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Government sets out operational framework for 2027 Deposit Return Scheme

Government publishes detailed implementation guidance for Deposit Return Scheme, revealing new flexibility for retailers and expanding opportunities for voluntary participation across multiple sectors

Boy putting bottle into a reverse vending machineThe Government has published initial guidance for the implementation of its forthcoming Deposit Return Scheme (DRS) in England and N.Ireland, with similar requirements anticipated to apply for Scotland. This provides operational details for legislation passed in the Westminster Parliament last week, outlining how different stakeholders will participate in the scheme ahead of its October 2027 launch.

Applications for the role of Deposit Management Organisation (DMO) opened last month, are scheduled to close next week (3 February 2025), with interested not-for-profit parties able to bid for operating either the England and Northern Ireland scheme, Scotland's scheme, or both. The appointment of the DMOs is scheduled for April 2025, which provides approximately two and a half years to establish necessary infrastructure.

Expanding participation opportunities

The guidance sets out the opportunity for a diverse range of organisations to participate in the return point network, extending well beyond traditional retail settings. While supermarkets, grocery stores, convenience stores and newsagents will form the mandatory backbone of the collection network, the scheme enables voluntary participation from a much broader range of premises.

Online retailers can participate through takeback services, with the guidance confirming that retailers can register with the deposit management organisation as takeback service providers. This will allow them to recover empty containers from online customers at the point of delivery to refund deposits, ensuring the scheme remains accessible to the growing number of consumers who primarily shop online.

Other types of organizations that can apply to host voluntary return points include hospitality venues, food-to-go stores, schools, gyms, sports and community centers, and mobile caterers. Businesses operating vending machines can also participate in the scheme, though specific operational details for these various settings will be developed by the appointed DMO.

For hospitality venues such as cafes, restaurants and pubs, the guidance aims to provide flexibility, though this in turn may present practical challenges. These venues can choose not to charge the deposit for drinks consumed on the premises, provided they collect and store the containers for DMO collection. If venues sell both drinks for consumption on premises and takeaway drinks, they have the option to only apply deposits to takeaway sales, though it is not clear how this will be enforced with consumers.

Accompanying today’s announcement, Circular Economy Minister Mary Creagh commented on the broader significance of this inclusive approach: "This Government will clean up Britain and end the throwaway society. This is a vital step as we stop the avalanche of rubbish that is filling up our streets, rivers and oceans and protect our treasured wildlife. Turning trash into cash also delivers on our Plan for Change by kickstarting clean growth, ensuring economic stability, more resilient supply chains, and new green jobs."

Operational flexibility

The guidance provides clear criteria for retailer exemptions, confirming that stores in urban areas with retail space under 100m² will be automatically exempt from hosting return points. According to the Association of Convenience Stores’ (ACS) Local Shop Report 2018, 58 per cent of independent stores are smaller than 1,000 square feet (approximately 93 square metres). However, these retailers can still apply to participate voluntarily - a flexibility that could help maintain comprehensive coverage for the DMO, depending on the fees offered to retailers.

For other retailers, today’s announcement confirms two other routes for retailers that wish to be exempted, either on the basis of proximity to another return point, or where the limitations of the physical premises makes return point installation impractical.

The flexibility built into England and Northern Ireland's scheme, particularly around payment methods, is notably different from Scotland's original plans to launch DRS in 2022, which required all retailers selling drinks to offer a cash refund for the 20p deposit. Instead, participating retailers can opt to provide vouchers instead of cash / card payments, which is likely to encourage bigger retailers to directly tie in their loyalty schemes and smaller operators to provide store credit.

Stephen Moorhouse, Vice President of Coca-Cola Europacific Partners GB, acknowledged both the challenges and opportunities ahead: "Delivering to the timelines will be challenging but achievable, and now is the time for industry to roll up its sleeves to create a well-designed system that works for businesses, shoppers and the environment."

The Association of Convenience Stores welcomed the certainty provided by the detailed implementation framework. Chief Executive James Lowman stated: "We are pleased to have certainty on the DRS regulations so local shops can start to prepare for October 2027 and our communities can realise the benefits of reduced litter and higher quality recycled materials."

The scheme forms part of wider collection and packaging reforms which the government projects will support 21,000 new jobs and stimulate more than £10 billion of investment in recycling over the next decade.