Charging for single-use disposable beverage cups: consultation

2. Proposed approach

The purpose of the planned charge is to reduce our consumption of single-use disposable beverage cups through establishing a robust system which leads to widespread acceptance and increased use of reusable cups; while creating an opportunity for innovative approaches to reusable cup schemes to develop.

The intention is to make the charge as effective and feasible as possible, while keeping administrative burdens to a minimum in line with the principles of our New Deal for Business^[44] and to achieve this, the approach we have proposed is modelled on that already used for the single use carrier bag charge, which is familiar to both suppliers and consumers.

A summary of the scheme is provided below and more details on key considerations and questions are provided in the latter part of this consultation. Some of the questions are more suited to be answered by suppliers of drinks than other organisations or individuals but we welcome all responses.

Summary of proposals:

• Require all suppliers of drinks in or with single-use disposable beverage cups in Scotland to apply the charge at the point of sale to the consumer when a drink is bought, with a small number of exemptions. This approach allows us to capture nearly all scenarios where cups are provided and creates a transparent approach across all suppliers.
• The charge will not apply where a drink is free, such as in non-retail hospital and social care settings, or where a drink is supplied in a reusable cup.
• The charge to be applied to all single-use disposable beverage cups, regardless of composition, or type of drink the cup is intended to be used for. This includes single-use cups marketed as ‘biodegradable’, ‘compostable’, or other similar terms. These products remain single-use and should therefore be subject to a charge designed to encourage consumers to move to reusable alternatives.
• Set the minimum charge at £0.25 which is separate to the price of the drink and visible to the customer. Research conducted in 2019 demonstrates that a £0.20 - £0.25 charge presented in this way could encourage behaviour change in 49% of the population^[45]. The £0.25 includes any chargeable VAT.
• Exemptions would apply based on purpose or setting, for instance in schools, when a drink is purchased from some vending machines, and settings where bringing and using a reusable cup may not be practical.
• Suppliers will be able to retain reasonable costs for administering the system out of the proceeds of the charge, matching the single use carrier bag model.
• That net proceeds of the charge should be used for the advancement of environmental protection or improvement, or to any other purposes that may be reasonably regarded as analogous^[46].
• Suppliers would be expected to record the numbers of single-use disposable beverage cups they have charged for, the charge paid for them, the amount they are entitled to deduct to calculate the net proceeds (such as the costs to administer the system and VAT), and the net proceeds raised by the charge. This replicates the record keeping system for the single use carrier bag charge and should not be overly onerous to suppliers. Suppliers would be required to provide this information to the enforcement authority on the request of enforcement officers.
• Costs of modifying systems would be considered a reasonable one-off deduction from proceeds.
• Enforcement will be modelled on that for the single use carrier bag charge. Any supplier failing to charge or to comply with the recording requirements will be committing an offence and liable for a fine on conviction. Local authorities will also have the power to issue fixed penalty notices.

Charge level

In 2019, the EPECOM panel commissioned an academic literature review^[47] to test the proposition that charging separately for the cost of a cup can act as a ‘habit disruptor’. A habit disruptor is something that interrupts or challenges established routines or behaviours – in this instance the habit of using a single-use disposable beverage cup.

Furthermore, loss aversion theory shows that individuals have a higher sensitivity to potential losses than to gains^[48]. This means charging for products has a stronger impact on behaviour change than offering a discount. Applying a charge is the same method as that used to establish charging for single use carrier bags. The evidence suggested that:

• charges are more effective than discounts in reducing the use of single-use disposable beverage cups.
• a minimum charge of £0.20-0.25 would be needed to change the behaviour of 49% of the population.

Based on these findings, the Scottish Government is proposing a scheme which- would require suppliers to charge a minimum of £0.25 for every single-use beverage cup supplied to consumers when they purchase a drink (with specified exemptions), which is distinct and separate from the cost of a drink. The charge would be inclusive of VAT, and in line with the approach taken for the single use carrier bag charge.

