On 27 January 2025, the UK Government reaffirmed its commitment to maintain the target launch date of October 2027 for the deposit return scheme (DRS). This statement follows the publication of the draft Deposit Scheme for Drinks Containers (England and Northern Ireland) Regulations 2024(E & N.I Regulations) on 25 November 2024.

The E & N.I Regulations will bring new compliance obligations to retailers, producers and suppliers of drinks to the English and Northern Irish markets, regardless of whether they are based in England, Northern Ireland or elsewhere. In this blog, we set out the types of products that fall within scope of the DRS and summarise some of the key proposals made by the E & N.I Regulations. We also provide an update on the status of the DRS in Wales and Scotland.

Objective of the DRS and recap of current status in the devolved nations

Across England, Northern Ireland and Scotland, consumers buy an estimated 30 billion single-use drinks containers each year – including 12 billion plastic drinks bottles and 13 billion drinks cans. An estimated 6.5 billion single-use drinks bottles and cans per year go to waste rather than being recycled, with many ending up littered, according to the Department for Environment, Food and Rural Affairs.[1]

The publication of the E & N.I Regulations marked a significant step towards launching the DRS across England, Scotland and Northern Ireland in October 2027 and thereby meeting the policy objective to reduce littering of single-use drinks containers, drive up recycling rates, and to support the move to a circular economy.[2]This supplements the UK's wider aims of increasing recycling rates, cutting littering and ultimately promoting a circular economy.

To recap, and as we discuss later in this blog, Scotland's DRS is 'on pause' to align with a UK-wide timescale. Also, at the time of writing, the Welsh Government has stated an intent to withdraw from a UK DRS in order to launch an independent DRS that includes glass.

A brief refresher on the mechanics of a DRS

The DRS operates as follows: when a consumer buys a drink, they pay a small amount of money (i.e., a deposit) for the container in which the drink is held at the point of purchase. The deposit is redeemable by whoever returns that container to a designated return point. This is not a new concept and one we have written about extensively since Scotland set out its own framework for establishing a DRS under the Deposit and Return Scheme for Scotland Regulations 2020 (the 'Scottish DRS Regulations').

What products fall within the scope of the E & N.I Regulations?

(i) Drinks

    Under the draft text of the E & N.I Regulations, the DRS will apply to drinks that are suitable for human consumption, such as water and beverages (including, for example, sports drinks, diluted liquids, sodas, slushies, and fruit squash and cordial). It will also apply to drinks which are sold individually or as part of a multipack.

    Certain liquids, such as syrups or flavouring additives used solely to enhance the taste of drinks are excluded from the scope. This exclusion applies generally to products that are not intended as standalone beverages.

    (ii) Containers

      Containers of relevant drinks fall within the scope of the DRS if they are single use bottles or cans made wholly or mainly from plastic, steel or aluminium, and which have a capacity of containing between 150 millilitres and 3 litres. The E & N.I Regulations expressly exclude ''registered low volume products'' from the scope of the DRS. Coffee cups and glass are not covered by the DRS.

      Overview of the key proposals for DRS implementation

      The E & N.I Regulations set out a range of operational and compliance requirements, from establishing return points and procedures, to setting up a body to oversee the implementation of the scheme, and enforcement mechanisms to ensure effective implementation of the scheme. Some key proposals include:

