the scheme; ensuring ongoing development, and continuous improvement
- Governance: Ensuring compliance with legislation; ensuring transparency and accountability to government and the public; carrying out prevention and enforcement activities regarding fraud and system abuse
- Financial management: Overseeing finances and ensuring financial sustainability; securing best value for recyclate; overseeing reinvestment of profit
- Scheme promotion: Including public information and education and community engagement
- Monitoring and evaluation: Establishing performance indicators, conducting research and collecting and analysing data for audit, performance management and service improvement purposes
- Scheme rules and processes: Setting deposit levels (or advising on this), setting / administering producer fees; reconciling deposit transactions; validating products and dealing with barcodes
- Scheme infrastructure and logistics: Dealing with drop-off points, RVMs, transportation, storage, reprocessing etc; engaging with producers / retailers, and putting contractual arrangements in place to deliver these aspects of the scheme.
13.40 It should be noted that the extent to which respondents saw these functions as being carried out by the administrator directly or by a third party varied.
13.41 Overall, there was a great deal of overlap in the roles and function put forward by individuals and organisations. However, there was a broadly held view among organisations that the administrator should be responsible for ensuring the scheme met its objectives as set out in government legislation and adhered to any related rules, but that how that was done should not be prescribed to any great extent. Thus, organisational respondents were more likely to describe a strategic rather than just an operational role for the scheme administrator, involving functions such as setting up, designing and establishing the scheme; ensuring its smooth running (via contractual arrangements); providing appropriate governance; setting key performance indicators (KPIs) and monitoring performance against these. Some organisations (e.g. charities, public sector bodies, ‘other’ organisations) also said the administrator should ensure the scheme operated in an ethical or sustainable way and delivered benefits for communities in Scotland.
13.42 The consultation paper raised the possibility of the scheme administrator overseeing the reconciliation of deposit transactions, and setting the producer responsibility element of the scheme, tasks which might alternatively be carried out via a central clearing system. These functions were noted by a range of respondents – mainly but not exclusively, organisations – as falling within the potential remit of the scheme administrator.
Other comments on the role of the scheme administrator
13.43 Occasionally, across both organisations and individuals, respondents queried the need for a ‘scheme administrator’ or expressed concern about the potential implications for costs and bureaucracy. It was also common for individuals in particular to say that they did not know what the role or function of the scheme administrator should be – respondents said that this was beyond their knowledge and expertise, or that it was an issue for ‘experts’ to consider. Organisational respondents often made the point that the role and function of the administrator would vary depending on the nature of the scheme established, and the arrangements put in place elsewhere in the UK.
13.44 Respondents – organisations and individuals – suggested that it would be useful to look at the roles carried out by administrators in existing schemes elsewhere in the world.
Email: Tim Chant DRSinScotland@gov.scot
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