Extract from Scottish Parliament topical question time: Circularity Scotland - Mar 14

Circularity Scotland

1. Brian Whittle (South Scotland) (Con)

To ask the Scottish Government what its response is to reports that Circularity Scotland expects to make £57 million a year by the public failing to return containers and that this is part of the company’s business model. (S6T-01253)

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

Circularity Scotland Ltd is a not-for-profit company, established by industry and made up of producers, retailers, hospitality, wholesalers and trade associations.

Everyone who pays a deposit on a drinks container will be able to reclaim the deposit in full. Any unredeemed deposits from Scotland’s Deposit return scheme will be reinvested into keeping the costs of running the scheme as low as possible for producers of all sizes across Scotland. The model is in line with best practice in other schemes around the world.

Under the DRS regulations, the scheme administrator is required to meet a minimum return rate of 80 per cent in the first year and 90 per cent in subsequent years. Failure to meet those targets would result in financial penalties, establishing a strong incentive for Circularity Scotland to ensure high return rates.

Brian Whittle

The Scottish Government’s full business case for the scheme states explicitly that unredeemed deposits are anticipated to make up between 32 and 43 per cent of Circularity Scotland’s revenue. It goes on to say that modelling assumes that the

“90% capture rate of containers is achieved by year 3 of the scheme’s operating and that it is maintained for the remainder of the 25 years.”

That seems pretty clear: the higher the capture rate, the lower the revenue for Circularity Scotland. The minister surely accepts that that creates a perverse incentive for Circularity Scotland to avoid increasing the capture rate.

Lorna Slater

Brian Whittle is a little bit out of date in what he has said. When the dates for the launch of the scheme were moved forward, the dates for the recycling target were not changed. The recycling target is 80 per cent in the first year and 90 per cent in subsequent years of the scheme.

Successful Deposit return schemes around the world are based on the principle of producer responsibility, and they are funded in three ways. One is through producer fees, another is through the value of the materials that are gathered by the scheme and the third is from unredeemed deposits. That is true for the Deposit return scheme that the United Kingdom Government intends to introduce in England, Wales and Northern Ireland.

The UK Government’s response to its consultation on the scheme, which was published in January, says:

“Where a container is not returned, the value of the deposit on that container will be held by the DMO”,

which is the UK Government’s term for the scheme’s administrator. It goes on to say:

“This is an unredeemed deposit and is a potentially significant value stream for the DMO, helping to fund the operation of the scheme. This is a common funding stream found in many international DRSs.”

Brian Whittle

Even if Circularity Scotland were to increase the capture rate, we do not know how such a loss of revenue might affect it, because the Scottish Government has—in a seemingly endless quest to muddy the waters around the scheme—shrouded Scotland’s DRS administrator in secrecy, creating a private company that is immune from freedom of information legislation. Despite it being producer led, as the minister is so fond of saying, it is utterly unwilling to tell producers that sign up to the scheme what potential liabilities they are accepting responsibility for, including the terms of the contract with Biffa.

Will the minister see sense and pause this opaque, badly designed and potentially disastrous mess of a Deposit return scheme now, or does she remain determined to leave us guessing about whether it will even be launched, given that that will be dependent on who wins the Scottish National Party leadership election? How is business supposed to plan a way ahead in this environment of uncertainty?

Lorna Slater

The Deposit and Return Scheme for Scotland Regulations 2020, as passed by this Parliament, call for the scheme to be industry led, and Circularity Scotland is the not-for-profit company that has been established by industry.

I have here a list of the members of CSL. It includes trade associations such as the Society of Independent Brewers, the British Soft Drinks Association, the Wine and Spirit Trade Association and many more, such as Diageo, Coca-Cola, Heineken, Sainsbury’s, Marks and Spencer, Lidl and so on. They have created CSL, and they are responsible for ensuring that it works for them.

CSL is a private, not-for-profit company whose responsibility it is to help businesses in Scotland to comply with the 2020 regulations, as passed by this Parliament, and it has reassured me that it is working towards a go-live date of 16 August, as agreed by this Parliament.

The Presiding Officer (Alison Johnstone)

As members would expect, there is much interest in this entire session, so I would be grateful for concise questions and responses.

Fergus Ewing (Inverness and Nairn) (SNP)

Much, if not most, of the £57 million that will be lost in non-redeemed, non-claimed deposits will be paid out—and lost—by those who cannot, or cannot readily, return bulky and heavy items, bottles, tins and cans. They will predominantly include the poorest, those without a car, the elderly, the mobility impaired and rural and island dwellers who cannot access a return point. Their money will go towards the—non-disclosed, but probably telephone-number—salaries of the bosses of Circularity Scotland. Is that transfer of money from the poorest to the richest not simply immoral?

Lorna Slater

The member mischaracterises the scheme entirely. Every person in Scotland will pay the 20p deposit when they buy a drink in Scotland in the containers that are scheme articles, and they will get their 20p when they return those articles—[Interruption.]

The Presiding Officer

Let us hear the minister.

Lorna Slater

The accessibility of the scheme is critical, and we are working hard with Circularity Scotland and Biffa to ensure that every person in Scotland will be able to access the scheme and to get their deposits back.

Colin Smyth (South Scotland) (Lab)

Accessibility is important. The Government recently took a decision to exempt small retailers from the online takeback scheme. Can the minister explain how people who are housebound or disabled, for example, will have their bottles taken back if they have bought them online from a small retailer? There is a real accessibility challenge for those people.

Lorna Slater

There are two points there. Nobody will be required to take the scheme article back to the exact store that they bought it from. Even if they buy it online from a small retailer, they can return it anywhere.

The member makes a good point about people who are not physically able to get to a return point. With the proposed change to the regulations whereby we are phasing in the online takeback, it is important that everybody in Scotland is able to access the scheme, including those who have accessibility or mobility issues. Work is under way to understand how many people that is and how we may best ensure that they can fully access the scheme.

Ross Greer (West Scotland) (Green)

Even the Conservatives at Westminster understand that unredeemed deposits should be used to help to cover the cost of the scheme and thus reduce costs for all, as is normal for equivalent schemes across the continent.

Perhaps the real reason that the Scottish Tories and their colleague Fergus Ewing seem so desperate to bring the DRS into disrepute is that they object to the fundamental principle of the scheme: that the polluter pays, instead of the taxpayer.

Can the minister share with Parliament the cost to local councils every year of the litter that is caused by drinks containers and therefore how much the scheme will save the taxpayer in that respect alone?

Lorna Slater

Absolutely. Every year, £46 million of public money is spent on removing litter and fly-tipping from the Scottish environment. The Deposit return scheme will mean that local authorities will have less waste to handle, as well as reducing litter and associated clean-up costs. That is good for residents and for council budgets.

Kat Jones, who is the director of the Association for the Protection of Rural Scotland, supports removing those costs from the taxpayer. She says:

“For too long, the costs of single-use cans and bottles have been met by local taxpayers, communities and our environment. It is high time that industry took responsibility for the waste they create, just as they do around the world.”