Deposit Scheme for Drinks Containers (England and Northern Ireland) Regulations 2024

Lord Hayward Excerpts

Monday 20th January 2025 Grand Committee

[Baroness Ritchie of Downpatrick (Lab)]

My Lords, I thank my noble friend the Minister for presenting the case for the deposit return scheme. I declare my interest as a member of the Secondary Legislation Scrutiny Committee in your Lordships’ House. I welcome this SI and agree with my noble friend that it will make a major contribution to the reduction of littering. Numerous cans and other types of litter are strewn across the countryside and nobody appears to take responsibility, apart from local neighbourhoods that engage in their own collection schemes. I laud them for doing so.

I have some questions in relation to Northern Ireland. Normally this would be a devolved measure. I suppose that the UK Government were trying to ensure that there was a collective approach on the part of the Government and the devolved nations and regions. Perhaps my noble friend could explain the purpose of including the devolved nations and regions. Also, will the money collected from this scheme in Northern Ireland go to the Treasury, or will it go to the Department of Finance, where it can be invested in local schemes, and into the general exchequer for the delivery of lots of different types of service? I am well aware of the value of the plastic bag scheme in reducing litter but also in terms of the money. It has added to the portfolio of money available for the enhancement of services.

Secondly, I have a couple of questions in relation to Wales, which, I note, has not signed up to this scheme. How can the interoperability of the four UK schemes and the avoidance of unique identifiers in the Welsh market be assured? With Welsh proposals not yet published, how can the October 2027 introduction date be assured to avoid material switching under the EPR scheme? Will the Government ensure that the divergence of the Welsh scheme does not impact the governance of the UK, Northern Ireland and Scotland deposit return scheme and the appointment of a scheme administrator?

Those are the issues that most interest me in this SI, which I strongly support.

[Lord Hayward (Con)]

My Lords, I echo the comments made by the two previous contributors on compliance for small businesses, which is crucial. It is all very well for large companies to say, “Yes, we support these schemes”, but the burden will often fall heavily on the small retailer, in one form or another. I should start with a mea culpa, in that I was head of personnel for Coca-Cola when it introduced the first ever plastic bottles into this country, so it is all my fault. For the benefit of my noble friend next to me, in particular, the first plastic bottles produced in this country were made in a factory in Leeds—a bottling plant in Pudsey.

I therefore also have a memory of glass bottles and the system that worked then. The glass bottle return system had gone out of operation in most parts of the country when plastic bottles were introduced. At the risk of being accused of regionalism or being rude about the Scots, that system lasted longer in Scotland because that part of the country returned their products to the retailers to reclaim the deposits available.

[Lord Blencathra (Con)]

A thruppenny bit.

[Lord Hayward (Con)]

It is important to small businesses and, because we are talking about companies that operate worldwide, both producers and retailers. How closely will our system meet that of the other countries that the Minister identified? I am aware that there are negotiations in other parts of Europe on some form of return system; it would clearly be better for all concerned if there is either a common or a virtually common system. That is particularly the case for Northern Ireland versus Eire, as many of the products will move from one side of the border to the other.

My concerns are about why glass is excluded, the international basis of the operation and its similarity with others, and small businesses that will carry a burden in one form or another. Given the experiences that I witnessed in my previous role for many years—I should add that I later went on to become head of the British Soft Drinks Association, and therefore saw operations not only from Coca-Cola’s side but for waters and fruit juices—it is important that this works across the whole country. I recognise and expect that the returns will operate much better in some places than in others.

[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, I thank the Minister for her introduction to this statutory instrument. It is vital to ensure that, as a country, we reduce our waste and engage the consumer fully in the process. As the Explanatory Memorandum clearly states, the power to introduce a DRS was enshrined in the Environment Act 2021, nearly four years ago, but the issue was being debated as early as 2019, with Defra running two public consultations. The first gave 84% support from those participating; the second, 83%, so why has it taken so long to get to this position? I do not wish to be impolite to the Minister, as she has been in post for only a short time, but it has to be said that there was a lot of pratting about by the previous Government. This is, of course, a technical term.

The scheme is to be run by a direct management organisation—a DMO—and this will take another two and a half years to get up and running, so will not start until October 2027. They say that Rome was not built in a day, but I despair at the leisurely timeframe. Meanwhile, the country is knee-deep in waste.

