Extract from Scottish Parliament - Topical Question Time: Deposit Return Scheme (Payments) - Mar 7

3. Fergus Ewing

To ask the Scottish Government, in light of reports that small shops in Scotland fear they cannot survive because of the costs and impacts of the Deposit return scheme, what its position is on Circularity Scotland’s confirmation on 1 March that retailers who use reverse vending machines would have to wait one month for payment for returned bottles, rather than the previously expected seven days. (S6T-01225)

The Minister for Green Skills, Circular Economy and Biodiversity (Lorna Slater)

The handling fee given to retailers to cover the costs of providing a return point for Scotland’s Deposit return scheme is the highest such fee in the world.

The payment term for all manual return point operators and hospitality venues will be seven days; the payment term for larger locations that install automatic return points will be longer. Circularity Scotland has a wide membership of producers, trade associations and retailers. Any business with concerns should contact Circularity Scotland for advice and support.

Fergus Ewing

For the past 18 months, in all its documents, on its website and in its presentations, Circularity Scotland has confirmed that payments to retailers who provide reverse vending machines would be made within seven days. Tens of millions, if not hundreds of millions, of pounds have been invested on the basis of those commercial terms. Now, that seven-day period has been extended to one month. That decision was taken by Circularity Scotland after no consultation of convenience stores and there has been no explanation or press release. It is hidden away on page 23 of the document that I am holding.

I have three questions. First, does the minister agree that that decision by Circularity Scotland was taken in an underhand and sleekit fashion? Secondly, was she consulted on that decision? Thirdly, will she now order Circularity Scotland Limited to rescind that decision?

The Presiding Officer (Alison Johnstone)

I remind members of the requirement that supplementary questions should be brief.

Lorna Slater

I can make the member aware of the context. Businesses offering return points in Scotland for Scotland’s Deposit return scheme have three options. If they do not wish to apply to be a return point, and if they have reasonable grounds for exemption, they have the option to apply for an exemption and not to act as a return point. Exemption may be offered on health and safety grounds, including a lack of storage space, or on geographical grounds if a business is close to existing return points. [Interruption.]

The Presiding Officer

Let us hear the minister.

Lorna Slater

The second option for businesses is to behave as a manual return point, which may be particularly suitable for small businesses of exactly the type that the member is concerned about. Convenience stores operating a manual return point, and with a small volume of returns, would probably find that option most convenient. Those small businesses, which are exactly the businesses that the member is concerned about, will receive payments after seven days.

For larger locations, such as large supermarkets, that need to have automated vending machines to provide larger capacity return points, the payment terms will be longer. That is unlikely to affect the small businesses that the member is so concerned about.

I remind the member that the scheme is industry-led, as was agreed by members from across the chamber, and that the fees relating to the scheme are therefore a matter for industry to decide.

Fergus Ewing

There is irrefutable proof that businesses have been misled, duped and deceived by Circularity Scotland. For the second week running, the minister has completely failed to answer relevant, pertinent and vital questions. I ask her again: was she consulted by CSL on the unwarranted, unheralded and non-consultative change from seven-day to one-month payment—if even that can ever be achieved under this scheme? Was she consulted: yes, or no?

Lorna Slater

Circularity Scotland is a private, non-profit company and is responsible for operating the scheme, which includes setting handling fees for retailers. As is set out in the DRS regulations, the Scottish Government is not involved in setting handling fees. The fee was agreed after an extensive knowledge gathering exercise, which included analysis and modelling by PricewaterhouseCoopers, the company appointed by the scheme members.

Maurice Golden (North East Scotland) (Con)

There are reports that Circularity Scotland dismissed the contributions of small producers as just “dust in the wind”. That serves to make small producers feel that the Scottish Government sees them as worthless. Many are already worried sick about the pigheaded planning of the scheme. Was the minister consulted on changes to retail handling fees: yes, or no?

Lorna Slater

I will give the member the same answer that I gave the previous member. As set out in DSR regulations—[Interruption.]

The Presiding Officer

Minister, please give me a moment. Members, I am sure that we would all wish to be heard with respect—please afford the minister that courtesy.

Lorna Slater

As set out in the DRS regulations, the Scottish Government is not involved in setting retailer handling fees.

Colin Smyth (South Scotland) (Lab)

For clarification, can the minister say whether she was consulted on the changes in those handling fees? Yes or no?

Last week, we heard producers give a resounding vote of no confidence in the scheme, with less than 16 per cent registering. This week, it is retailers who are expressing concern. Pete Cheema of the Scottish Grocers Federation said that the scheme was not fit for purpose and that there is a real risk of thousands of stores closing due to cash flow issues or significant loss of footfall. Is it not a damning indictment of the minister’s handling of the scheme that just five months before she says that it will be introduced, businesses have not been given a clear blueprint for what should happen? The minister will still not answer the straightforward questions that members are asking.

Lorna Slater

Businesses have been given an operational blueprint, which was shared by Circularity Scotland last week.

Schemes of this type are in successful operation all over the world. I repeat what I said earlier: the return handling fees in Scotland are the highest when compared to other schemes around the world. Our businesses will do better than other businesses around the world in comparable schemes—[Interruption.]

I repeat: Circularity Scotland is a private non-profit company. It is responsible for operating the scheme, including setting retailer handling fees. The Scottish Government is not involved in setting retailer handling fees.

Mark Ruskell (Mid Scotland and Fife) (Green)

It is crucial that we continue to support small retailers to participate in the DRS. Not only will they be paid through the handling fee but there will be an opportunity for local shops to increase footfall. That is why the Federation of Independent Retailers is calling for there to be no delay to the scheme.

Can the minister outline what is being done to ensure that retailers are aware both of their obligations and of the opportunity that the scheme presents?

Lorna Slater

I appreciate the member’s question and his highlighting of the fact that those businesses that have invested in the scheme need the scheme to go live on 16 August, which is what the Scottish Government has committed to. Circularity Scotland has already contacted all retailers that have signed up for updates with information on the return point registration and exemption process. Retailers that have not signed up for those updates are encouraged to do so via the Circularity Scotland website.

Circularity Scotland will also be sending a direct mail to approximately 10,000 retailers across Scotland with information about retailer registration and the exemption process. Circularity Scotland has been in dialogue with more than 1,000 individuals at physical and online roadshows across Scotland. It is also conducting regular meetings with trade associations representing retailers, wholesalers, drinks producers and hospitality.

Christine Grahame (Midlothian South, Tweeddale and Lauderdale) (SNP)

The minister says that the scheme is industry led, but I have a letter that was published on 6 March, signed by among others, the director of the Confederation of British Industry Scotland, the policy chair of the Federation of Small Businesses, the chief executive of the Scottish Chambers of Commerce and the chief executive of the Scottish Council for Development and Industry, alongside hundreds of individuals who describe DRS in its current form as “reckless”. Will the minister, at very least, instruct Circularity Scotland to remove glass from the current recycling scheme?

Lorna Slater

Scotland’s Deposit return scheme, which will go live in August 2023, will collect glass. Glass is one of the main three materials that is used to make single-use containers and accounts for more than a quarter of all the containers due to be included in our Deposit return scheme.

Of the 44 territories operating Deposit return schemes in the world, only four do not include glass. Glass is one of the most common items to pollute our beaches and broken glass poses a hazard to the public and to wildlife. It also poses a threat to local authority, private sector and voluntary clean-up crews. Including glass in the DRS will help to reduce the amount of littered glass.

The Scottish DRS business case suggested that including glass will save 1.2 megatonnes of CO₂ equivalent over 25 years, and will significantly increase the quantity and quality of glass recyclate.