Deposit Return Scheme Implementation Advisory Group minutes: February 2019

Attendees and apologies

• Jill Farrell (Chair), Zero Waste Scotland
• Don McGillivray (Co-chair), Scottish Government
• Alex Jones, Scotch Whisky Association
• Andy Tighe, Scottish Beer and Pub Association
• Bryan McCluskey, Natural Hydration Council
• Colin Smith, Scottish Wholesale Association
• Colin Wilkinson, Scottish Licensed Trade Association
• Ewan MacDonald-Russell, Scottish Retail Consortium
• Gavin Partington, British Soft Drinks Association
• John Lee, Scottish Grocers Federation
• Laura McKelvie, Federation of Small Businesses
• Margaret Smith, Scottish Wholesale Association
• Mo Razzaq, Federation of Independent Retailers
• Pete Cheema, Scottish Grocers Federation
• Stuart Murray, Zero Waste Scotland
• Willie Macleod,  UK Hospitality
• Colin MacBean, Scottish Government
• Denise Borrer, Scottish Government (Secretariat)
• Scott Wood, Scottish Government
• Tim Chant, Scottish Government

Items and actions

Agenda item 1: Welcome and introductions 

1. Don McGillivray welcomed attendees to the first meeting of the DRS Implementation Advisory Group, noting that representatives from key sectors were represented. 

Agenda item 2: Terms of reference   

2. The Terms of Reference were considered by the Group.  Willie McLeod highlighted the challenges associated with agreeing this document given the ongoing uncertainty around the final design of the scheme. Don McGillivray confirmed a final decision on scheme design was expected in spring. 

3. Mr McLeod also requested that sufficient time be given to consider papers prior to meetings. It was confirmed that the secretariat would aim to circulate papers 5 working days in advance of meetings.  

Agenda item 3: Update on scheme design 

4. Don McGillivray updated the group on progress with finalising the design of the scheme. The consultation analysis was published by the Cabinet Secretary for Environment, Climate Change and Land Reform on 21 February, with responses being used to inform decisions regarding the design of the scheme. The final scheme design would be signed off by Ministers and it remained the intention to introduce secondary legislation later in the calendar year.

5. The group discussed materials and, in particular, the implications of including glass containers in the scheme.  John Lees highlighted significant concerns about the impact that the inclusion of glass would have on convenience stores and Mo Razzaq pointed towards the potential health and safety risks associated with handling and storing this particular material.  

6. Willie McLeod highlighted the potential inefficiencies should hospitality business be required to operate alternative arrangements for the collection of some materials which could reasonably be captured through DRS.   

7. Brian McCluskey was keen to understand how the inclusion of glass may impact on the costs of handling, transporting and processing other materials captured through the scheme. It was recognised that any scheme would need to properly take account of the variance in such costs across material streams and it was noted that in a number of other countries there was a separate producer fee for each material.

8. Colin MacBean confirmed that work was ongoing to understand the economic impact of including glass and offered to engage further with producers and retailers in order to test the assumptions underpinning that work.  Jill Farrell confirmed that those assumptions would also be further refined through the development of a Business Plan for the scheme, work on which would commence in spring.  

9. Don McGillivray noted that any materials not captured through DRS would be captured under the revised packaging producer responsibility arrangements which were currently the subject of a UK-wide consultation.  The aim was for DRS to provide an efficient way to meet producer responsibility obligations. 

10. Alex Jones asked whether size limits were likely to apply to containers captured through the scheme. Don McGillivray confirmed that any limit would be driven by the specification of Reverse Vending Machines (RVMs), a number of which do not accept containers of 3 litres or above.

11. The group heard that a number of investment models were being considered to fund the infrastructure required for the scheme, including RVMs. It was recognised that retailers would like the opportunity to select machines which best reflected their particular requirements and this could be achieved through an arrangement whereby retailers either purchased or leased machines directly and were subsequently reimbursed those costs through a handling fee paid through the scheme.  There would be a need to ensure that all machines met certain technical criteria necessary in order to ensure the efficient flow of data.

