Retailers threaten Scottish Government with legal action over Deposit Return Scheme delay

Retailers are considering legal action against the Scottish Government after being left “out of pocket” by the delay to the deposit return scheme.

On Wednesday, the government confirmed the scheme will not begin until October 2025 at the earliest with circular economy minister Lorna Slater claiming changes imposed by the UK Government made it impossible for the plans to go ahead as planned.

The announcement marks the fourth time the scheme has been delayed.

However, leading industry firms warned a further delay risked “completely undermining [the Scottish Government’s] position as a legislator that can be relied upon”.

Mo Razzaq of the Federation of Independent Retailers said it is now seeking legal advice on the issue of compensation.

Scotland was to set have been the first part of the UK to introduce a DRS, with it planned for March 2024, but the latest delay means it will now not happen until initiatives in the other parts of the UK are ready.

The UK Government wants a DRS across the four nations to be aligned, and had ruled the Scottish scheme could not include glass bottles – as Holyrood had originally planned – for that reason.

Scottish ministers accused their counterparts in Westminster of “sabotaging” the scheme north of the border.

First Minister Humza Yousaf said it had been “yet another dark day for devolution”, claiming Holyrood had been “undermined by the actions of a Tory Westminster Government”.

Slater said the decision to delay the Scottish DRS once again to tie in with the UK Government’s launch date was taken after the “overwhelming response from businesses” in Scotland was for it to “align with the UK”.

Mr Razzaq said retailers want compensation, having already invested in reverse vending machines where shoppers can return empty containers to get their deposit money on drinks cans and bottles back.

As well as paying for the machines to be installed, he said retailers are now “trapped in contracts with reverse vending companies” which cost an average of almost £4,000 a year.

Speaking on BBC Radio Scotland’s Good Morning Scotland programme, Mr Razzaq, who is also a Labour councillor, said: “We want compensated on this.

“We took on this because the Scottish Government told us this was a requirement for business. We did exactly what they asked for, and now we’re the ones out of pocket.”

He said the Federation of Independent Retailers is “seeking legal advice on this matter”, adding: “This wasn’t down to retailers not trying to make this work, it is down to the Scottish Government not working it properly and not planning this properly.”

Asked if his organisation is now considering suing the Scottish Government, he said: “Yes we are. We are working on the sums just now, we will need to look at the losses our members have suffered.”

It comes after waste management firm Biffa penned a letter to Humza Yousaf urging the scheme to go ahead.

In the letter, seen by STV News, the firm said they had invested over £65m in property, vehicles and counting equipment based on the assumption the scheme would be delivered.

Chief executive Michael Topham wrote: “Whilst the position of the UK Government is no doubt unwelcome for all those committed to delivering the scheme for Scotland in the form originally intended, I strongly believe that the best course of action at this stage is to proceed without further delay, enabling Scotland to deliver this ground-breaking environmental solution as soon as possible and substantially earlier than the rest of the UK.”

He added: “Any decision to cancel or significantly delay the scheme beyond March 2024 sends a seismic and detrimental signal to all those businesses that are in principle willing to commit resources into helping the Scottish Government deliver on its ambitions, completely undermining its position as a legislator that can be relied upon.

“In my view the ramifications of this will be significant. Not only in terms of the urgent and immediate need for many businesses, who have invested in the scheme in good faith, to protect their financial position, but also in terms of attracting long-term outside investment in Scottish green infrastructure and related schemes in the future.”

Slater accepted businesses have made “significant investment” to prepare for the DRS – but she insisted the sector had supported the decision to delay until the UK Government’s scheme is ready.

Speaking on Scotland Tonight, she said: “At every point. We have worked in good faith through the process with the UK Government.

“We’ve put in place the scheme administrator, the processes around that in line with the Scottish regulations. And we’ve worked systematically with industry through all the issues the industry was raising for us.

“Now there were some issues on the table that we simply couldn’t give certainty on, things like shellfish labelling, which is a trading standards issue that is for the UK to decide getting the UK to come up with those sorts of answers in a timely way was a challenge all along.

“The UK simply isn’t able to come up with the answers that we need because they haven’t done the background work. On getting deposit return scheme going, which is why we’re unfortunately having to delay it again because the UK will have to go and do that work now.”

She insisted it was the UK Government who “made this scheme impossible to deliver on the original timescale”.

The minister added: “The UK in using the internal market Act to block our scheme, did two things. One was the removal of glass, but the other piece of that was the application of some conditions on interoperability.

“But what that meant was they were what they said in that is they were going to make us match whatever they passed with their regulations. The thing is, they haven’t passed the regulations yet, so that puts us in an impossible position.”

However she said she is “very, very sceptical” about whether this will happen in time for October 2025, noting: “The UK haven’t even passed their regulations yet, we’re in mid-2023 now.”

She could not say what will happen to Circularity Scotland, the body set up to operate the DRS in Scotland, now it will not begin for more than two years.

The minister said: “Circularity Scotland is an industry body and industry wanted, that was the ask, that we align with the UK.

“So now industry have to decide how they are going to support Circularity Scotland.”

Responding to the news that retailers are considering legal action, Scottish Conservative MSP Maurice Golden said: “Lorna Slater should stop ducking the question and reassure Scottish businesses that they will be compensated for shelling out a fortune on a Deposit Return Scheme that’s been hopelessly botched – and now further delayed – by her and the SNP-Green government.

“Retailers and producers warned her from day one that the scheme was flawed to the point of being unworkable, yet she repeatedly insisted that it would go ahead and that they would have to comply with it or cease trading.

“Lorna Slater’s stubbornness and lack of clarity have defined this whole fiasco and businesses should not have to pick up the tab for her incompetence.

“The postponement of DRS announced this week was the inevitable conclusion to a shambles of the Nationalists’ making. They should admit as much and reimburse the firms affected, rather than force businesses to drag them through the courts.”