Depending on your politics possibly the most interesting topic to have emerged from this autumn’s round of party-political conferences was the discussion regarding proposals for the introduction of some type of Deposit Return Scheme (DRS) on sales of various bottled or packaged products. It was interesting not least because the subject was raised by Environment Minister Michael Gove who is generally considered to be somewhere on the ’free market’, right wing of a party which makes much of its anti-red tape/pro-business stance. Although the recent publicity has concentrated on Mr Gove’s intervention, many commentators seem unaware that the Scottish government had already commissioned a detailed study of such a scheme earlier this summer and they have the power to introduce legislation without needing to wait for Westminster to produce a version for England and Wales.
While the source of the recent DRS proposal may have come as something of a surprise, the response from the convenience and retail industries has been much more predictable with one notable exception. Led by the likes of the ACS, the complaints have focused on issues of cost, staff time, lack of physical space on-site, and even apparently "potential flashpoints in store".
The notable exception is the UK arm of Coca-Cola which has gone on record saying that it believes that the time is right to trial new interventions such as a well-designed deposit scheme for drinks containers, starting in Scotland where conversations are under way. Make no mistake, that is one extremely powerful player to have on the ’green’ team.
At the moment there are very few firm details of how any DRS might work. Most assume that it would resemble the sort of schemes which were common in Britain until the late 1960s. The sales price included a few pennies deposit on the bottle; when you took your empty bottles back the shopkeeper returned the deposit. Usually that meant just knocking it off the price of the new bottles you were buying.
A major difference
But one major difference between then and now is that in those days recycling meant that the bottles themselves were re-used by the manufacturers, whereas today recycling generally means the glass being ground up to raw material for new bottles. As far as the current proposals are concerned, they seem to cover plastic bottles and metal cans, as well as glass, so again recycling refers to basic materials rather than individual containers.
One of the objections being mentioned is that of accounting complications at the retailer’s end and, given the lack of detail in the proposals to date, it is quite difficult to specifically describe what accounting procedures would be entailed.
However, as far as the petrol retailing world is concerned, none of the likely accounting implications should be too alien at least for those retailers who have experience of selling bottled gas. In most cases the main grumble from retailers operating the bottled-gas scheme has come from those who have taken back a lot of empties which they hadn’t sold themselves and hence have paid out more cash in returned deposits than they’d taken. Since their own settlement with the supplier happened maybe only once a month, it meant that they could be out of pocket for some weeks.
It’s also worth noting that technology has moved on a bit since the days of the old bottle-deposit schemes, and even from the gas-bottle schemes of the 1990s when most of these transactions were manually recorded on paper ledgers: specifically the widespread adoption of computerised POS and back-office systems with barcode readers. Given appropriate standardisation these should make it far easier to identify items and automatically generate the appropriate accounting entries.
easy to complain
It’s easy for the retail industry to complain about the cost of any DRS. However, it’s also obvious that the country has a problem with waste packaging. The cost of the problem is at the moment borne largely by the taxpayer paying to have rubbish collected from roadsides.
For such widely divergent political sources as the SNP and a Tory Environment Minister to both propose that the cost should be moved back onto those who profit from the activity ie the consumer and the manufacturers/retailers suggests that some form of legislation is inevitable, and the retail industry should start to plan ahead for it.