We consider that a minimum charge set at this level will drive behaviour change towards reusables and create a level playing field more so than requiring suppliers to simply sell the cup and drink separately. Although selling the cup and drink separately at a supplier’s chosen price point may provide more flexibility for suppliers, as the price of cups vary we consider that setting a minimum charge would reflect available evidence about the level of charge that would be required to significantly influence consumer behaviour; provide a level playing field for all suppliers in Scotland, address the potential differences in overhead costs; and allow the charging scheme to be more easily communicated to the consumer.

The cost of drinks also vary. A minimum charge of £0.25 would mean that each single-use disposable beverage cup has the same minimum charge applied regardless of overall cost of the drink purchased. This is the most simple and straightforward approach for industry, suppliers and the customer. Suppliers would retain the autonomy to charge more for the cup if they wish, or to offer additional discount for customers who bring a reusable cup.

We recognise the importance of considering the impact on those on lower incomes who may be disproportionately impacted by charges. The charge can be avoided by consumers by replacing a single-use disposable beverage cup with a reusable cup, either provided by themselves or by suppliers where reuse models are implemented.

While an initial investment is required for a reusable cup, likely at a cost higher than purchasing a single-use cup, these items are usually durable and can last years, therefore if used consistently over time – and avoiding the charge – will allow consumers to re-coup the costs in savings.

However, the nature and availability of alternatives would be largely dependent on how retailers choose to enact the charge, their willingness to accept alternatives and how price adjustments are applied to products. We are aware that some people may not have access to their own reusable cup or may prefer to use single-use items for other reasons. The cost of reusables do vary, with some available from one or two pounds.

We also must consider the potential impact on people living with disabilities, who may find it harder to use reusable cups and would therefore be reliant on single-use cups for consuming beverages on the go. It may be that reusable alternatives or the logistics around them are not conducive to aiding independent living. This could result in rising costs for those that require continued use of single-use disposable beverage cups.

These impacts, as well as other considerations such as the potential impact of a charge on people in rural communities and people experiencing homelessness, are considered further in the accompanying interim Equalities and Fairer Duty Scotland Impact Assessments. We would welcome any further evidence on the likely impacts of a charge.

Q1: What would you consider a reasonable minimum price for a single-use disposable beverage cup, which is visible and separate to the price of the drink, to meet the aims of the scheme: to reduce the use of these items towards reusable alternatives?

a. £0.20

b. £0.25

c. £0.30

d. £0.40

e. £0.50

f. Other amount (please specify)

g. I don’t know

Q2: Please provide reasons for your answer to question 1. We would be interested in knowing your views on what price per cup would encourage behaviour change.

Q3: Alternatively, Scottish Ministers could require suppliers to charge in regulations but leave it up to suppliers to choose the price they charge for a single-use beverage cup. This approach would be supported by guidance provided by the Scottish Government. This is similar to the approach that taken in the Netherlands. Do you prefer this approach?

a. yes

b. no

c. I don’t know

Q4: Please provide reasons for your answer to question 3.

Scope of the charge

We are proposing that all single-use disposable beverage cups are included in the scope of the charge as this is the optimum approach to take action against our ‘throw-away culture’. Cups for hot and cold drinks that are being purchased would be included regardless of the composition of the cup or its potential recyclability.

The climate emergency and nature crises we face are fundamentally crises of over-consumption. In order to maximise the impact of the charge, all single-use beverage cups are in scope, regardless of the material they are made of, including cups made from compostable or biodegradable materials.

These materials are not circular solutions to the problem of over-consumption. These policy proposals are developed in line with the principle of prevention of waste in the waste hierarchy, promoting consumption reduction and helping to make reuse the default option.

Exempting these materials from the charge could lead to material substitution and continuing levels of single-use cup consumption through loopholes to continue supplying single-use cups exempt from the charge. They also present their own unique waste management problems such as requiring specialist collection and processing facilities and potentially encouraging littering. There is also a risk that they will confuse consumers, as they often appear identical to traditional single-use cups, and might end up being disposed of in incorrect recycling bins, potentially contaminating entire loads of recyclable materials.

