Deposit return scheme doomed to 'fail' without urgent action, retailers warn

Retailers across Scotland have warned that failures on the part of Scottish ministers and the private company tasked with administering the country’s deposit return scheme have left the initiative in the “last chance saloon,” amid claims ordinary consumers will “pay the price” if problems are not ironed out.

The Scottish Retail Consortium (SRC) said that despite “enormous investment” into the scheme, it does not believe it can be launched successfully this summer unless businesses receive the “key information” necessary to put infrastructural changes in place.

It comes as one of Scotland’s leading brewers condemned the contracts put in place by the scheme’s administrator, alleging that they would leave some drinks producers liable for huge payments even in the event that the initiative is not rolled out as planned this August.

Under the DRS scheme, shoppers will pay a 20 pence deposit when they purchase a drink that comes in a single-use container made of plastic, steel, aluminium, or glass. They will then be reimbursed when they return empty containers.

The government has hailed it as one of the most environmentally ambitious undertakings in Europe, but the plans have been beset by widespread criticism, with hundreds of firms across the food, drink, and hospitality sectors calling for its introduction to be paused in light of its “impending catastrophic impact.”

Following talks with Lorna Slater, the circular economy minister, the SRC has now said that consumers will face higher prices and reduced choices unless a clear plan on how to deliver the scheme is set out.

The trade association estimates that retailers will invest more than £250m this year to purchase and install reverse vending machines, and change prices and IT systems. However, it stressed that a lack of clarity on how the scheme will work is holding back further investment.

Calling for a “complete operational blueprint” to be published by the end of this month, Ewan MacDonald-Russell, deputy head of the SRC, said it was “alarmed” at the failures of the scheme’s set up so far.

Scotland's deposit return scheme is due to be rolled out in August but it is facing widespread criticism from those in the hospitality and retail sectors. Picture: Thomas Samson/AFP/Getty

“If these issues cannot be resolved, then Scottish consumers will pay the price,” he said. “Shoppers will face a bewildering patchwork of approaches which will be difficult to understand with the process of returning drinks and retrieving deposits likely to be cumbersome.

“Customers will also face the consequences of retailers having to simplify their offering to attempt to be compliant, which is likely to mean reduced choice and potentially higher prices. This is the last chance saloon to deliver a successful Scottish DRS which will land well with consumers in 2023.”

Under the scheme, any business which produces or imports drinks for sale in Scotland that are sold in the designated single use containers must register. They can do so either directly with the Scottish Environmental Protection Agency - the scheme’s regulator - or Circularity Scotland, the scheme administrator, which says it offers a range of benefits for producers who sign up through it, such as reporting returns data, and collecting returned containers. All drinks producers will have a legal duty to comply with the regulations, and it will be an offence to sell a drink in a scheme container in Scotland if the producer of that drink is not registered with SEPA.

Some drinks producers have hit out at the finer details of the scheme, arguing that it will force them to pay significant sums of money even if it is delayed beyond this summer. Dougal Sharp, the founder of Edinburgh-based Innis & Gunn, said that the producer agreement between his firm and Circularity Scotland included a requirement for it to make payments to the administrator in the event that the roll-out date of 16 August is missed.

“It’s a case of, ‘If you don’t sign up, you can’t trade’, and, ‘If you do sign up, and we don’t launch, you’re on the hook for significant sums of money’,” he said. “The sliding scale is eye watering. It starts at £50,000 a month, and this is effectively an unsecured loan, going up to £1.5m a month that producers will be expected to pay in the event that the scheme doesn’t launch.”

Stressing that producers were not responsible for the scheme’s delivery, Mr Sharp said there a significant amount of work has to be done in order to fulfil its goals. “There’s a huge amount of infrastructure that needs to be put in place to actually get this scheme to launch - recycling centres, vehicles, drivers,” he added. “I believe it’s risky. I believe there are a number of significant risk factors in the scheme.”

But David Harris, chief executive of Circularity Scotland, said that the scheme “will be ready” and “up and running on time, with “very, very significant investment” put into it so far.

Addressing Mr Sharp’s comments, he said that within the agreements struck with only the very largest producers, there was “an obligation to effectively support the investment that’s been made,” and even then, only in “very extreme circumstances.”

He explained: “This scheme goes live in August. If for some reason the money isn’t flowing, we and the people who’ve put the investment in will have costs, and this is about underwriting those costs. But to be clear, this is something which the largest producers committed to over six months ago in order that the investment could be procured.”

A spokesman for the Scottish Government said the regulations around the scheme tasked industry with its delivery, and that the government was supporting it, and would continue to work with Circularity Scotland and businesses as they finalised their operational delivery plans.

He added: “The government has committed to a pragmatic approach to implementation and we have already taken action to make the scheme as efficient as possible and reduce costs. The steps we have taken were in direct response to concerns put to us by retailers.”