UK deposit registration opens with 0p producer fees to 2028, as M&S urges the Chancellor to scrap the scheme

How the UK deposit scheme is built

A deposit return scheme adds a refundable charge to a drink at the till and pays it back when the empty container comes back. In the UK the money moves through one body. Under regulation 22 of SI 2025/67, the producer pays the operator an amount equal to the deposit on each item, and every business down the chain charges it on to the next¹.

The operator, legally the UK Deposit Management Organisation and trading as Exchange for Change, sets the deposit and the producer fees. Regulation 63 requires a per-container fee for each of PET, steel and aluminium, the same for every producer, with no cross-subsidy between materials. Retailers that host return points are paid a handling fee for each container they take back.

The scale is large. The House of Commons Library briefing of 22 July 2026 puts UK use at about 14 billion plastic drinks bottles and 9 billion drinks cans a year, and cites government impact assessments for England and Northern Ireland of £632 million in set-up costs and £1.065 billion a year in running costs¹¹. The same assessment puts average benefits at £1.612 billion a year. Scotland’s assessment, on a ten-year basis, gives costs of £900 million against benefits of £1.27 billion, so the two are not comparable line by line.

Glass sits outside the scheme in England, Northern Ireland and Scotland, and so do HDPE milk bottles, according to Defra’s producer and retailer guidance. Wales includes glass from day one but with a zero deposit, a split that shapes much of the reaction below.

What changed since registration opened

29 September: registration opens. Exchange for Change opened its portal for businesses that must register as a producer, a return point operator or both. Phase 1 asks for company details, a primary contact, trading names and addresses, and issues a reference number on submission. The operator gave no closing date and said phase 2 opens in January 2027⁵.

30 September: contractors and transition rules. The operator named five logistics and processing providers: SUEZ for the North-East, North-West, West-Central and South West of England; CIRQLR for East Central, South and South East England; Re.Group with Hargreaves Services for Scotland; Bywaters for London; and Re-Gen for Northern Ireland. It expects about 700 jobs and 400 vehicles, and three new purpose-built plants at Ely, Knowsley and Avonmouth from October 2030⁶.

At launch the network relies on three dedicated processing facilities, in Scotland, Scunthorpe and Guildford, two dedicated lines at the Isle of Dogs and Newry, and a shared plastics recycling facility at Avonmouth. That puts six sites in service from October 2027, three years before the purpose-built plants arrive.

The same day, its transition note said drinks manufactured and filled before 1 October 2027 stay outside the scheme and may be sold after launch with no deposit, logo or fee. It asked industry to sell through that stock by April 2028, a request rather than a legal deadline⁷. Packaging not yet filled is treated differently: flexibility for empty containers tied to orders placed before 1 October 2027 depends on regulators agreeing, and other non-compliant packaging must be made scheme-compliant before it is filled.

1 October: the registration page is revised. Exchange for Change updated its registration notice, which repeats that urban shops under 100 m2 are automatically exempt from hosting a return point while larger small shops must register even if they apply for exemption. The operator said how to apply for an exemption will be published in the coming months, so shops of 100 to 199 m2 cannot yet complete that step⁵.

10 October: M&S calls for the scheme to go. In a post on the M&S corporate site setting out what he has written to the Chancellor before the next Budget, M&S’s chief executive called the scheme “patently ridiculous” and asked for it to be scrapped. He wrote that shoppers will “pay 20p more for every bottle or can of drink” from next October and that M&S paid an extra £40 million of packaging EPR “in one go” in April¹².

The fee notice of 2 September also carried the operator’s invitation to “Join 270,000+ other businesses”, a promotional line rather than a count of phase 1 registrations, which Exchange for Change has not published⁸.

What the rules and the operator have set

The legal duties sit in regulations; the money sits with the operator. Regulation 1(3) of SI 2025/67 brought producer registration into force on 24 January 2025, the day after the regulations were made, and regulation 11 bars supply by unregistered producers. Most other duties start on 1 October 2027¹. From then a producer must pay the producer fee and the deposit amount, mark each container with the scheme logo and return code, report the containers it places on the market and keep records for seven years, under regulations 13, 21, 22 and 24.

The deposit is the operator’s figure, not one written into the England and Northern Ireland regulations. Regulation 59 makes the operator responsible for setting and publishing it, and regulation 60 requires three months’ notice of a change. Exchange for Change stated a flat 20p on 24 April 2026, citing consumer research that a deposit below 15p was unlikely to reach a 90% return rate within three years, while 30p could put a disproportionate cost on shoppers¹⁰.

All figures are pence sterling. The low volume ceiling counts per product line. Regulation 81 also sets a floor of 85% for PET and for other materials from 2030, and Scotland’s amended regulations carry the same 70%, 80% and 90% path².

Hospitality has its own rule. Under regulations 28 and 29, pubs and restaurants in England and Northern Ireland may opt out of charging the deposit on drinks consumed on the premises, but takeaway sales must carry it. Enforcement in England sits with the Environment Agency and Trading Standards, according to Defra’s guidance⁴.