We want to ensure that the charge has sufficient impact to encourage the behaviour change needed to tackle this issue, while preventing instances where new versions of a single-use product are created to avoid the charge. Furthermore, single-use disposable beverage cups are most often used on the go, so even if they are recyclable there is no guarantee that the consumer is in the position to recycle it when they are finished using it, and local authorities bear the burden of disposal either through on-street waste bins or litter.

As noted in previous sections, feedback from the Advisory Group emphasised the need for a level playing field for suppliers and consumers and therefore we propose that, unless covered by the exemptions below, all suppliers regardless of size and sector are included in the scheme.

We recognise there are some scenarios where it would not be appropriate to apply the charge. As noted above, the proposal is that the charge should only apply where a drink is being purchased, which would include the redemption of loyalty scheme points or systems where a free beverage is earned through previous purchases. Situations where the drink is free, for instance in non-retail care and health settings, will not attract the charge. However, there will be situations where a cup would be in the scope of the charge but where it would not be appropriate to charge; therefore the charge will not be applied to cups sold in such situations and those cups will therefore in effect be exempt. The proposed exemptions are:

• Vending machines: Evidence submitted to the Scottish Government during early stakeholder engagement indicated that in the majority of vending machines there is currently no option to select a reusable cup and this would not be possible without additional technological development. This exemption does not apply to drink machines in retail settings where the drink is taken to a checkout for payment but in scenarios where a vending machine is used instead of a staffed service. It is likely to only apply to when there is no reusable option available.
• In school settings: There is the potential for the implementation of a minimum charge on single-use beverage cups to have a disproportionate effect on some pupils, for example those in receipt of free school meals. We are therefore proposing that the charge would not be applied in primary or secondary school settings. However, schools may wish to introduce other measures to reduce the consumption of single-use cups, for example by introducing reusable cup schemes at their school.
• Settings where bringing and using a reusable cup may not be practical: This could include event spaces and festivals where single-use cups are required for safety reasons, settings where it may not be possible to clean a reusable cup, and cross-border transport. This is based on the principle that the charge should be avoidable, in keeping with its behaviour change purpose, and therefore should not be applicable where a customer does not have an option.

We recognise that single-use disposable beverage cups are used in a range of settings and therefore there are circumstances in which a cup would attract the charge where it would not be appropriate. We want the scheme to be straightforward and easy for suppliers and customers to understand while encouraging the behaviour change necessary to reduce the impact of these items. We will continue to work closely with businesses and local authorities to ensure an appropriate streamlined approach to the introduction of this charge and minimise burdens as far as possible in line with the principles of our New Deal for Business and Verity House Agreement.

Q5: Do you agree the proposed exemption for single-use cups sold in schools is appropriate?

a. yes

b. no

c. I don’t know

Q6: Do you agree the proposed exemption for drinks sold from vending machines is appropriate?

a. yes

b. no

c. I don’t know

Q7: Do you agree the proposed exemption for settings where a reusable cup is not practical is appropriate?

a. yes

b. no

c. I don’t know

Q8: Do you think there should be other exemptions? Please provide as much detail and evidence as you can.

Use of net proceeds

It is essential we establish a robust system which leads to much greater acceptance of reuse; while ensuring that any administrative burdens are proportionate.

Section 87A of the Climate Change (Scotland) Act 2009 gives discretion to Scottish Ministers to require that the net proceeds raised by the charge are applied to the advancement of environmental protection or improvement or to any other purpose that may be reasonably regarded as analogous.

It is proposed that the regulations will require net proceeds raised by the charge to be applied in this way. We do recognise that further stakeholder engagement on this topic is required and specific guidance on how to apply these requirements from the Scottish Government. Care will also need to be taken to design the final policy in a way that does not exceed the devolved powers of the Scottish Parliament in terms of the fiscal reservation in Schedule 5 to the Scotland Act 1998.

