Energy and Environment

The Deposit Return Scheme is a load of rubbish

It is widely believed that the Brexit turmoil has forced Theresa May to put her domestic agenda on hold. If so, nobody has told the Department for Energy, Farming and Rural Affairs (DEFRA) where the energetic Michael Gove has been busily working on bans on plastic straws, cotton buds, drink stirrers, wood burning stoves and puppy-farming.

His latest wheeze, a deposit return scheme for drink containers, may have passed you by when it was announced in January, but it deserves closer attention. The idea is that you pay a ten or twenty pence deposit for drinks sold in disposable cans and bottles which you then redeem at one of the 30,000 reverse vending machines that will pop up around the country, or at a manual collection station in your local corner shop. It is bound to increase recycling rates somewhat and no one could object to that. The problem is that it is vastly expensive, horribly inefficient and will create unnecessary hassle for everybody.

Countries such as Sweden and Norway have achieved recycling rates of over 90 per cent with similar schemes. This is to be applauded, but they didn’t do it by introducing a deposit system on top of kerbside collection. This is the crucial difference. Kerbside collection covers virtually every home in Britain and, as a result, we recycle 72 per cent of drink containers. The average country with a deposit scheme recycles 87 per cent of drink containers, so we can confidently predict that Gove’s scheme would improve our performance somewhat, but at what cost?

The government’s own impact assessment says the scheme will cost more than £1 billion in its first year and £814 million every year thereafter. This will be paid for by a combination of producer fees and unclaimed deposits, costs which will ultimately fall on the consumer. In addition, we will all have to start collecting our empties and storing them somewhere before traipsing off to the nearest collection point where, if the machine is working and there isn’t too much of queue, we can claim back our deposits and get a voucher which we will be able to exchange for cash after queueing somewhere else.

If every household spends just five minutes a week going through this rigmarole, it will equate to £1.7 billion of unpaid labour. Add this to the direct costs of running the system and we’re looking at an annual cost of £2.5 billion.

What do we get in return? According to the government, the scheme will generate recyclable materials worth £37 million and save councils £50 million on litter collection. These are slim pickings when put side by side with the costs.

Rather than admit that the deposit scheme is an epic loss-maker, the authors of the impact assessment claim that the psychological benefits of seeing less litter are worth a whopping £968 million a year to the British public. This unfeasibly high figure narrowly pushes the policy over the line in cost/benefit terms, but only because the government totally ignores the biggest cost of all: the unpaid labour that you and I will be expected to perform for the system to function.

Don’t get me wrong. Recycling is good and littering is bad. No one should be against sensible efforts to move towards a circular economy, but it cannot be done at any cost. It is pointless making people cart their household waste to a supermarket when they can have it collected and recycled with minimal effort at the kerbside.

The real issue is with the cans and bottles people buy when they are out and about. These ‘on the go’ containers are more likely to be littered and less likely to be recycled. Local councils could address this by investing in better recycling bins in the street. That would be a more pragmatic – and vastly more efficient – way of tackling the problem than Mr Gove’s big idea.


Read Chris Snowdon’s new IEA briefing ‘A load of rubbish? Introducing a Deposit Return Scheme to the UK’ here.

Head of Lifestyle Economics, IEA

Christopher Snowdon is the Head of Lifestyle Economics at the IEA. He is the author of The Art of Suppression, The Spirit Level Delusion and Velvet Glove; Iron Fist. His work focuses on pleasure, prohibition and dodgy statistics. He has authored a number of papers, including "Sock Puppets", "Euro Puppets", "The Proof of the Pudding", "The Crack Cocaine of Gambling" and "Free Market Solutions in Health".

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