Supermarket bosses have called on the Labour government to delay the rollout of the deposit return scheme again, in a move that supporters fear could derail the scheme for good.
The Grocer has learnt the BRC has written to environment secretary Steve Reed, saying that the proposed October 2027 start date is “not feasible” given the rising threat of food price inflation and the high infrastructure costs it would impose on supermarkets.
It also said the decision by the Welsh government to pull out of a joined-up UK launch, revealed in November, risked DRS not being effective.
Sources told The Grocer that losing the support of supermarkets was a “hammer blow” to DRS, which could prove even more disastrous than the Welsh withdrawal.
The move comes as MPs were due to debate later today on whether to approve the legislation for DRS, which was laid before parliament in November. The move was at the time described by Defra bosses as a “major step forward” for the embattled scheme.
Without supermarket support, however, sources warned it would be impossible for the government to stick to its schedule.
In April last year, the Tory government announced DRS was being delayed until October 2027, having originally been due to go ahead in 2025. The Grocer had previously revealed supermarkets had told ministers it would be impossible for the rollout to happen before the middle of 2028 at the earliest.
While environment minister Mary Creagh confirmed the October 2027 start date after Labour came into power, the scheme has been hit by further subsequent setbacks. These include the announcement by the Welsh government in November that it was pulling out of cross-nation plans for a joined-up launch.
The Welsh move had already further spooked retailers reluctant to push ahead without a uniform system across the UK. But the aftermath of the November budget and recent growing fears of food inflation later this year have cemented their position, with supermarkets including Tesco, Sainsbury’s and the Co-op understood to have led the move to call for a delay.
Last week, Tesco boss Ken Murphy hinted at what was to come when he called for the government to rethink the timeframe for EPR and DRS, which is due to come into force in 2027. Murphy said he hoped the government would agree to “manage and mitigate” both schemes “to the greatest extent possible” in a bid to minimise the financial burden on retailers.
“We would like to work with the government on some of the environmental legislation coming down the track such as EPR and DRS that could have significant cost implications for the industry,” he said.
Sainsbury’s CEO Simon Roberts later echoed his concerns, suggesting that Tesco could call for delays to one or both of the schemes.
“We’re very supportive of the ambition of those initiatives but we want to make sure that the industry can absorb the costs over the right timeframe to try to keep a lid on inflation,” said Roberts.
Naomi Brandon-Bravo, sustainability policy adviser at the BRC, said: “Introducing DRS is a massive undertaking and it’s essential the government implements it properly, delivers the environmental benefits and justifies the significant costs.
“Retailers are currently fronting the set-up costs, and without fair compensation, this will add inflationary pressure on consumers.
“Installing tens of thousands of machines is practically difficult and represents a substantial financial burden, with the overall cost of the scheme expected to reach £2bn.
“For DRS to be effective it must be applied consistently across all four nations. The decision by the Welsh government to leave this four-nation approach creates significant uncertainty for businesses and consumers.
“A fragmented DRS would leave the system open to fraud as cans and bottles bought in Wales (without a deposit) could be redeemed for cash on the other side of the border.
“This would also dilute the ability of retailers to provide clear information to their customers on recycling.
“An effective DRS that is planned properly in a way that works for customers must be prioritised over speed. The government must consider whether the 2027 start date is currently realistic given all these challenges.”
This week, The Grocer revealed pressure is growing on the government to find ways to mitigate the cost of major environmental regulations, including extended producer responsibility (EPR) and DRS, after a fourth straight month of food inflation and predictions of worse to come.
The FDF said it was “critical” that the new government worked with the industry to mitigate the impact of the new taxes and regulation, with EPR alone set to add £1.5bn a year to industry costs and the first invoices due to land in October.
As well as the MPs debate on the DRS regulations, Defra is due to hold talks with hundreds of companies later today after admitting it had received an “overwhelming” response after publishing the latest estimated fees for EPR over the Christmas period.
Sources said they expected the talks to see companies raise “huge concern” over the level of charges to be faced by producers, especially for materials such as glass.
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