I welcome the application of civil penalties to drinks producers that do not comply, but it would make a big difference if civil penalties were applied to individual consumers who carelessly discard their drinks containers around the countryside. I am not convinced that the carrot of a returned deposit will alone change behaviour; there needs to be a stick element as well.

Despite a not-for-profit DMO being set up to administer the scheme, local authority trading standards departments will be involved in monitoring and enforcement, along with the Environment Agency. As the Minister knows, local authorities are underfunded, with social care swallowing their budgets at an alarming rate. Do the Government intend to produce additional funding for local authorities trading standards to carry out this not inconsiderable extra work?

Despite the Explanatory Memorandum referring to the instrument enacting the “polluter pays” principle from the Environment Act, I can hardly be excited about the fact that it has taken so long to reach this point, as 2021 has disappeared over the horizon. The first Defra consultation was in February 2019, six years ago. That first consultation response was published within four months. The next consultation in March 2021 was not published until January 2023, nearly 18 months after it closed. The responses showed that 83% of respondents were in favour of a DRS. Was Defra waiting for a 100% response before it acted?

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[Lord Blencathra (Con)]

My Lords, I begin by commiserating with the Minister on the enormous amount of work she has to handle in this House. The Commons have four Ministers carving up the legislation between them, but the noble Baroness has to do the whole shooting match on her own—to use an unwoke term, probably. Last Monday we were into the details of free-range egg definitions in this Room, while on Thursday it was just a simple little thing like saving the world from destruction. Today it is one of the most difficult and complex instruments we have seen for some time, with 108 regulations and seven schedules—97 pages of controversial detail. In the last debate I heard my noble friend Lord Lilley complain that the heat pumps regulations ran to 32 pages—he should be so lucky.

If I were to comment on or ask questions on every section and subsection that concerns me, it would be an hour-long speech—I will not do that to the Minister or the Committee. Even so, I still have a lot to ask, but I have notified the Minister about my questions since clarity is more important today than trying to put one over on the Minister. I am a recycling enthusiast but not a fanatic, and I hope I am realistic. When I heard my noble friend Lord Hayward talk about the Scottish experience, I interjected to say “A thruppenny bit”, because I recall that if, as a 10 year-old boy in the Highlands in the early 1960s, you collected the glass lemonade bottles with their bakelite screw-on tops, you could get a thruppenny bit back every time. I had a nice little business going collecting those bottles, although admittedly some of them were probably not capable of being refilled. In the terms of the current legislation, they were a bit soiled. But it was a good little business—and I am probably the only person in this Room who did recycling at that age and at that time.

[Lord Hayward (Con)]

I am afraid that my noble friend is showing his age, because the deposit went from a thruppenny bit to 6p and then to a shilling—so to be able to recall the thruppenny bit collections displays an age that I am not sure he wishes to do.

[Lord Blencathra (Con)]

Because I had engaged some others to help with collecting the bottles, to whom I paid 1.5p while I took the thruppenny bit, I was put out of business prematurely before I could collect the 6p.

The last Government started this in 2019 with their first consultation, and there have been two more since, as well as various workshops and draft regulations like these. The fact that we did not lay those regs for approval was not through lack of belief in recycling but because there were still far too many loose ends to tie up. I am one of the 84% of consumers who like the concept of this, but I am deeply worried about the detail—just like the Secondary Legislation Scrutiny Committee. We saw the Scottish SNP Government, with their usual fanatical incompetence, rush into this then have to pull back. My principal concern is that this may be one more recycling initiative too far at the moment.

First, we have just done the EPR, which will force all manufacturers of glass, plastic, cans, paper and cardboard to do more recycling. Then, on 3 February, we are due to have the regs on consumer recycling, whereby we will allow all cans, glass and plastic to go into one bin, which will boost recycling. I am totally in favour of that, as long as paper and card are kept clean and pure in a separate bin. In March, the commercial simpler recycling scheme will come in, which will boost commercial recycling. With all that going on, why do we need a scheme to take back empty drinks containers to the shops when it is easier and cheaper to do it at home? It is not just me who is concerned. WRAP said in its response that it is difficult to understand the full impact of deposit return schemes on local authorities before they go live and before adaptations to the EPR and simpler recycling are known.

