The Local Authority Recycling Advisory Committee (LARAC) has written to the Minister for Waste Crime and the Circular Economy, Emma Hardy, demanding an urgent review of how the UK's Deposit Return Schemes (DRS) will hit council budgets — and it wants the work done with current data, not the 2016-era composition and behavioural figures it says underpin Defra's official impact assessment.

The material stakes are concrete. When the schemes go live, plastic and aluminium drinks containers — plus glass drinks containers in Wales — will move out of kerbside collection systems and into dedicated return points. Drink containers rank among the most widely collected and most valuable materials in household recycling streams. Pulling that tonnage out of kerbside systems changes both the revenue line and the cost base of every collection contract and Material Recovery Facility (MRF) in the affected jurisdictions.

LARAC warns the schemes could cost councils 'millions'. It identifies five exposure channels: lost revenue on high-value materials, increased MRF gate fees as feedstock composition shifts, Trading Standards enforcement duties, litter management, and contract changes with private-sector partners.

The 69p calculation under challenge

Defra's 2024 impact assessment put the local authority effect as a saving of 69p per household. LARAC does not accept the number. Chair Gareth Rollings said: "The suggestion that councils will achieve savings through DRS does not reflect the financial and operational consequences they expect when the scheme goes live."

"While some of the gaps in Defra's 2024 Impact Assessment may reflect the limited evidence available at the time, its failure to account for factors likely to increase costs for local authorities and the wider waste sector is extremely concerning," Rollings added.

The core criticism is methodological. Behaviour around container consumption, disposal and recycling has shifted materially since 2016, and LARAC argues the assessment also omits cost drivers entirely — a gap that matters when councils are setting budgets against a live scheme timetable.

Four asks

LARAC's letter sets out four actions for government.

First, a new DRS impact assessment built on current data to establish the real financial and resource implications for local authorities.

Second, a cumulative assessment of DRS, packaging Extended Producer Responsibility (pEPR) and Simpler Recycling in England. All three reforms touch the same tonnage, the same contracts and the same households, and LARAC wants government to understand how they interact and affect each other's implementation and effectiveness.

Third, offsetting the lost income and additional costs through the New Burdens Doctrine in England, with equivalent funding arrangements in Wales, Scotland and Northern Ireland — or, alternatively, through the unredeemed deposits held by the Deposit Management Organisation (DMO). That last option points to a specific funding pot: deposits never claimed by consumers will sit with the scheme administrator, and LARAC sees it as a legitimate source of compensation for councils losing material value.

Fourth, a formal monitoring and review framework with local authority representation built in during the scheme's initial years of operation.

Rollings framed the fourth ask as systemic rather than financial: "Local authorities must also have a formal role in monitoring and reviewing DRS once it is operating, including how it interacts with packaging Extended Producer Responsibility, Simpler Recycling and the wider system of waste and recycling reforms."

What decides what happens next

The immediate milestone is ministerial: whether Emma Hardy commissions a fresh impact assessment and, if so, whether its findings change the 69p-per-household figure before schemes go live. The parallel questions — a DMO-funded or New Burdens-backed compensation mechanism, and a seat for councils in scheme governance — will determine whether DRS arrives as a net cost shift onto local authorities or as the neutral-to-positive proposition Defra has modelled.