The Scottish Ministers have the same power in respect of the single use carrier bag charge but it has not been used in this case. Suppliers of single use carrier bags are instead encouraged to donate to good causes and can volunteer details on how they use this revenue to Zero Waste Scotland^[49]. This was to avoid disrupting pre-existing charitable giving arrangements for those retailers who already charged for single use carrier bags and donated the proceeds to charity. However, we feel that it is appropriate to use the available powers for this new charge.

We propose that suppliers will be able to deduct reasonable costs for administering the process out of the proceeds of the charge so that the system is not financially burdensome.

We would expect suppliers to keep records of:

• the number of single-use disposable beverage cups which they have collected a charge for annually;
• the level of charge set by the supplier and paid for those cups;
• the cost of administering the charge; and
• the net proceeds raised by the charge.

Any necessary updates to systems, staff training and promotion of the charge would be considered as a one-off deduction from the proceeds. Further guidance would be provided by the Scottish Government and aligned to the introduction of the regulations.

As part of this consultation, we would also like to invite stakeholder opinions on alternative approaches to what happens to the revenue raised by the charge. Participants are asked to consider whether the revenue from the cups charge should be collected centrally, for example, by the Scottish Government or Local Authorities. This would provide oversight and centralised direction on how these funds are spent and allocated, though consideration would be needed as to whether the money should be ringfenced for environmental purposes.

If the funds were collected by the Scottish Government, it may be necessary to enter discussions with the UK Government around what further powers might be required. For example, if the charge was considered a tax the Scottish Government does not currently have the power to create a new national tax without the consent of both the Scottish and UK Parliaments.

The power to create a new local fiscal measure is already devolved under the terms of the Scotland Act, but any policy design would need to be undertaken alongside Local Authorities and the Convention of Scottish Local Authorities (COSLA) and be shaped to fit the definition of a local measure.

Further work is needed, including further stakeholder engagement on this proposal and new legislation would be required. It would also be necessary to undertake further analysis of whether this would have any additional impact (positive or negative) on the environment, businesses, or consumers.

Enforcement

Local authorities are the enforcement agency for the single use carrier bag charge, and may authorise enforcement officers to exercise enforcement powers under those regulations to establish whether the regulations are being complied with, including powers to make test purchases, enter premises and question suppliers. We propose that local authorities are also the enforcement authorities for these regulations, and that equivalent enforcement powers should be available. We recognise that this is a new enforcement regime and, in line with the Verity House Agreement^[1], we will work in partnership with local authorities to fully discuss details around additional costs and requirements. This will take place during final policy development.

We propose that it will be an offence to fail to comply with the requirement to charge, or with the information recording requirements, punishable on summary conviction by a fine not exceeding the statutory maximum (currently £10,000) or by conviction on indictment by a fine.

In addition, we propose local authorities will be able to issue fixed penalty notices (FPNs) for those offences. Section 88A and Schedule 1A of the Climate Change (Scotland) Act 2009 (as amended by the Circular Economy (Scotland) Bill) provide for a fixed penalty regime. Under this regime, appointed enforcement authorities may authorise enforcement officers to issue FPNs when they have reason to believe the person has committed an offence under the regulations. If the FPN is paid in time, the person cannot be convicted for the offence. We propose to set the maximum amount of the fixed penalty as £200, with a discounted amount of £100 if it is paid early.

It should be noted that if funds were collected centrally by the Scottish Government the enforcement agency would likely be Revenue Scotland. Further work would be required on implementation and administration of the charge if this were the case.

Q9: Where do you believe the funds generated from the charge should be directed?

a. to the advancement of environmental protection or improvement or for a similar purpose

b. in line with the single use carrier bag charge – retained by business and encouraged to be donated to good causes on a voluntary basis

c. collected by local or national government

d. I don’t know

e. other, please provide as much detail as possible.

Please provide any information in support to your answer to question 9.

Q10: (Please only answer this question if you are a supplier of single-use disposable cups) To what extent do you agree with the recording requirements as set out above?

a. Strongly agree

b. Agree

c. Neither agree or disagree

d. Disagree

e. Strongly disagree

Please provide any information in support to your answer to question 10.

