Ministers to scale back flagship recycling scheme in order to meet 'undeliverable' August 2023 launch date

Ministers are likely to scale back the SNP/Green’s flagship recycling scheme to hit a launch date described by an internal government review as undeliverable for a fully functioning project.

The Deposit Return Scheme (DRS) will see people pay a 20p deposit when they purchase a drink made of plastic, steel and aluminium or glass, with the money returned when the bottle is recycled at a return point.

The aim is to reach 90 per cent collection rates. However, the scheme has been plagued by delays and business concerns, with the initial launch date of July 2022 ditched last year.

Fears have previously been raised by businesses the scheme’s introduction could result in some companies stopping selling their goods in Scotland.

In November, more than 500 figures from across the food, drink and hospitality sector signed an open letter to Lorna Slater, the Scottish Government minister for green skills, circular economy, and biodiversity responsible for DRS, calling on her to pause its introduction.

However, an internal review of the implementation of the scheme casts significant doubt over the planned launch date of August 16 next year, despite ministers continuing to claim it is still achievable.

The ‘Gateway Review’ report, kept secret from MSPs since it was delivered to ministers in May, warns of “significant challenges”, with a “difficult transition from government to industry leadership” still ongoing.

It was also given the second highest level of concern by officials – amber/red – which means the “successful delivery of the project is in doubt with major risks or issues apparent in a number of key areas”.

Lorna Slater has committed to launching the Deposit Return Scheme in August 2023.

The report recommended that a “fully functioning and compliant DRS cannot be in operation for the revised August 2023 schedule”. It added: “The review team believes that a ‘softer’ approach to DRS implementation should be pursued, but further urgent activity would be required to consider, assess and agree this possibility.”

The decision to scale back what is launched in August to provide something appears to have been accepted by Government, with a further report in October stating “it is now recognised and accepted that a fully/wholly functioning scheme is not [redacted] required, for the 16 August 2023 target”.

That report has also dropped the level of concern to ‘amber’, meaning delivery is “feasible”, but with “significant issues” still to be resolved.

However, the more recent report still highlights major problems facing the scheme. It lists issues including “VAT, on-line takeback, cut-over, the operational plan and retailer exemptions".

In a letter to Holyrood’s net zero committee, Ms Slater continued to commit to the August 2023 launch date.

She told MSPs: “Industry has been making good progress on preparations for the scheme, which will go live in August 2023. It will be a major part of our efforts to reduce littering, cut emissions and build a more circular economy.

"However, I am aware of business concerns on some outstanding issues, particularly given the very significant pressures everyone is facing during the current cost-of-living crisis.

"We have committed to a pragmatic approach to implementation, and the action I am setting out today will help to make the scheme more efficient and reduce costs, while ensuring that environmental benefits are still delivered.”

Ms Slater also confirmed all bar the biggest supermarkets would be exempt from the online takeback requirement of the scheme. The requirement would have seen small retailers forced to offer a takeback service when it launched.

Stuart McMahon, director of CAMRA (Campaign for Real Ale) Scotland, welcomed the decision in the letter, but warned others in the rest of the UK may stop selling products to avoid increased cost.

He said: “CAMRA still fears that the Deposit Return Scheme risks severely limiting the choice available for consumers as Scotland’s small, local and independent breweries and cider makers face extra burdens to be part of the scheme, threatening their viability at a time of rising costs, rocketing energy bills and customers tightening their belts.”

Ewan MacDonald-Russell, deputy head of the Scottish Retail Consortium, said the change provided “certainty” for businesses considering withdrawing from the Scottish market.

However, he said: “We remain baffled Scottish ministers believe there is a simple way to differentiate the online market. Any measures which put costs on to only some businesses will require clear evidence to ensure this is a proportional and legal measure.

“It’s reassuring that, due to the myriad of delays and unanticipated issues, the Scottish Government will work with SEPA and Circularity Scotland to develop a realistic model for implementation.

"With eight months to go, retailers don’t know what price to put on the shelf, whether VAT will apply or how often bottles will be collected from their stores. A pragmatic approach will be required from all parties if that August 2023 launch is to be achieved.”

Want to hear more from The Scotsman's politics team? Check out the latest episode of our political podcast, The Steamie.

It's available wherever you get your podcasts, including Apple Podcasts and Spotify.