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What's your objection to the Deposit Return Scheme?

The running costs of the government’s proposed deposit return scheme (DRS) for drinks cans and bottles is a very expensive way of achieving very little, a new briefing from the Institute of Economic Affairs reveals.



Author of the report Christopher Snowdon finds that the DRS is expected to cost almost £1 billion to set up (and £814 million per annum thereafter) to collect recyclables worth just £37 million.



While the DRS is expected to increase recycling rates, it is unlikely to recover more than an extra 10-15 per cent of beverage containers. Whilst it would be better to recover and recycle this waste than send it to landfill, the marginal cost is excessive; a relatively small proportion of cans and bottles should not be recovered at any cost.



The government’s impact assessment puts an unfeasibly high value on the intangible benefits of a modest reduction in littering while ignoring the significant costs to consumers of collecting and returning their containers, according to the briefing.



The report shows that the benefits of the policy are outweighed by its costs. A DRS would be a loss-making inconvenience for consumers and retailers alike.



Key facts:



According to DEFRA’s Impact Assessment, a DRS would:



Produce recyclable materials worth £37 million



Reduce litter clean-up costs by £50 million



Produce ‘greenhouse gas emissions savings to society’ worth £12 million







This produces benefits of less than £100 million, for more than £800 million of cost.



The UK already has a comparatively high recycling rate with kerbside recycling.



The recycling rate for plastic drink bottles is 74 per cent in the UK. Parts of the USA, Canada and Australia which have had a DRS in place for many years have recovery rates that are similar to – or lower than – the UK.



The vast majority of the containers intended to be collected through the DRS are already being recycled via kerbside collection. Under a DRS, local authorities will lose the revenue they make from selling these materials.





Expected costs (retailers):



The government’s impact assessment estimates that the cost in the first year will be £1,093 million, with running costs of £814 million per annum thereafter. These costs will be met by producer fees and unclaimed deposits and will ultimately fall on consumers.



Setting up and operating the system:



Reverse vending machines: Approximately £30,000 per machine, plus around £62,000 worth of retail space



Storing returned containers: £17.4 million per annum cost to the retail sector



Operating manual return service: 114 hours of extra work per small retailer per annum


Expected costs (consumers):



Significant cost of unpaid work required of consumers to make the DRS function:



Storage of DRS-compliant cans and bottles in their home



Time and inconvenience of returning recyclables


The opportunity cost of just five minutes extra labour per week, per household would equate to £1,687 million per annum (based on the median hourly income of £14.31), far outstripping the value of even the intangible benefits.