Scottish Parliament statement on Circular Economy - Nov 17

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

One of the fundamental changes that we need to make to our society and economy to tackle the climate emergency is the transition to a circular economy. That means that, instead of having an economy in which we take, make and dispose, we design to last and we reuse and repair while wasting as little as possible.

Finding better ways to deal with the waste that our economy is currently creating and to reduce the total amount of waste is key to building a circular economy. I am working on creating a comprehensive vision for how we reduce and manage waste in Scotland, and I will give you an update on our progress towards that vision so far.

The Government’s flagship scheme for reducing litter and waste and for increasing recycling is the United Kingdom’s first deposit return scheme. In 2020, Parliament passed legislation to establish the deposit return scheme, with the intention of having the scheme operational in 2022. Unfortunately—as, I know, members are all keenly aware—2020 was an unprecedented year. The global pandemic and Brexit had a major impact on businesses, particularly retailers and those involved in their supply chains, and challenges persist today. Unfortunately, the very businesses that will be most instrumental in making the DRS operate—including hospitality businesses, small Convenience stores and small brewers—were and still are badly affected by the pandemic and the mismanagement of Brexit.

There have also been unresolved issues such as a lack of clarity from the UK Government on the VAT treatment of deposits. Such issues add unnecessary cost, time delay and risk to the project. I have written to the UK Government twice and have offered to meet it to discuss the matter further, as did the former Cabinet Secretary for Environment, Climate Change and Land Reform. Industry, too, has written.

However, I heard only yesterday from the Financial Secretary to the Treasury that they do not see a route to removing VAT from deposits. That is deeply disappointing. The financial secretary has offered to work with my officials and industry on potential VAT adjustments. I understand that that falls well short of what is needed, but I have tasked my officials to work on the issue urgently in order to understand the implications and agree a way forward. [Interruption.]

The Government is committed to the scheme being operational as soon as is practically possible. Roll-out of the DRS is being spearheaded by Circularity Scotland Ltd, which is a non-profit company that was set up last February by private sector producers, retailers and wholesalers and which was approved as the scheme’s administrator by the Scottish ministers in March. Officials and I are working hard with Circularity Scotland and the industry to agree a final timescale and clear milestones for delivery, and I will announce that schedule to Parliament in due course. [Interruption.]

The Deputy Presiding Officer

Excuse me, minister.

Could we have no interruptions, please? I made that clear at the outset, and it is normal courtesy when any statement is given.

Lorna Slater

Thank you.

Reducing waste through the implementation of the DRS is just one part of the vision for waste management in Scotland. Another piece is modernisation of our infrastructure to boost Scotland’s recycling performance by supporting local authorities. That is why I am delighted to announce today that we are making our first investments through our £70 million recycling improvement fund. I can confirm that more than £7.1 million has been awarded to local authorities to enable them to increase the quantity and quality of recycling. That marks the beginning of one of the biggest investments in recycling in Scotland in a generation.

Seven local authorities have successfully bid for support from the first round of the fund: Fife Council, Midlothian Council, North Ayrshire Council, Highland Council, East Lothian Council, Aberdeenshire Council and South Ayrshire Council. A range of improvements will include more frequent recycling collections, the extension of food and garden waste collections, and local service redesigns to align with Scotland’s household recycling charter.

The funding will also unlock bold innovation in our recycling provision. For example, the investment that has been made today will allow Fife Council to become the first local authority in Scotland to locally sort and separate the plastic films that it collects for recycling, enhancing Scotland’s ability to deal with that problematic material.

The investment will also include funding for improved reuse services. In North Ayrshire, reuse services at household waste recycling centres will be extended and will include a new initiative to reuse bed mattresses in an innovative partnership with the third sector.

The landmark investment that I am announcing has the potential to reduce CO2 emissions by 17,200 tonnes each year—the equivalent of taking 9,100 cars off the road—and that is just the start of the fund’s impact. I hope to provide further updates on investment in Scotland’s recycling infrastructure soon.

