Deposit return scheme (Scotland)

The deposit-return scheme (DRS), is a container return scheme being planned for Scotland. The scheme has been delayed several times and is now due to start in 2025 to coincide with the a United Kingdom scheme. A not-for-profit, publicly owned company, Circularity Scotland Ltd, was set up to operate the scheme however, it went into administration following the latest delay of the scheme. The total level of investment lost as a result of the delay is estimated at £300 million including £9 million of public money which had been invested via the Scottish National Investment Bank.

Background
The Scottish Government proposed a DRS in 2017 which would recycle single use containers made of PET and Aluminium to reduce litter and address environmental concerns. In May 2019 the Environment Secretary Roseanna Cunningham announced that the scheme would also include glass and that the deposit would be set at 20p. All shops that sell drinks and also all producers would be required to accept all returned containers and pay deposits back the consumer. The scheme would be administered by a not-for-profit limited company called Circularity Scotland Ltd.

After initially being delayed because of the COVID-19 pandemic implementation of the scheme came under the remit of the office of Minister for Green Skills, Circular Economy and Biodiversity Lorna Slater in August 2021. In November of that year Ms Slater announced a second delay so she could continue to work with producers to "agree a final timescale and clear milestones for delivery".

Proposed scheme provisions
The scheme would operate along the "producer pays" principle, where the producer pays the proposed deposit amount (20p) to the scheme operator, Circularity Scotland. At each point down the chain, the wholesaler, the retailer, and ultimately the consumer who buy the goods each pay the unit price plus the deposit. Every producer and retailer would also operate a return point, where the consumer would return the container and receive back the deposit. The return point operator would then request back the deposit from Circularity Scotland.

Producers would pay a small surcharge to cover the cost of the scheme and retailers would receive a small handling fee to cover their costs. Each product would need a specific barcode to track returns. All producers and retailers of drinks in bottles and cans in Scotland would need to sign up the scheme to continue selling. When a container is not returned then VAT would be due on the deposit with the liability falling on the producer.

The scheme aimed to increase recycling of used containers to 90% by the second year, and reduce carbon emissions by 4 million tonnes over 25 years. The Scottish Government estimated that 42,000 fewer plastic bottles would be littered every day in Scotland. The direct costs saved by having spending less on cleaning up litter would be £46 million. Including glass would reduce CO2 emissions by 50,000 tonnes per year.

Controversy
Critics argued the scheme would put undue pressure on small retailers as many would not have the staff nor the space to handle returned containers. Automated Reverse Vending Machines cost circa £30,000 with £2,000 for installation. The Scottish Retail Consortium criticised the requirement for those selling drinks online to collect empty containers from customers, as they be unable to use their existing vehicles to collect empty drinks cans and bottles because of food safety risks.

A Scottish Government report in March 2023 said there where major risks in key areas of the scheme. The report gave a "red/amber" status to the scheme meaning it doubted that it could be delivered successfully.

The UK Government said the scheme would create a barrier on trade within the United Kingdom and that it would require an exemption from United Kingdom Internal Market Act 2020. However, the UK Government granted an exemption, allowing the Scottish Government to proceed with the scheme provided they remove glass from the scheme. This was because the UK Government's own planned scheme did not include glass and having glass in the Scottish scheme would create a "permanent divergence" within the UK internal market. Despite the removal of glass the chief executive of Circularity Scotland Ltd, David Harris, said the scheme remained "viable" and the impact was "minimal" with drinks producers urging the Scottish Government to push on with the scheme. Scottish Ministers accused the UK Government of sabotage, showing an "utter disregard for devolution" and announced a delay to 2025 to coincide with the proposed UK-wide scheme. Following announcement of the delay major drinks firms including the producers of Irn-Bru, Red Bull and Coca-Cola pulled their financial support for Circularity Scotland Ltd citing "ongoing political uncertainty". Circularity Scotland Ltd subsequently went into administration with the loss of 60 jobs.

Following the delay, the minister in charge of implementing the scheme, Lorna Slater, survived a vote of no confidence by 68 votes to 55. A veteran Scottish National Party Member of the Scottish Parliament Fergus Ewing was suspended from the SNP following his vote with opposition parties of no confidence in Lorna Slater, highlighting internal divisions and political tensions surrounding the scheme's implementation.

Michael Topham, Biffa's chief executive said the company had invested £65 million in the scheme "in good faith" and that they would look to recover this investment over the coming decade. In May 2024 it was confirmed that Biffa lodged a claim for compensation from the Scottish Government at the Court of Session and named the former Circular Economy minister Lorna Slater in the action.