The Welsh government risks derailing the rollout of Wales’ breakaway Deposit Return Scheme after the Senedd rejected the primary candidate to act as its administrator, drinks industry figures have warned.
Yesterday, Welsh ministers rejected the bid by Exchange For Change – which is the confirmed Deposit Management Organisation (DMO) for England, Scotland and Northern Ireland – to act as the DMO for the scheme in Wales, which is set to launch in October 2027.
The Senedd has since dissolved ahead of elections on 7 May, meaning no DMO can be appointed until after the next government takes office.
It’s strongly believed that Exchange for Change, which is backed by the drinks industry, remains the only bidder, leaving uncertainty over who any potential DMO could be and further delaying the implementation of the already complex scheme.
“Optimism is that this is a road bump and sense prevails in a month’s time,” a senior drinks industry source told The Grocer. “In the meantime, that’s another month lost – if the DMO had been appointed today then they could crack on and start aligning the schemes. Now we’ll lose that month.”
Trade bodies sought a last minute intervention last month, warning that any delay in appointing a DMO ahead of the elections risked ruining the chances of a UK-wide launch in October 2027.
Kicking the proverbial can on appointment risked exposing businesses to a greater risk of industrial-scale border fraud, which could cost an estimated £300m per year, they warned.
The delay was a “major disappointment” for anyone wanting to kickstart the circular economy, said British Soft Drinks Association Director General, Andy Bagnall.
“After a new government is formed in May, resurrecting the process to appoint a scheme administrator must be one of its top priorities. Industry needs certainty and a relentless focus on operational delivery to ensure the scheme for plastic bottles and metal cans can go live with the rest of the UK in October 2027.”
Welsh DRS already brim-full with controversy
The Welsh DRS is already hugely controversial after Wales was given the go ahead by Westminster to operate its own breakaway scheme under the Internal Market Act in February.
Unlike proposed DRS schemes in England, Scotland and Northern Ireland, controversially Wales plans to include glass from the beginning, albeit under a transition period in which glass containers would have zero deposits and no labelling requirements for the first four years.
Drinks bosses have previously warned the day one inclusion of glass would lead to a “mass market withdrawal” of some product lines from Welsh shelves, as glass would become prohibitively expensive as packaging.
According to a senior drinks source, one of the reasons ministers rejected Exchange for Change’s bid is down to disagreement over the proportion of glass recycling points required.
Ministers are understood to want every DRS point to take glass, whereas drinks industry figures believe that the scheme would only generate enough to fund around 150 individual glass collection points across Wales.
“We are disappointed that our application to be the scheme administrator for the Deposit Return Scheme in Wales has not been approved at this time,” an Exchange for Change spokesman said.
“Industry has always been clear that the right outcome for Deposit Return Schemes is for there to be a fully interoperable scheme across all four nations from October 2027 – one that reflects the realities of how the UK drinks market operates.”
The body “strongly believe” having a single scheme administrator across all four nations of the UK remained the best way to achieve this, the spokesman said.
“While we were clear in our application that significant challenges existed with the regulations in Wales, we believe that our application suggested practical and effective ways to overcome these. Nevertheless, we fully respect the outcome of the application process and will continue to engage closely with the Welsh government in our role as the scheme administrator for DRS in England, Scotland and Northern Ireland.
“Our focus remains firmly on the setup of the scheme across the rest of the UK, and our work continues at pace to build a scheme that is as effective and efficient as possible from October 2027.”
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