Deposit Return Scheme: Row over key legal exemption for scheme rumbles on

Scottish Government ministers have been working to agree a key legal agreement with the UK Government on its controversial deposit return scheme since as early as 2021, it has claimed.

Secretary of State for Scotland Alister Jack arrives in Downing Street, London.

However, UK Government sources pushed back on the suggestion, pointing at the last time such an exemption was granted and the clear request from the Scottish Government for such an exemption.

The claim is the latest in a row over the scheme, with UK Government sources telling The Times and The Sun that Westminster was likely to block the scheme by refusing permission for a required trading exemption.

Alister Jack, the Scotland Secretary, said on Tuesday there had still been no formal request from the Scottish Government for an exclusion for the scheme within the Internal Market Act.

However, letters between interim finance secretary John Swinney and Victoria Adkins, the financial secretary to the Treasury, show discussions about a possible exclusion have been ongoing for months.

The Scottish Government first requested an exemption within the Internal Market Act in 2021 alongside a request relating to the ban on single-use plastics. This broad exclusion was rejected, with one granted for the single-use plastics ban only.

The potential for an exclusion for the deposit return scheme was then raised in November 2022, with a further inter-ministerial group pencilled in for March 6, next week to discuss further.

A letter from Mr Swinney to Michael Gove, the levelling up minister and Chancellor Jeremy Hunt mentions that “further engagement is underway” about the internal market act’s risk to the DRS.

The deputy first minister writes: “Therefore, this should be a straightforward issue to resolve between governments, and I am seeking your assurance now that UK Ministers will expedite a rapid solution, including a exclusion to the IMA if that is required, and avoid the type of protracted negotiations required to achieve the single-use plastics IMA exclusion last year.”

In a response, Ms Atkins states that she agrees with the “need for long-term alignment of schemes across the UK” and that the UK Government “recognise your concerns”.

She adds: “Defra has assured me that its officials are working closely with counterparts in the Scottish Government and BEIS to scope and understand any implications associated with the UKIMA for the delivery of Scotland’s DRS and welcome the constructive working relationships between officials as they go through these details.”

UK Government sources point to another letter, this time from Lorna Slater to then-Defra minister George Eustice in which she appears to formally request the exemption for the single-use plastics ban in December 2021.

In it, Ms Slater writes: “I believe that this policy area should be added to the list of exclusions under the Internal Market Act”.

A UK Government source said: “It is extraordinary that the Scottish Government should have proceeded so far, at such expense, without formally seeking a relaxation in the laws protecting cross border trade which they claim is essential for the viability of the scheme.

"If and when the UK Government receives a request for a UK internal market exemption, it will be considered in the usual way.”

It is understood the UK Government was expecting the meeting on March 6 next week would result in a formal request from the Scottish Government for the exemption.

The single-use plastics exemption took around six months to be agreed, but an equivalent for the DRS could take longer or be blocked altogether by Scottish Secretary Alister Jack.

Mr Jack said: "No UK Government ministers have received a formal request setting out the scope and rationale for a UKIM exemption for the Scottish Government's deposit return scheme. Should such a request be received, it will be considered by the relevant Whitehall departments.

“As I have set out previously, the bar for a UKIM exemption is very high."

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.