      • Deposit management organisation ('DMO'). A DMO will be appointed to oversee the DRS. It is expected that the organisation will be appointed and announced in April 2025. Producers, manufacturers and importers will be required to make payments to the DMO, including registration fees and the deposit in respect of a deposit item supplied to a consumer. Applications opened on 2 December 2024 to become a DMO for the DRS in Scotland, England and Northern Ireland. Applications will close on 3 February 2025.
      • Deposit amount. A specific deposit amount has not yet been set, but the E & N.I Regulations require the DMO to determine an amount for deposit items. Once determined, the deposit amount will be published, though it is not yet clear when we can expect details to be published.
      • Mandatory and voluntary return points. Certain supermarkets and grocery stores will be required to operate a mandatory return point and other suppliers and retailers of deposit items will have the option of voluntarily operating a return point.
      • Registration requirements. Producers, manufacturers, importers and return point operators are required to make registration applications with the DMO before 1st October 2027. Producers, manufacturers and importers will not be allowed to supply drinks unless they are registered, and will be required to keep records relating to the supply of any such drinks.
      • Producer registration fee. Producers, manufacturers and importers must pay a registration fee if one is set by the DMO, which it is entitled to do at its own discretion. An amount has not yet been fixed, nor it is clear if one will be set, however, where one is set, the DMO will consult with producers and other relevant stakeholders to determine an appropriate fee. The fee will then be published and reviewed at least every 12 months.
      • Labelling and information requirements. There are specific rules relating to the labelling of deposit items as well as provisions requiring suppliers of deposit items to display information about the DRS. Logos will also be issued by the DMO, which must be carried on deposit items and multipacks to identify them as deposit items.
      • Enforcement. The E & N.I Regulations set out various enforcement powers for the Environment Agency in England and the Department of Agriculture, Environment and Rural Affairs (DAERA) in Northern Ireland. These include powers to:
        • require the provision of information;
        • allow entry and inspection;
        • issue compliance notices;
        • issue enforcement undertakings;
        • issue fixed and variable monetary penalties; and
        • publish a public enforcement action register.

      Status of the DRS across the rest of UK

      Scotland

      The Scottish Government had sought a full exclusion from the Internal Market Act (IMA) to implement their scheme, but this was not granted. Rather, the UK government granted a partial exemption to Scotland under the IMA for the devolved Scottish DRS to proceed but required the exclusion of glass bottles. The UK Ministers IMA decision led to the delay of the Scottish DRS Regulations until October 2025. It was subsequently agreed that Scotland's DRS would align with the timescales of the UK DRS and has also agreed to exclude glass from the Scottish scheme.

      For a more detailed breakdown of Scotland's DRS, please see our previous blog here, and our comments on its subsequent amendments here.

      Wales

      The exclusion of glass has proven to be a controversial political issue in Wales also. In November 2024, the Welsh government has announced that it would withdraw from the UK DRS and instead move ahead with its own DRS that includes glass as an in-scope container. An implementation timeline has not yet been announced and it is unclear if the Welsh DRS will be rolled out at the same time as the UK-wide scheme, which is now expected to become operational in October 2027.

      Comment

      The wheels are now in motion for a UK DRS and further details will begin to emerge as legislative timescales prescribe specific practical, logistical and operational measures.

      The UK Government has emphasised the importance of UK wide interoperability to ensure a smooth implementation of a UK DRS. It remains to be seen if the Welsh Government will maintain their current opposition to the exclusion of glass and how this would impact the movement of goods throughout integrated UK supply chains. In addition, the voice of the food and drink industry including the multiple actors engaged in production, supply, distribution and retail will be central to the successful application of the scheme. Many of those actors engaged in the food and drink sector have direct experience from Scotland's DRS and as such, industry feedback and engagement will also be important during the transition and planning phases prior to October 2027.

      For instance, businesses need support to plan ahead - a DRS requires significant capital investment plus operational and logistical planning. As a corollary to that, operational scheme mechanics and logistics need to be factored into transition planning. Finally, the scheme administrator/ DMO has a pivotal role to manage the many operational challenges and tight timeframes faced by multiple stakeholder demands and so it will be essential that the DMO forges close engagement and cooperation with industry.

      If you have any queries in relation to the DRS, please contact Grant Strachan or your usual Brodies contact.


      [1] UK Government Press release: 27 January 2025: Government to clean up communities with deposit return scheme for plastic bottles and cans - GOV.UK

      [2] UK Government Policy Paper: UK government update: Deposit Return Scheme for drinks containers, Published 19 November 2024

      Contributors

      Grant Strachan

      Partner

      Ussamah Nasar

      Solicitor