In addition to reducing waste and providing better recycling, we need to correctly manage the waste that is produced even as the total amount of it declines in line with our ambitious waste reduction targets.

The Scottish Government is fully committed to ending the practice of landfilling biodegradable municipal waste by 2025. That is an important step in tackling our contribution to climate change. Landfilling biodegradable municipal waste produces methane, a particularly potent greenhouse gas that received well-deserved attention at the 26th United Nations climate change conference of the parties—COP26. I am pleased to say that the amount of waste that is going to landfill in Scotland is at its lowest level since records began, and we are on track to exceed the 2020 European Union target on landfilling biodegradable municipal waste.

However, we need to maintain progress beyond 2025, too, and make sure that how we treat residual waste aligns with our emissions reduction targets. Our programme for government set out a commitment to review the role of incineration in the waste hierarchy in Scotland. In September, I set out our intentions, including that the review would be led by an independent chair, and I am pleased to announce that we have appointed Dr Colin Church to that role. Dr Church brings a wealth of experience from across the waste and environmental sectors.

I am particularly conscious of the fact that how we treat our residual waste can have wider, unwanted impacts on communities and the environment in both the short and the long terms. That is why the review will include scope to consider the societal impacts of residual waste treatment, including health and community impacts, as well as how emissions from existing incinerators can be reduced.

Of course, Dr Church will determine the detailed scope and timings of the review. However, my previous update set out our intention for the scope to include an assessment of the required incineration capacity, to ensure, as some members have rightly pointed out, that we are not building unnecessary infrastructure that is not in keeping with our ambitious waste reduction targets.

To alleviate concerns about a rush of planning applications for incinerators before the review has completed its work, we have today issued a temporary notification direction. It asks that planning authorities notify the Scottish ministers of new planning applications and of when they are minded to grant planning permission for incineration. The notification direction will be in place only for the duration of the review and should not in any way disrupt local authority preparations for the forthcoming ban, in 2025, on sending biodegradable municipal waste to landfill.

We are already taking action to reduce waste and to reach our targets. Last week, the Scottish Government laid before the Scottish Parliament legislation that bans some of the most problematic single-use plastics. Every year, hundreds of millions of pieces of single-use plastic are wasted in Scotland. They litter our coasts, pollute our oceans and contribute to the climate emergency. That has to end, and the ban will be another step forward in the fight against plastic waste and our throwaway culture. That is another example of the bold action that is needed if we are to deliver on the commitments that were made at COP26.

We recognise that the ban is at risk from the UK Internal Market Act 2020, which effectively exempts any items that are produced in or imported via another part of the UK. However, we continue to work with the other Administrations across the UK to find a way to ensure that the ban in Scotland is not undermined.

We continue to work with the rest of the UK to progress the extended producer responsibility scheme for packaging, ensuring that it fully meets the polluter-pays principle and that local authorities benefit from additional funds as a consequence. We are also currently reviewing Scotland’s progress in delivering on our 33 per cent food waste reduction target.

Those are all building blocks towards a comprehensive vision for waste reduction and management in Scotland, to which we will bring more detail in our route map, in order to meet our 2025 waste and recycling targets, as well as looking ahead to 2030 and beyond.

A circular economy is about much more than waste management; it is also about sharing and repairing, so I am delighted that we are providing support for the new national network of community sharing libraries and repair cafes. New business models that are based around repairing, remanufacture and recycling will bring opportunities.

As I stated, I will return shortly to inform Parliament of the final timeline for the deposit return scheme. I am also looking forward to progressing a transformational circular economy bill as an urgent priority in this parliamentary session. Building a circular economy is key to tackling the twin crises of climate change and biodiversity loss, and I look forward to working with all members to achieve that.

The Deputy Presiding Officer

The minister will now take questions on the issues that were raised in her statement. I intend to allow around 20 minutes for questions, after which we will move to the next item of business. Members who wish to ask a question should press their request-to-speak buttons now.

