Firm behind Deposit Return Scheme could collapse after industry backers pull funding

The firm behind Scotland’s deposit return scheme looks set to collapse after major industry backers pulled their funding.

On Thursday, it emerged that the Circular Scotland (CSL) had sent home staff and warned they may not be paid for the rest of the month unless their stakeholders agreed to fund a “hibernation” until the delayed scheme launches in October 2025.

However, further uncertainty has been created after the British Beer and Pub Association, the British Soft Drinks Association and the Scottish Retail Consortium have all said that they “don’t have the confidence required to provide further voluntary funding for the company.”

In a joint statement, the three groups said: “Our members have collectively invested significant time and tens of millions of pounds in good faith to help establish a scheme administrator in Scotland to meet a deadline originally set by the Scottish Government. Sadly, a high degree of political uncertainty has now disrupted plans and timings, putting the future of Circularity Scotland Limited at risk.

“Given this ongoing political uncertainty we don’t have the confidence required to provide further voluntary funding for the company.

“It is now a matter for the CSL Board to determine how it wishes to administer the company’s affairs.”

It comes after the delay to the deposit return scheme was announced by Lorna Slater last Wednesday.

The circular economy minister said she had been left with “no other option” than to push the scheme back to at least October 2025, in line with other parts of the UK.

The UK Government imposed conditions on the Scottish scheme including only along the necessary exemption to the UK Internal Market Act if glass was removed from the plans.

CSL insisted that the scheme could go ahead next March despite the UK Government’s demands.

Last week, Circularity Scotland’s chief executive David Harris said it was “absolutely ready to launch in March 2024 – even if glass is not included”.

In an email to staff, obtained by the Daily Record, bosses at the not-for-profit firm said they were proposing that the company “exist ‘in hibernation’ until the Scottish DRS launches in October 2025.”

The notice continued: “If stakeholders agree to fund this proposal, all employees would be at risk of redundancy and a consultation period would begin.

“In this scenario, it is likely that the company would be able to pay June salaries, any outstanding holiday pay and pay in lieu of notice to those made redundant.”

The firm added: “If stakeholders do not agree to fund this proposal, Circularity Scotland may go into administration. If the company becomes insolvent it may be unable to pay contractual monies due to employees – including June wages.”

First Minister Humza Yousaf blamed the difficulties of CSL on the UK Government.

He told PA news agency: “Unfortunately, Circularity Scotland find themselves in a difficult position because of the eleventh hour intervention of the UK Government.”

He said that the Scottish Government had “made the point that that intervention would undoubtedly be damaging not just to the deposit return scheme but to Circularity Scotland too,”

The First Minister added: “We know that a separate Scottish scheme can’t go ahead, but of course we’re looking to align with the UK scheme in October 2025, that’s the date the UK Government have provided.

“So I think it would be important to make sure Circularity Scotland continue, to make sure industry in Scotland is ready for when that scheme comes into place.”

Scottish Conservative MSP Maurice Golden said the blame lay firmly with the Scottish Government. He said the statement from the drinks producers “raises enormous question marks over the future viability of Circularity Scotland, and will cause deep alarm to its employees.”

“But, equally, I fully understand the position of businesses, who are not willing to continue to bankroll CSL while Lorna Slater’s shambolic Deposit Return Scheme is on hold.

“The blame for this almighty mess lies squarely at the door of the inept circular economy minister.

“From day one, Lorna Slater refused to engage with businesses who warned her that her flawed scheme was unworkable, and stubbornly ploughed ahead with it.

“She ignored their pleas for a UK-aligned scheme and only applied for a UK internal market act exemption at the eleventh hour, despite having known for years that it was a necessity.

“Then she decided to delay DRS for a further two years when Circularity Scotland made it perfectly clear that it could go ahead with glass being excluded.

“Scottish businesses are due compensation for the heavy losses incurred due to her rank incompetence.”