According to reports the UK government is set to block the “inflationary” Deposit Return Scheme in Scotland to protect cross-border trading and because the scheme would add to the cost of living crisis. A UK source told The Times: “The present scheme is in deep trouble and that is before the UK government has been asked to relax laws protecting cross-border trade.” Lorna Slater, the Green minister leading the scheme, has admitted that an opt-out from the UK Internal Market Act (UKIMA) is needed for the scheme to proceed.

For months, Scottish business owners - from Innis & Gunn to Summerhouse Drinks - have been voicing their concerns over the scheme and its complicated nature, costs and how it will impact their businesses and green infrastructure already in place.

Whisky consultant and author, Blair Bowman, who has been campaigning on behalf of Scotland’s drinks industry said: “What has happened here is almost like someone deciding to build a house and then ask for the correct planning permissions after construction. This The United Kingdom Internal Market Act exemption is effectively a prerequisite for the DRS to actually be viable and not illegal. The fact that this has still not been requested yet from the UK Government shows at best arrogance and at worst incompetence as this should have been requested a long time ago. Lorna Slater repeatedly says that the industry has had years to prepare and yet here we can clearly see that she has not even received the correct permissions to allow DRS to operate. How can she expect businesses to prepare for something that is potentially illegal in the context of UKIMA?”

Most critics don't disagree with the aim of the deposit return scheme for bottles and cans, but it needs to be workable. Picture: George Frey/Getty Images

While the potential scrapping of the scheme is a relief for some - Craig Duncan, Keystore Maddiston in Falkirk said he is ‘delighted with the DRS news’ - it has also been met with anger. Chris Payne of Shoogle Spirits said it is hard not to be annoyed that it has come to this. “Producers have been trying to speak to the government for months now and no one was listening,” he said. “If there had been thorough industry engagement, collaboration, and transparency then we could have had a world leading recycling scheme that everyone would support. Our main question now is how do we recover from this?”

Stephen Kemp, owner of The Orkney Distillery added: “The UK Government’s intervention comes as an enormous relief, as not one Scottish Government Minister was prepared to hear-out and support the very real concerns raised by all corners of the industry in Scotland.

“I hope that the Scottish Government leadership will now immediately call a halt to the DRS, and begin the process of a root and brand review so that Scotland may one day have a Deposit Return Scheme that can work in harmony with the rest of the UK, whilst successfully fulfilling the environmental ambitions that we all aspire to.”

James Porteous of Electric Spirits Co. summed up the situation, and business owner’s frustration, saying: “This whole situation has imploded. We have the Scottish Government telling us the deposit return scheme is absolutely going ahead, while Westminster says it absolutely won't be, the day before we're required to sign up. We have the minister in charge informing the industry of potentially huge, vague changes to the scheme via an appearance on a TV chat show. The ongoing lack of competence is exhausting. Small businesses are fighting for their lives while second-rate politicians indulge in third-rate politics over an issue that demands our absolute best."

Robert Ransom, director of Highfern Ltd, explained that the news that the UK government will block Scotland’s Deposit Return Scheme application for exemption from the UK Internal Market Act isn’t unexpected, as the Scottish government were warned that the Deposit Return Scheme was incompatible with the UK Internal Market Act in 2020. He said: “ On 9 February in a letter to MSPs Lorna Slater stated 'The formal process for excluding the deposit return scheme regulations from the Internal Market Act is well underway.’ As of the 22nd February the UK government had not received an application, so Lorna Slater would appear to have deliberately misled MSPs on this issue.

“Yes we want to maximise recycling, yes there is an argument for producers to contribute to the costs of recycling infrastructure, and yes, deposits can help encourage the consumer to recycle, but by muddling these goals, sadly Scotland’s Deposit Return Scheme is unnecessarily complicated, commercially naïve, a VAT headache, and creates an trade barrier within the UK.

“The Scottish Government could reduce the impact on the internal market by applying the deposit at the point of retail sale, not when the container enters the Scottish Supply chain, a point which until now has been meaningless. However the simplest option for the consumer, the trade and the scheme administrators would be to run a uniform scheme across the UK. "

Questions are now being asked about the cost of the scheme and what happens to those already signed up to take part, the deadline for which is tomorrow (28 February).

Scottish Greens climate spokesperson Mark Ruskell MSP said of the new: “Scotland’s Deposit Return scheme will play a vital role in cutting our climate emissions, cleaning our coasts and streets and tackling littering.

“To veto this scheme three years after it was approved by Parliament and after businesses have invested hundreds of millions of pounds would not just be bad for the environment, it would destroy jobs and be devastating for those who have invested and got ready.”

"It would be a big slap in the face to the many businesses all across Scotland who have already started preparing for the Scheme, some of whom have already spent large amounts of time and money on ordering equipment and starting recruitment.

"It would also seriously undermine our parliament, our devolution and our democracy.

“The climate crisis is the most urgent crisis that we will ever face. A lot of young people are sick of being let down. We cannot simply stand by and let it happen again.”

"This whole situation has imploded” - Scottish businesses react to ‘life-saver’ news that the Deposit Return Scheme set to be blocked by Westminster