Maurice Golden (North East Scotland) (Con)

I thank the minister for advance sight of her statement.

We have just seen the Green minister again break her promise to ban new incinerators. Unless she can somehow burn and recycle the same waste, how does she expect recycling to improve?

The minister has just suggested that the deposit return scheme might not launch as planned. If there is going to be a delay, I hope that ministers at least use the time wisely to improve the scheme. They can do that by ensuring a future-proof open standard system that is compatible with that in the rest of the UK. A digital app to allow home collections is essential to prevent disabled and vulnerable groups from effectively being excluded.

Finally, there is an issue of transparency. The deposit return scheme is shrouded in secrecy, with a multimillion-pound tender process that has been hidden from the public and the Parliament. Freedom of information requests will not work, because the Scottish National Party used a private company to oversee it. We do not need to see the commercial responses, but will the minister release the brief and the specification that have been provided to bidders?

Lorna Slater

I thank Maurice Golden for the question and I will try to cover all the points. With regard to incineration, Aberdeenshire Council, which is Tory and Labour, is pushing for a new incinerator; Maurice Golden’s position on that is unclear.

The notification direction that we have issued today is the same tool that was used to effect a temporary moratorium on unconventional oil and gas extraction. I stress that the notification direction is temporary and does not in any way pre-empt the outcome of the review of incineration.

I am delighted that Maurice Golden is keen for the deposit return scheme to be introduced, especially given that, during the debate when Parliament passed the legislation in 2020, the Tories pushed for a delay to the scheme, and then for a further delay.

The next point was on home collections. Annie Wells said:

“Scottish Conservatives support the delay of implementation ... in light of the Covid-19 outbreak, but we do not think that that goes far enough.”—[Official Report, 13 May 2020; c 93.]

I am delighted that the Conservatives have changed their position and now support the quickest possible implementation of the deposit return scheme.

With regard to home collections, online collections are absolutely part of the legislation for the scheme. As yet, the UK Government has not defined its deposit return scheme, so there is nothing for us to align with. As with so many other things, the Scottish Government is leading the way with the scheme.

Maurice Golden

I do not care about the UK; we are in Scotland. The minister has not answered my question.

The Deputy Presiding Officer

Excuse me, Mr Golden. The question was asked, and the minister has responded.

Before I call the next member, I remind all members who wish to pose a question—I am not looking at anyone in particular—to press their request-to-speak buttons now.

Mercedes Villalba (North East Scotland) (Lab)

I thank the minister for advance sight of her statement. We recognise that Her Majesty’s Revenue and Customs position on VAT is challenging, but VAT deposits have not been a barrier to implementation of deposit return schemes in other European countries.

The minister says that the Scottish Government

“is committed to the scheme being operational as soon as practically possibly.”

Can she confirm that there will be no delay to the July 2022 implementation date?

We know how concerned the minister was about industry lobbying causing delays to the scheme, so can she confirm what discussions she has had with large-scale producers to ensure that they, and not local authorities, will foot the bill for any delay?

We acknowledge that the minister has committed to come back to the chamber to outline the final timeline, but can she confirm today when she will return to the chamber?

Lorna Slater

I thank the member for her questions. Again, I will try to address them all.

The member asked about the date for the deposit return scheme. The scheme is comprehensive and involves tens of thousands of collection points around the country, big retailers, small brewers and our hospitality sector. I am engaging with all those stakeholders to figure out the shortest possible period of time in which to implement the scheme, given the challenges around Brexit and the pandemic, which is still raging. There is constant industry engagement.

I re-emphasise that Circularity Scotland is a non-profit company that has been set up by private sector producers, retailers and wholesalers. The scheme will be implemented by industry for industry. Therefore, industry engagement is at the core of the scheme, the implementation of which will be based on the producer pays principle.

