Responding to a report by the Cross-Party Beer and Pubs Group on the impact of DRS, which was first announced back in 2019Leon Thompson, executive director of UKHospitality Scotland, said that just over a year from the scheme’s introduction, fundamental questions remain about how it will work.
“This report should serve as a wake-up call,” he said.
“The complexity of the program brings inherent financial risks to hotel businesses. Scottish members continue to be concerned about secure storage, theft of containers and broken glass, all of which will lead to the loss of deposits – a situation that would hit businesses hard.
The scheme, which is based on international equivalents, will see a 20p deposit added to the price of ‘certain’ single-use drink containers.
Restaurants and pubs that sell drinks to be opened and consumed on the premises will not have to charge the deposit to the public, and will only be required to return the containers they sell on their own premises.
Customers and businesses will be able to recover the deposit by returning the empty can or bottle to the retailers that sell the products, or by using an online delivery return service.
Thompson notes that one area of the regime where there is still no resolution is the issue of VAT paid on deposits.
“Unless HMRC makes changes, businesses and consumers will pay 24p per container but only receive 20p back. The DRS will become another form of taxation of businesses and customers, adding to the cost of living crisis.
“UKHospitality continues to press the UK Government and the Scottish Government to resolve this issue.”
Members of the cross-party group called on the Scottish Government to clarify and consider the net benefits of the scheme in their report. They also highlight specific concerns over logistical issues and the costs of using glass, as well as the impact on Scotland’s small independent brewers and businesses.
As well as urgent review, the report recommends that the Scottish and UK governments work together to align their respective regimes so that there is a single market for brewers and retailers, as opposed to complexity, cost and waste. additional due to three different markets.
Similar DRS plans are set to be introduced in England, Wales and Northern Ireland in the years to come.
“As there will ultimately be three separate programs across the four UK countries, we are working with members to come up with common solutions and approaches,” Thompson continues.
“However, it is clear that all businesses will need to make significant changes to their financial and operational systems in order to comply with regulatory complexity and variations. It also threatens the prospect of a dramatic reduction in choice for customers. Scottish as companies pull out of the market.
“In addition to the deposit challenges, it’s important that DRS is already proving an expensive hospitality policy at a time when operators can least afford it and companies are already achieving impressive recycling rates.”