12. Colin Smith enquired whether a “return to retail” model was preferable or whether there was scope for the establishment of alternative community return points. Jill Farrell advised that there may be scope for groups of retailers operating in close proximity to each other to propose alternative arrangements to the scheme administrator, whereby a communal return point be established.  

13. John Lees noted the First Minister’s commitment to give specific consideration to small retailers as part of the scheme design and raised significant concerns about any scheme which did not include default exemptions for smaller retailers. Laura McKelvie and Pete Cheema reiterated these concerns, flagging the significant challenges associated with storage and processing of material by smaller businesses. Don McGillivray noted those issues and highlighted that any handling fee paid to retailers through the scheme should fully cover costs. John Lee questioned whether membership of the scheme could be voluntary for the smaller stores. Don McGillivray confirmed that modelling work had been undertaken to understand the potential impact of blanket exemptions for small retailers, with emerging evidence suggesting any ‘opt in’ scheme would have a significant impact on accessibility. Pete Cheema raised the issue of non-domestic rates relief for any retail floorspace lost through DRS and the Scottish Government agreed to explore this further.  

14. Willie McLeod requested that the scheme be designed so as to remove the need for consumers to pay (and subsequently redeem) a deposit when they purchase an obligated container in a closed loop hospitality setting.  The Scottish Government indicated this was the most likely approach for on-sales but this was still to be confirmed as part of the final scheme design. 

15. Don McGillivray highlighted the strong public support which existed for a deposit level in excess of 15p. This complemented wider international evidence which suggested that schemes with a higher deposit rate tended to perform better. Don McGillivray confirmed the Scottish Government’s view that the deposit should not attract VAT, but this would require agreement from HM Treasury.   

16. The group discussed timescales for implementing the scheme, with Don McGillivray pointing towards the experience in other jurisdictions where schemes had been delivered over a twelve to eighteen month implementation window. In line with EU requirements, a minimum of 12 months would be afforded to producers and retailers to prepare for the introduction of the scheme following the passage of legislation by the Scottish Parliament. 

17. The group noted the proposed 2023 introduction date for a DRS covering England, and possibly the rest of the UK.  Gavin Partington, Brian McCluskey and Willie McLeod signalled a strong preference for alignment of plans across the UK. In the absence of such alignment, Gavin Partington signalled the need for some early work to better understand the financial and operational challenges associated with the operation of a discrete Scottish scheme.  Only then could decisions be taken about how best to mitigate those challenges.

Action: Scottish Government to explore potential for domestic rates relief for DRS floorspace.  

Structuring the work of the Implementation Advisory Group 

18. Scott Wood and Jill Farrell presented a suggested structure for the group’s work.  The primary purpose of the group would be to develop proposals for the DRS Programme Board’s consideration.  In recognition of the scale of the implementation exercise, it was proposed that key activities be organised through two discrete work packages focussing on “administration” and “operations” respectively.  Gavin Partington indicated that the proposed work packages seemed sensible. 

19. The group agreed to the development of a detailed work programme for each of the work packages.  In addition, it was agreed that the proposed approach be tested through the development of a series of introductory papers exploring key aspects of DRS implementation, to be tabled at the next meeting. 

20. Willie Macleod raised concerns about the group’s capacity to support the breadth of activity planned.  Jill Farrell highlighted the role of the Zero Waste Scotland DRS implementation team in facilitating discussions and taking forward work on the group’s behalf, thereby limiting the requirement for group members to lead activity.  Andy Tighe and Gavin Partington signalled their willingness to draw in expertise from their respective member organisations to inform the work that was required, recognising the specific technical expertise which was available within their sectors.

Actions:

• Scottish Government/Zero Waste Scotland to take forward development of work plans for the two work packages agreed by the group.
• Scottish Government/Zero Waste Scotland to prepare introductory papers on a small number of implementation tasks for consideration at the next meeting.

Agenda item 5: AOB 

18. Nothing further raised.

Agenda item 6: Date of next meeting 

The date of next meeting was not fixed but it is proposed that it take place in late March or early April. It was requested that the meeting take place between 11am and 1pm to facilitate attendance by participants who travel from other parts of the country.

 

Deposit Return Scheme Implementation Advisory Group