The member’s final question was about when the announcement will be made. A firm date for industry as to when the scheme will go live is absolutely critical, and I will return to the chamber as soon as possible to make that announcement.

I am currently engaging with industry to ensure that the scheme is on the quickest possible timeline and that we have concrete visible milestones to allow us all to see active progress on the project.

Stephanie Callaghan (Uddingston and Bellshill) (SNP)

The actions that are set out in today’s statement will help us to reach our world-leading targets for zero emissions by 2045. Dr Church’s review of the role of incineration in the waste hierarchy in Scotland is particularly welcome. What impact will that have on planning applications for new incinerators, such as the Overwood farm proposal in South Lanarkshire?

Lorna Slater

I absolutely agree that moving towards a circular economy, using less, reusing and recycling are critical to meeting our climate aspirations.

With regard to incinerators, it would not be appropriate for me to comment on the merits of any individual planning proposals. The notification direction requires planning authorities to make ministers aware of new planning applications that involve incineration facilities, and they must notify ministers if they are minded to grant planning permission for incineration facilities. That will ensure that both the review and Scottish ministers are fully aware of any on-going and new planning applications that are submitted during the review process. It will also give ministers the opportunity to decide case by case whether national interests are at stake that would merit ministers calling in an application for their own determination, or to allow the local authority to issue a decision at local level.

The notification direction is the same tool that was used to give effect to a temporary moratorium on unconventional oil and gas extraction. I stress that the notification direction is temporary and does not in any way pre-empt the outcome of the review of incineration.

Liam Kerr (North East Scotland) (Con)

The minister has blamed her Government’s latest failure on deposit return on everything except her Government. However, she says that she and her officials have been working hard. What are the projected start-up costs of the scheme, and how will it be funded?

Lorna Slater

The scheme is being run by an independent administrator, which is a private company. It is responsible for pulling in the funding and for planning. It is external to Government; it is a separate body.

The Deputy Presiding Officer

Has the minister finished responding to the question?

Lorna Slater

Yes, thank you.

Jenni Minto (Argyll and Bute) (SNP)

My constituency is an important renewable energy source. However, due to the dispersed nature of communities on islands and remote mainland areas, many of the proposals to achieve a circular economy can be more expensive to implement. Will the minister advise what the Scottish Government is doing to support communities such as those in Argyll and Bute?

Lorna Slater

I understand the different challenges that communities across Scotland face in building a circular economy, including island communities such as those in Argyll and Bute. We are working with local authorities to identify and address specific challenges that authorities with island or rural communities face in delivering the forthcoming ban on biodegradable municipal waste, and we are providing support through Zero Waste Scotland to enable authorities to secure alternative solutions for their residual waste.

Zero Waste Scotland has made funding available through the islands green recovery programme refill fund to empower existing small and medium-sized enterprises in island communities to take steps in the war on waste by ditching single-use packaging and moving to reusable options.

The recycling improvement fund has been developed in partnership with the Convention of Scottish Local Authorities and the Society of Local Authority Chief Executives and Senior Managers to support all local authorities in improving recycling infrastructure.

I urge all local authorities to engage with Zero Waste Scotland and to bring forward applications to the fund, to help deliver a step change to modernise our infrastructure and boost Scotland’s recycling performance.

Paul Sweeney (Glasgow) (Lab)

According to Greenpeace, the increase in littering as a result of the deposit return scheme not being implemented runs at a rate of 21 million discarded bottles and cans a month. Does the minister agree that that externalising of cost to the public sector and the local authorities that have to collect the waste is not sustainable? If the scheme’s implementation continues to be delayed, will the minister be on our side and push for local authorities to get the extra money that is needed to cope with the continued expense of picking up litter?

Lorna Slater

As with the Scottish Conservatives, I am delighted that Labour has changed its mind about the issue. At the time of the debate on the deposit return scheme in 2020, the Labour spokesman said that they felt that this was not the time for a deposit return scheme and asked for a delay to its implementation. [Interruption.] I am delighted that Labour is on board with having the scheme implemented as soon as possible, and that is what I am working towards every day. [Interruption.]

