DRS: eight years on, and the costs are still unresolved

A Deposit Return Scheme for beverage containers was first proposed in December 2018 as part of the Resources and Waste Strategy for England, with implementation originally planned for spring 2023. Almost eight years later, the scheme is still a year away from launch. That delay is perhaps unsurprising given the scale of political, economic and policy change since 2018:

· Brexit and the UK Internal Market Act

· A global pandemic

· Six Prime Ministers

· Nine Environment Secretaries

· Disagreement between the four nations

· The postponement of Scotland’s scheme

· The cost-of-living crisis and high inflation

· Competing packaging reforms for pEPR

· Delays in legislation and in appointing a scheme administrator

The above factors have created uncertainty with both local authorities and businesses (both those collecting and receiving materials), with many wondering whether the scheme would actually happen. However, on 30 September 2026, Exchange for Change, the Scheme Administrator, announced that it had appointed 5 contractors to manage the collection and processing of materials from reverse vending machines, with the go-live date of October 2027 finally feeling like a reality. This news has not been universally welcomed across the sector, and the 8-year-long debate continues.

There are several key groups that will be negatively impacted by the implementation of DRS, and to date, there has been no suggestion of any compensation to offset the losses they face.

Waste Collection Authorities (including unitary councils)

Collection authorities have the resources to meet current demand for recycling collection services, including both personnel and vehicles. The implementation of DRS will lead to a fall in the tonnage collected and thus may impact:

· the resources required to deliver the service; however, reducing these may not be straightforward, as it may involve redundancies or redeployment, and assets may only be partially depreciated and not readily redeployable or sellable;

· those authorities that retain materials from collections (rather than passing them to the disposal authority) will see a fall in income from the sale of materials;

· Those with outsourced services may find their contracts need to be renegotiated to allow for changes to resourcing to offset the reduction in tonnage (and thus income), which may not be straightforward depending on the change mechanisms within their contracts.

Waste Disposal Authorities (including unitary councils)

Disposal authorities may have waste transfer stations, sorting lines, and Materials Recovery Facilities (or contracts that provide these on their behalf) to bulk and sort materials, designed to meet current dry recyclables tonnage demands. The DRS will result in a reduction in the amount of material processed through these facilities and, thus, in the income from these high-value materials. However, it isn’t as straightforward as a loss in income from material sales:

· contracts for materials processing can have minimum tonnages;

· the basket price mechanisms may push up the cost of processing every tonne of material processed through the facility;

· there may be planning restrictions on the site that prevent material from other sources being brought in;

· MRF sorting may not be able to operate efficiently or effectively. They are designed to manage a specific input with sequential extraction of different material streams, and removing streams from the input may have a detrimental impact on the overall operation of the plant.

· the MRF may be under-utilised but unable to source material from other sources – potentially resulting in redundancies and financial difficulties.

Service Providers

Many local authorities who collect materials two-stream or co-mingled procure contracts for processing at existing merchant MRFs, specifically designed to handle dry mixed recyclables. Service providers will face many of the issues outlined above, but where they have merchant facilities, they may be particularly vulnerable to changes in tonnage and composition.

And these are just a few examples.

LARAC calls for urgent action

In September 2026, LARAC wrote to Defra Minister Emma Hardy MP calling for an urgent review of the impact of DRS on local authorities. It challenged Defra’s estimate that the scheme would save councils 69p per household, warning instead that lost material income, higher MRF gate fees, contract changes, Trading Standards enforcement and litter-management pressures could cost councils millions of pounds. LARAC requested an updated impact assessment based on current data; a financial mechanism to offset councils’ lost income and additional costs, either through the New Burdens Doctrine and equivalent arrangements across the devolved nations or a share of unredeemed deposits; formal local authority involvement in monitoring the scheme after launch; and a cumulative assessment of DRS, pEPR and Simpler Recycling. These are not peripheral concerns: they go to the heart of whether the costs and operational consequences of DRS have been properly recognised and fairly allocated.

Private-sector concerns

LARAC is not alone in questioning whether the financial and operational consequences of DRS have been fully recognised. The British Retail Consortium has estimated that the scheme could cost retailers at least £1.8 billion a year, in addition to substantial set-up costs, while CIWM and hospitality, drinks and retail bodies have raised concerns about infrastructure, staffing, system divergence, fraud, transition arrangements and the interaction with pEPR. Businesses that invested in preparation for Scotland’s postponed scheme have already incurred high sunk costs. Although these organisations generally support the principle of DRS, their message is consistent: poor sequencing, inadequate transition arrangements and unresolved design issues risk transferring substantial costs to businesses and, ultimately, consumers.

The Environmental Services Association, representing the UK’s waste and recycling industry, has also questioned whether the scale and sequencing of DRS are justified. It has argued that pEPR and collection reforms should have been implemented first, allowing their impact to be assessed before introducing an additional system that removes valuable material from existing collection and sorting infrastructure. ESA supported the delay to October 2027 as a sensible and pragmatic response to the lack of policy detail and preparation time, while stressing that DRS must complement rather than undermine established kerbside services and investment in MRF infrastructure.

A way forward

What is clear now is that, almost nine years after it was first proposed, DRS will be introduced. Exchange for Change is established, contracts have been procured and mobilisation is under way. The priority must therefore shift from debating whether the scheme should proceed to ensuring that it is implemented fairly and does not destabilise existing collection and recycling systems. Government and the Scheme Administrator should work with local authorities, waste contractors, retailers and producers to update the impact assessment using current tonnage, material-value and contract data; establish a transparent mechanism to compensate organisations for demonstrable additional costs and stranded investment; and clarify how unredeemed deposits will be used.

The interaction between DRS, pEPR and Simpler Recycling must also be monitored as a single programme rather than as separate reforms. A formal review should be undertaken after the first year of operation, with agreed measures covering capture rates, litter reduction, consumer participation, local authority costs, MRF performance and the effect on kerbside recycling. DRS may now be inevitable, but avoidable losses are not. A collaborative, evidence-led transition would give the scheme the best chance of increasing recycling without weakening the infrastructure and services on which it depends.

Victoria Crawford Consulting

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victoria@victoriacrawfordconsulting.co.uk

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