The Explanatory Memorandum says that we looked at foreign deposit return schemes, and the enthusiasts all cite Germany, which has a phenomenal 98% return rate for its DRS. That is fantastic, but let us look at the German history of this. Germany started a refillable bottle scheme in the 1950s, then had initial legislation on recycling in 1991 and gave a big boost to it in 1996. In 2003, it introduced yet more legislation to introduce DRS for single-use containers and there was a big change in 2006 when it legislated to make all retail outlets take back other shops’ bottles. That encouraged deposit return schemes to take off. One year later, the German company TOMRA sold over 9,000 reverse vending machines, of which 25% of return locations in Germany have one. Incidentally, TOMRA was created way back in 1972 to handle refillable bottles.

Germany is still tweaking it. Only in 2022 did it bring in a DRS for alcoholic drinks, juices and nectars in single-use plastic bottles and cans, as well as milk-based drinks in cans. I can only assume, to borrow the words of the noble Baroness, Lady Bakewell, that the Germans were faffing around for the last 50 years before coming to the present scheme. They have been at it a long time, slowly adding to the legislation as experience, technology and acceptance grew. Their success has depended on three things: first, 42% of all beverages in Germany are filled in refillable containers, and they get a 98% return rate on that; secondly, they have over the years built 135,000 return locations; and the third aspect is the German mentality. That is not a jibe at an alleged Teutonic tendency that orders will be obeyed but comes from the fact that the Germans have been doing this deposit return scheme for about 50 years. It is their modus operandi, and they know little else. The main pick-up from their kerbside collection is lightweight stuff such as wastepaper and card.

Thus, we have to look at this from the point of view of the English and Northern Irish householder. We are used to separating waste into different bags and bins—far too many in some council areas—for kerbside collection and to taking plastic, card, glass and paper to big recycling bins. Norway launched its DRS in 1996 after 10 years of discussion, development and testing. I presume that it was also “faffing around” in taking 10 years to get it right. We have neither 10 years of testing nor 30 to 50 years of experience of DRS and I fear that the Government are biting off more than they can chew here, especially with all the other recycling initiatives.

Let us look at a few of my many queries. Wales has already been mentioned. Retailers and importers working in Wales will face the practical difficulties of operating under different schemes—separation of stock, unique label identifiers and new accounting systems. How can the interoperability of the four UK schemes and an avoidance of unique identifiers in the Welsh market be assured? With Welsh proposals not yet published, how can an October 2027 introduction date be assured, to avoid material switching under the EPR scheme? Are the UK Government considering a United Kingdom Internal Market Act exemption for the Welsh DRS? Will they ensure that the divergence of the Welsh scheme does not impact the governance of the UK-Northern Ireland-Scotland DRS on the appointment of a scheme administrator?

A unique approach in Wales threatens seamless intra-UK trading and risks delaying the October 2027 start date. The Welsh Government will not publish their proposals for their scheme until spring and they plan additional initiatives, such as glass reuse and refill schemes. It looks like Wales wants to do in two years a full-on German scheme that took the Germans 50 years to perfect. Unless the Government can persuade the Welsh Labour Government to fall in with the rest of the UK, I would be loath to support this whole scheme in England and Northern Ireland, much as I like the concept of it.

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There was also a question about what information the Government have on how many mandatory return points would be needed for this to work in England and Northern Ireland and, given that all the shops selling drinks containers in the Westminster area are over 100 square metres, whether they would have to have a return facility. Our regulations set out that supermarkets and convenience stores will be required to host a return point unless they are subject to an exemption. Therefore, takeaways, which have been mentioned during the debate, will not be required to host a return point, but if they want to they can choose to do so. Utilising this, our impact assessment analysis suggests that approximately 41,000 return points across England and Northern Ireland will be set up.

[Lord Hayward (Con)]

In referring to locations in and around Westminster, the Minister said that they were close to 100 square metres and would therefore be required to operate the scheme. That is not quite my understanding from what the noble Lord, Lord Blencathra, said. Could I clarify whether shops and other outlets below that figure will be required to offer those facilities?

[Baroness McIntosh of Pickering (Con)]

Could I add a rider? Will there not be a de minimis rule? I asked about the size of stores; surely there will be a de minimis rule below which stores will not be required to participate.