The Deputy Presiding Officer

Excuse me. Could we listen to the minister, please? Thank you.

Lorna Slater

We are engaging with stakeholders, including landowners and local government, on a new national litter and fly-tipping strategy, which will be launched early next year. We will consult the public on actions around littering before the end of the year.

Fergus Ewing (Inverness and Nairn) (SNP)

Circularity Scotland has produced estimates of the key requirements that will largely determine the overall costs of the proposed deposit return scheme. Its estimates are broadly double the Scottish Government estimates, which, at the time when the Parliament approved the scheme, totalled £2,410 million over 25 years.

What are the total costs now? Have they doubled to around £5,000 million? Will the minister publish or arrange to publish the Circularity Scotland estimates? In the light of that and other extremely significant challenges, will she instruct an independent review of the proposed scheme, including reappraisal of all other options so that the objectives that we all share can be achieved in the most effective and manageable, but affordable, fashion?

Lorna Slater

My priority is to implement the deposit return scheme as quickly as is practically possible. The cost of the scheme is borne by industry. It is organised by Circularity Scotland, which, I reiterate, is a private company. As such, it is for it to decide what information to publish. The full business case—

Mercedes Villalba

Who is paying?

Lorna Slater

Industry is paying. This is an industry scheme funded by industry; it is not a publicly funded scheme. The full business case addendum that was published last March sets out the strong economic case for the DRS.

There are successful deposit return schemes throughout the world. I have interacted with the one in Sweden, where deposit return machines provide a community hub. People go to shops to return their bottles and cans every day and, in doing so, they support and increase footfall to local businesses. Successful schemes are run all over the world and they deliver significant environmental and economic benefits to the public. We are confident that Scotland’s DRS will do the same.

We are aware that some in industry have been exploring alternative values for some of the assumptions that are set out in the full business case. We have not had an opportunity to assess the evidence for those alternative assumptions in detail, but I understand that industry is suggesting that the number of containers may be higher than was anticipated. It is wonderful news for reducing litter and waste in Scotland that the scheme may be able to collect more containers than was previously thought. The more containers that are captured by the DRS that might otherwise have been littered or gone to landfill, the greater the environmental and economic benefits will be, because the DRS will ensure that those containers go for recycling.

Liam McArthur (Orkney Islands) (LD)

This is the second delay to the scheme, and now we do not even have a date for its introduction. Meanwhile, small businesses, particularly in rural and island areas, lack the information and clarity that they need in order to be able to prepare. Given the international precedents for rolling out deposit return schemes, why is the Scottish Government making such a mess of introducing a DRS in Scotland?

Lorna Slater

In 2020, Willie Rennie, who was leader of the Scottish Liberal Democrats at the time, said that it was beyond him why we were rushing the scheme through. I am delighted, therefore, that the party has changed its mind and is now in favour of the scheme being delivered as quickly as possible.

I am absolutely aware of the criticality to industry of a firm delivery date, and I will return to the chamber to give a firm delivery date as quickly as possible, because I agree with what the member says.

Small businesses have been writing to me asking for delay to the scheme due to problems with Brexit and the Covid pandemic. Those are exactly the businesses that have been most badly affected, and I am listening to them. I am also engaging with big retailers—I have spoken this week to some of the biggest retailers in Scotland—as well as bottle producers and non-governmental organisations in order to find a route map for the scheme that will be as quick as is practically possible and will take into account the concerns of those businesses, which the member mentioned.

There are schemes in other countries around the world, many of which are less ambitious than the scheme that Scotland is proposing. For example, some of them do not involve small businesses. In Scotland, we want to support small businesses, because we believe that the scheme will increase footfall and improve the outlook for them.

The Deputy Presiding Officer

I want to make two points. First, could we have less chuntering from a sedentary position? When the minister is asked a question, we need to hear how she responds. Secondly, if we have more succinct answers, I will be able to bring in members who are seeking to pose a question.