Q11: To what extent do you agree with the enforcement regime as set out above?

a. Strongly agree

b. Agree

c. Neither agree or disagree

d. Disagree

e. Strongly disagree

Please provide any information in support to your answer to question 11.

Implementation

The Scottish Government’s New Deal for Business^[50] was established by the First Minister in April 2023 to help business and trade to thrive, and maximise the opportunity of the green economy, with fairness at its heart. In developing the New Deal, it was highlighted that amid the ongoing cost of living crisis, the cumulative impact of increased costs and the resource required to understand, plan and invest to comply with the range of regulations in development, both at UK and devolved level, is particularly challenging, especially for small and micro business.

We are aware that the introduction of related measures, such as DRS and pEPR, place additional responsibilities on suppliers. Although the range of significant policy measures illustrates the Scottish Government’s ambition to deliver a circular economy in Scotland, we acknowledge this cumulative impact on businesses and are keen to understand what could be done to address any challenges and realise opportunities.

Feedback from the Advisory Group has raised important points relating to implementing the charge for example:

• the importance of effective, consistent communication with businesses and consumers to ensure that the rationale for the charge and how it will work is clearly understood;
• keeping the design of the charge as simple as possible to understand for both consumers and businesses. For example, keeping the number of exemptions low and the bar for adding exemptions high;
• ensuring as level a playing field for businesses as possible;
• whether some settings should be exempt from the charge e.g. hospitals or schools; and
• costs to businesses of implementing the charge.

We would be keen to understand the implementation challenges that face suppliers in implementing the scheme and welcome suggestions on what more could be done to assist suppliers to ease any regulatory or other burdens they may face.

Q12: (Please only answer this question if you are a supplier of single-use disposable cups) What are the challenges you face to introducing the charge?

Q13: (Please only answer this question if you are a supplier of single-use disposable cups) How much time do you think it would take for your business to prepare to implement the charge? Please provide reasons for your answer.

a. within a couple of weeks

b. one month

c. two to three months

d. upwards of six months

Q14: (Please only answer this question if you are a supplier of single-use disposable cups) What could the Scottish Government do to assist in helping your business implement the charge?

Impact assessments

Alongside this consultation we have published interim assessments of the potential impacts on equality, socio-economic considerations, island communities, business and regulation, and the environment. This is in accordance with our legislative requirements and, importantly, to inform the final policy development process.

We aim to use this consultation process to highlight potential overarching impacts for sectors. The feedback we receive will be used to update the initial impact assessments accompanying this consultation. We will also incorporate feedback to inform future impact assessments for specific interventions, as required.

Q15: Please provide any further information or evidence that should be considered in the accompanying interim Equalities Impact Assessment

Q16: Please provide any further information or evidence that should be considered in the accompanying interim Fairer Scotland Assessment

Q17: Please provide any further information or evidence that should be considered in the accompanying interim Island Communities Impact Assessment

Q18: Please provide any further information or evidence that should be considered in the accompanying interim Business and Regulatory Impact Assessment

Q19: Please provide any further information or evidence that should be considered in the accompanying interim Strategic Environmental Assessment

Development of the regulations

Following this consultation, we will analyse consultation responses in order to understand the full range of views on our proposed approach to the charge, and impact assessments. We will also undertake any supporting analysis or research where required.

The Scottish Government will then come to a decision on how a charge could be implemented and will continue to work with stakeholders to develop the final policy and implementation plan. If additional powers require to be devolved to facilitate the creation of a tax, a negotiation process under section 80B of the Scotland Act 1998 will then commence with the UK Government. Once that instrument is in place, Scottish Parliamentary legislation can be developed. If it is decided that the charge will not operate as a tax, Regulations can be made without the need for the additional devolution steps. These will be subject to the super-affirmative Parliamentary procedure. This procedure requires that they will be laid in the Scottish Parliament for 90 days which offers a further period where views can be provided.