Biffa boss given 'firm assurances' by Scottish Government over bottle return scheme

A waste firm boss said he thought the Scottish Government were “applying pressure” on his business to sign up to its doomed bottle return scheme, a court has heard.

Michael Topham – the chief executive officer of Biffa Waste Services – told the Court of Session on Tuesday of his impressions of a letter sent to him by ex Green Party minister Lorna Slater.

He told judge Lord Sandison that the government was providing his firm with “unambiguous” and “unequivocal” assurances that its recycling initiative would proceed in 2023.

Mr Topham said that Slater’s letter had offered assurances to his firm “akin to a guarantee” that the scheme would proceed.

The court heard how this persuaded Biffa to commit millions of pounds of its own money to develop the infrastructure needed for the project.

Slater is the former minister for green skills, circular economy and biodiversity in the Scottish Government from 2021 to 2024. She was in charge of overseeing the doomed policy.

However, the project did not go ahead. Under the scheme, a 20p deposit would be added to all single-use drinks containers made from PET plastic, metal, or glass – the fee could be reclaimed when the containers were returned to retailers or reverse vending machines.

The initiative, which had already been delayed, was due to go live in August 2023.

However, the plans were shelved weeks before the launch date following a dispute with the UK government, which would have been required to grant the scheme an exemption from the Internal Market Act.

Slater gave ’emphatic’ assurance to Biffa

This has prompted the firm to instruct lawyers to launch a compensation claim against the Scottish Government – the business is seeking more than £166m in damages to reflect the losses it says it incurred from investing in infrastructure and from lost profits.

Describing the impact of Slater’s letter on the company’s thinking on Tuesday, Mr Topham said that his firm knew that drinks producers thought a Scotland-only scheme – separate from the UK government’s one – was problematic.

He said: “We knew there was a reluctance from the producers to have a separate scheme – there was nothing from the legal side – it was more from our interaction with the producers.

“The letter provided us with reassurances. I also took them to be applying pressure on us to go through with it with them.

“I took it as them providing us with a guarantee that the scheme was going ahead- that there was no risk of it not going ahead.”

Mr Topham was speaking on the first day of an eight-day-long hearing at Scotland’s highest civil court.

Scheme collapses

The deposit return scheme was due to be introduced in August 2023, but the launch date was pushed back, with the first minister Humza Yousaf citing concerns from businesses.

The Conservative government at Westminster refused to grant the scheme the go-ahead unless it conformed to a UK-wide approach which excluded glass.

In June 2023, Slater said she had no choice but to delay the scheme until at least October 2025, accusing the UK government of sabotage.

She left government last year following the collapse of the Green-SNP power-sharing agreement.

The company have decided to go to the Court of Session in Edinburgh because it believes the Holyrood government is responsible for it incurring a £166.2m loss.

It wants compensation for the cash it invested in the collapsed Deposit Return Scheme and the subsequent loss of profit.

Circularity Scotland leaves debts of more than £86m

Circularity Scotland collapsed with debts and liabilities of more than £86m.

Biffa, one of its main creditors, is seeking up to £166.2m of reparations.

This includes about £115m in projected profits over a ten-year contract with Circularity Scotland, as well as about £50m that Biffa said it spent in preparation for the scheme.

Lord Clark said in a preliminary ruling earlier this year that “questions remain” about the costs incurred by the waste company and the amount of future profits it lost out on.

Scotland is not expected to have a deposit return scheme until October 2027 at the earliest, when Holyrood ministers are expected to align their plans with a UK government initiative.

A Scottish Government review from March 2023 reported that its plans were fraught with problems months before the UK government raised objections.

It also emerged that the publicly-owned Scottish Investment Bank made an £8m loss on Circularity Scotland.

On Tuesday, Mr Topham also described how the letter – which was sent in 2022 – had offered the firm an “unequivocal reassurance about their commitment to the scheme”.

He added: ”It applied pressure somewhat on us to conclude the contract and move ahead.

“I took it as being akin to a guarantee that the scheme was happening and there was no risk whatsoever of it not going ahead.”

He also described the letter as “completely foundational”, “unambiguous” and “emphatic”.

Mr Topham also said there had been no mention of any dispute over internal market rules.

He said if he had been told about a dispute, it would have been a “complete curveball” and a “huge shock” .

He said that this would have made signing the contract conditional on having an exemption in place.

The court examined minutes from various meetings in which Biffa raised concerns about the safety of its investment with Circularity Scotland – the non-profit company funded by the drinks industry that was due to manage the scheme.

Mr Topham said he believed Slater’s letter was meant to allay concerns that there could be delays which could lead to “a change in political appetite for the scheme”.

The Scottish Government’s lawyer, Gerry Moynihan KC, said that Biffa had not placed as much importance on the letter from Slater as Mr Topham had suggested.

He pointed out that Biffa had taken out insurance with a premium of more than £3m. He said this suggested that this unusually high premium reflected the risk inherent in the scheme.

Citing the insurance policy, he told the court it showed that Biffa did not feel the scheme was guaranteed, and said there was no mention of the letter in the minutes of a board meeting the following day or a written update given to board members.

He questioned whether in 3,970 pages of documentation there was a single mention of the board being informed about the letter.

Mr Topham replied that he had told the board about the letter, and said insurance was taken out due to concerns about delays to the scheme.

He added that the insurance premium felt like a price worth paying and that the outlay could be recovered.

The Court of Session hearings are scheduled to last for eight days. Both Ms Slater and Alister Jack – the former UK government Secretary of State for Scotland – will give evidence.