SPI calculation. In one currency, the expected PET fee is 2.3 / 0.6 = 3.8 times the metal fee. Against the 20p deposit the operator states, the PET fee equals 11.5% of the deposit and the metal fee 3%.

Who pays and who gets paid from October 2027

The costs fall in three places: producers carry fees and deposit cash flow, retailers carry space, staff and machines, and the operator’s contractors carry collection. Public figures allow some of each to be named.

Drinks producers. Every brand owner, importer or own-label retailer that first places in-scope drinks on the UK market must register. A.G. Barr, maker of IRN-BRU, reported revenue of £437.3 million for the 53 weeks to 31 January 2026 and said it “continued our preparatory work” for the scheme¹⁵. Its filing does not split volumes by material, so its fee exposure cannot be calculated from public data.

Grocers as producers and return points. Retailers carry two roles: producer for own-label drinks and return point for everyone’s containers. M&S has given the clearest cost signal, its £40 million extra EPR payment in April, though it has published no deposit scheme cost of its own. Tesco offers a measure of what a return network looks like: its Sustainability Report 2026 says Tesco Ireland runs 345 reverse vending machines across 191 stores and reports a 104% return rate in the second year of Ireland’s scheme¹⁴.

Small shops. Exchange for Change’s June support package set £60 million of grants for up to 10,000 small independent retailers, at £6,000 a site paid in three annual instalments of £2,000, the first three months after installation. Urban shops of 100 to 199 m2 and rural shops under 200 m2 may apply for exemption; shops of 200 m2 or more face a presumption against it⁹.

Collection contractors. SUEZ, CIRQLR, Re.Group, Bywaters and Re-Gen hold regional contracts from October 2027. The operator gives no contract values, only “millions of pounds” of investment⁶.

Do not add these figures together. They measure different things (revenue, a tax payment, machine counts, grants and per-container fees), cover different periods, and Tesco’s figures relate to Ireland, where deposits are set in euro.

SPI calculation. For a producer placing 100 million containers a year, 40 million PET and 60 million cans, none low volume: from January 2029, 40,000,000 x 2.3p = £920,000 plus 60,000,000 x 0.6p = £360,000, or £1.28 million a year, against £0 before. Deposit amounts passed to the operator would be 100,000,000 x 20p = £20 million a year, a cash flow that returns as customers pay the deposit, not a cost.

SPI calculation. For the chart, 300,000 containers at an automated point earn 225,000 x 5p = £11,250 plus 75,000 x 1.3p = £975, or £12,225. At 500,000, the second tier adds 275,000 x 1.3p = £3,575, giving £14,825. A small shop’s £2,000 annual grant instalment equals the handling fee on 40,000 containers at 5p.

The cash and glass problems behind the zero fee

The 0p fee removes one cost but not the others. A producer still pays the deposit amount to the operator on every container it places, under regulation 22, and recovers it only when its customers pay. Payment terms for those deposit transfers had not been published by 14 October, so the size of the working capital gap is not yet known.

The second pinch point is Wales. The Welsh written statement put glass in the scheme from day one at a zero deposit, and the Commons Library dates that transition from 1 October 2027 to 30 September 2031¹¹. Producers selling glass drinks into Wales face a different labelling and collection position from the rest of the UK, while the PET and metal deposit for Wales has not been stated in the Welsh announcement.

History adds caution. The Commons Library recalls that Circularity Scotland, the administrator of Scotland’s first scheme, went into administration in June 2023, the month that launch was delayed, with reported debts and liabilities of over £86 million. The 2027 design answers that with one operator across four nations, but the M&S post shows that support from the largest retailers is not uniform.

How the UK compares with Ireland, Germany and the EU

The UK will start 44 months after Ireland. Germany already charges a single-use deposit set in law, and the EU’s packaging regulation sets a 90% separate collection target for 1 January 2029.

Ireland’s scheme, tracked as PR-IE-001 and run by Re-turn, went live on 1 February 2024 with a deposit of 15 cent on containers from 150 ml to 500 ml and 25 cent from 500 ml to 3 litres, according to the Irish government¹⁶. It shares the UK’s 150 ml floor and 3 litre ceiling, and Tesco’s 104% figure there is a retailer-reported result from a market next door to Northern Ireland. At launch the Irish government said more than 2,000 return points were ready, with larger retailers using reverse vending machines and nearly 200 smaller retailers taking containers back by hand over the counter.

Germany’s federal environment ministry states that the law requires a deposit of 25 euro cent on single-use drinks packaging, giving thin-walled PET bottles and cans as examples, in an FAQ dated 22 January 2025¹⁷. The new German packaging act, tracked as PR-DE-001, carries the deposit forward in section 46.

At EU level, Regulation (EU) 2025/40, tracked as PR-EU-007, requires each Member State to separately collect at least 90% by weight of single-use plastic and metal beverage containers up to 3 litres by 1 January 2029, according to the Legislative Observatory summary¹⁸. The UK, outside the EU, reaches its 90% target a year later and counts items, not weight.

Pence and euro cent are different currencies, and the UK targets count items while the EU target counts weight. The figures are not converted, ranked or summed. The SPI Ledger’s deposit return comparison also covers Austria, Poland and Portugal.