Environmental lawyer Pamela Turok of CMS examines the unresolved policy and operational questions that could derail the UK’s deposit return scheme before its October 2027 launch.
In just over 18 months, the UK is due to begin operating a deposit return scheme (DRS) for drinks containers.
The new scheme will be launched across all four nations on 1 October 2027 with a collection target of 70% in Year 1 which rises to an ambitious 90% in Year 3.
These plans follow the unsuccessful attempt to launch a separate DRS in Scotland in 2023. The collapse of that scheme was highly controversial leading to a lawsuit between the scheme’s contractor and the Scottish Government. It also created much consternation amongst drinks producers, who were asked to forward fund the scheme, and retailers, who had invested in returns management infrastructure.
Attempting to launch a DRS in Scotland ahead of the rest of the UK was a key factor in the scheme’s downfall as it raised concerns about cross-border trade disruption and created a potential competitive disadvantage for Scottish businesses.
Scotland-specific barcoding requirements also meant producers would have needed different packaging north of the border. This, along with a range of other factors including complicated design, cash flow concerns over reimbursement delays, and poor communication alienated drinks industry producers and ultimately made the Scottish DRS operationally unworkable.
As it’s being simultaneously launched across all four nations under a coordinated legislative approach, the newly proposed UK-wide DRS will not face some of the key problems which beset the Scottish scheme. It is, however, critical that the UK Government learns from some of the wider failings in Scotland and ensures that similar mistakes are not repeated.
To address some of the issues experienced north of the border, the UK-wide scheme has excluded glass from England, Scotland, and Northern Ireland although Wales has been granted a conditional exclusion for this material. This is subject to a four-year transitional period where there will be no deposit charges or labelling requirements for glass containers until October 2031.
All eligible containers covered under the UK DRS will be branded with the logo of the organisation managing the scheme, Exchange for Change. This will also help by removing the cross-border barcoding complexity that undermined Scotland’s scheme.
However, with the October 2027 launch date fast approaching, there are a number of key issues still to be determined around the UK DRS. These need to be quickly and carefully addressed to ensure the scheme can proceed within the proposed timescales.
The exact deposit amount for containers, a critical point for consumer behaviour modelling and business cash flow planning, still requires to be confirmed. While this is expected to be set at 20p, the DMO has yet to announce this formally.
The practical implications of this uncertainty extend well beyond consumer behaviour modelling. A seemingly minor ambiguity creates cascading operational challenges: IT systems for point of sale and back-office reconciliation must be configured months before go live; staff training materials and operational guides require finalisation well in advance of launch; and customer facing communications - from in-store signage to digital campaigns - demand lead time for production and distribution. For larger retail chains or multi-site operators, these workstreams may run in parallel across hundreds of locations simultaneously.
Producer fee levels have also not yet been published by Exchange for Change (and are not expected until Q3 2026), which prevents businesses from being able to accurately forecast compliance costs.
Retailers also remain uncertain over handling fee rates and timescales for reimbursement of the deposits they will pay back to customers. Until these are confirmed they are unable to determine whether the fee will cover the costs of infrastructure, staffing, space, and utilities required to accommodate the scheme. This also creates cash flow concerns, especially for smaller retailers.
This uncertainty is particularly problematic for capital investment decisions. The choice between deploying reverse vending machines (RVMs) and implementing manual collection processes is not merely operational - it represents a significant financial commitment with long lead times for procurement, installation, and staff retraining. RVMs typically require several months from order to installation, with costs running into tens of thousands of pounds per unit for larger automated systems. Without confirmed handling fee rates, retailers are unable to conduct meaningful return on investment analysis.
With Wales pursuing a separate DMO and uniquely including glass, precise mechanisms for cross-border returns and any dual labelling requirements must also be confirmed. The Welsh reuse policy is still under development and has not yet been granted the necessary legislative exclusion making it a potential source of future legal and operational complexity.
One of the most significant risks to the October 2027 launch is the complexity of coordinating operational readiness across multiple distinct industry sectors simultaneously. Unlike a regulatory change that primarily affects one part of a supply chain, DRS requires producers, retailers, logistics providers, and the Exchange for Change to achieve alignment across interconnected systems within the same compressed timeframe. The current policy uncertainty compounds this coordination challenge significantly.
Building a flexible compliance framework is arguably the most important tool available to businesses at this stage. Rather than designing systems and processes to a single set of assumed parameters, businesses should build in configuration flexibility. For example, ensuring that IT systems can accommodate deposit amounts within a defined range without requiring redevelopment, and scenario planning across a range of fee and deposit levels will allow businesses to identify the decisions that are truly dependent on confirmed figures versus those that can proceed on reasonable assumptions.
Robust record-keeping systems will be critical from the outset, both for compliance demonstration and for engagement with Exchange for Change and regulators. Early engagement on data format requirements and reporting obligations is also strongly advisable.
The UK-wide DRS has been redesigned to prioritise interoperability, standardisation, and legal alignment, but these unresolved issues must be quickly clarified if the scheme is to proceed with its proposed October 2027 launch date.
While launching a scheme that is not operationally ready would be worse, any delay in the UK DRS would significantly damage confidence. After the experience of the failed Scottish scheme, it is important the UK Government addresses these issues in a way that will ensure success.
Pamela Turok is an Of Counsel and environmental specialist lawyer at CMS
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How will the government and DMOs address the challenges of including glass in DRS while ensuring a level playing field across the UK?
There's no easy solution to include glass in the DRS while maintaining a level playing field. Potential approaches include a phased introduction of glass, potentially with higher deposits to reflect its logistical challenges. The government and DMOs could incentivise innovation in glass packaging design and subsidise dedicated return points for glass-handling. Exemptions for smaller businesses unable to handle glass might also be necessary. Any successful solution will likely blend several approaches. It must address the differing priorities of devolved administrations, balance environmental benefits with logistical and cost implications, and be supported by robust consumer education campaigns emphasizing the importance of glass recycling.