Mark Ruskell (Mid Scotland and Fife) (Green)

It is great to see momentum building behind the circular economy. Although I share some of the frustrations about the delay to the DRS, I welcome the minister’s commitment to deliver the most ambitious scheme on a timescale that will set the model for the rest of the UK to follow, instead of Scotland following a weak UK scheme that has been watered down by vested interests.

The VAT treatment of deposits is of considerable concern to industry, and the latest decision from the Treasury will no doubt be ringing alarm bells. Will the minister explain the latest position? How have she and the Scottish Government been consulted by the UK Government on the issue?

Lorna Slater

I must confess that our interaction with the UK Government on the VAT issue has been very frustrating. I have written two letters to the UK Government and have asked for a meeting on the issue, but it has been very slow in coming back to me. It came back to me yesterday saying that it would not implement industry’s requested action, which was aimed at ensuring that VAT returns on deposits in the scheme would be handled in the way that was best suited to getting the scheme up and running quickly and as cheaply as possible.

There are still many unresolved questions around VAT and the details that industry needs in order to be able to implement the scheme. I will continue to work with the UK Government and industry to figure out the details of all the matters around VAT. It is a complicated issue, but it is frustrating that the UK Government has been so slow in coming back to us on the scheme and appears to be dragging its feet.

The members to my left—the Conservatives—could support the scheme by speaking to their colleagues at Westminster about getting the VAT matter sorted out in a timely fashion in order to enable the deposit return scheme to be delivered as soon as possible.

Stuart McMillan (Greenock and Inverclyde) (SNP)

Will the minister provide an update on the plans to introduce a charge for single-use drink cups?

Lorna Slater

In 2019, Scotland became the first country in the UK to ban plastic-stemmed cotton buds. We have taken further action this year by banning more problematic single-use plastic items such as cutlery, straws, plates, and expanded polystyrene food and drink containers. We will now take further steps and consult on a charge for single-use disposable beverage cups, in line with recommendations from the expert panel on environmental charging and other measures.

Brian Whittle (South Scotland) (Con)

According to the industry, the scheme will need an estimated 10,000 reverse vending machines. Will those machines be constructed here? Will all materials that are collected in the scheme be recycled here?

Lorna Slater

That is an on-going matter for the industry to consider. The purchase of 10,000 reverse vending machines is an exciting opportunity. As the member can imagine, with the short timescale that we have to implement the deposit return scheme, there is a question about how quickly we can scale up to build those machines. I am hopeful and confident that as many machines as possible will be built in Scotland, but the industry will have to do what it can to meet the ambitious targets for the implementation of the scheme. I very much support building and manufacturing in Scotland.

Bill Kidd (Glasgow Anniesland) (SNP)

Will the minister elaborate on how the five-year £70 million recycling improvement fund will help us to accelerate progress towards meeting Scotland’s ambitious waste and recycling targets and fulfil our net zero commitments?

Lorna Slater

Today’s announcement marks the beginning of one of the biggest investments in recycling in Scotland in a generation. Across Scotland, that funding will be transformational. It will make it easier for households to recycle more; help to deliver the rates of recycling that are needed to meet Scotland’s ambitious climate targets; support local authorities in improving recycling and reuse infrastructure; help with the alignment of recycling collections to Scotland’s household recycling charter; and maximise the quality and quantity of recycling. The investment will also help local authorities to get ready for future developments including the deposit return scheme and the reform of producer responsibility systems for packaging.

The first £7.1 million of funding, which was announced today, will enable a range of improvements across Scotland, including more frequent recycling collections, the extension of food and garden waste collections, the replacement of litter bins with recycling bins, and local service redesigns to align with Scotland’s household recycling charter. The investment has the potential to reduce CO2 emissions by 70,200 tonnes each year, which is equivalent to taking 9,100 cars off the road.