Extract from Scottish Parliament: Topical Question Time: Deposit return Scheme (Compensation) - June 13

1. Jamie Halcro Johnston (Highlands and Islands) (Con)

To ask the Scottish Government what economic impact it expects businesses across Scotland to experience as a result of its decision to not provide compensation for the delayed Deposit return scheme. (S6T-01455)

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

We have been left with no option other than to reset the timescale for the Deposit return scheme and to delay its launch to October 2025 at the earliest, which is when the United Kingdom Government says that it aims to launch its own scheme. That is a consequence of a decision by the UK Government to impose only a partial exclusion from the United Kingdom Internal Market Act 2020 for Deposit return, forcing a last-minute change of scope in Scotland’s DRS, and creating new, vague and undeliverable conditions for interoperability with schemes in the rest of the UK that do not even exist yet.

The overwhelming feedback from businesses was that, given that last-minute imposition by the UK Government, a March launch was no longer possible. A considerable majority of businesses called for the reset of the date to match that of the UK’s stated target of a launch in October 2025 at the earliest, in order to reduce the impact of the UK Government’s decision at the 11^th hour.

Jamie Halcro Johnston

I am not sure that any of that answered the question that I asked.

Businesses are reported to have invested as much as £300 million to prepare for the scheme, not because they wanted to, but because the Scottish Government required them to. That investment, which was made in good faith, has now been put at risk because ministers did not do the work that was necessary to prepare for the scheme, and then refused to listen to businesses when it was clear to everyone—except Lorna Slater, apparently—that the roll-out was a shambles.

Throughout the process, the minister has seemed unable to give any answers on the scheme other than those in the prepared responses written in her folder. Can she tell us how much the Scottish Government estimates businesses have already invested in the scheme, which they are now unlikely to see any return on for some time?

Lorna Slater

The member made several points. The accusation that we did not do the work is absurd. The regulations were passed by the Scottish Parliament in 2020, before the United Kingdom Internal Market Act 2020, which was passed in December 2020. In 2021—the very next year—I started the process to get the exclusion from the act. It was not until nearly two years later—after January 2023—that the first question was even raised about whether the Scottish Parliament might not be able to continue to deliver our Deposit return scheme because of the 2020 act.

I am familiar with the number that Jamie Halcro Johnston quotes; we estimate that about £300 million has been invested in the Deposit return scheme by businesses in Scotland. We know that jobs have been created, infrastructure has been installed, and information technology systems were getting up and running as we worked towards our launch date.

It is frustrating for all of us that those impossible conditions—to match a scheme that does not yet exist—have been imposed on us. For example, the UK says that we have to match its deposit, but what is its deposit? Our deposit is 20p, but the UK Government has not said whether its deposit will be 10p, 20p, 30p—we have no idea. It is an impossible situation for us. We recognise how frustrating that is for Scottish businesses.

Jamie Halcro Johnston

In committee this morning, Lorna Slater told my colleague Liam Kerr:

“We do not consider that any action that we have been required to take gives rise to any obligation for us to pay compensation.”

Can the minister confirm that that comment is the result of legal advice received by the Scottish Government? Without reverting to the usual attempts at constitutional grievance as deflection, will the minister tell me what personal responsibility she takes for the failure of the roll-out? Given the Scottish Government’s refusal to compensate out-of-pocket businesses for her decision to delay the scheme, and with business confidence in her at rock bottom, why does she think that she is the person to take the scheme forward?

Lorna Slater

I will try to address as many of the member’s points as I can. The member asked about what I said this morning—that we do not consider that any action that we have been required to take gives rise to any obligation to pay compensation. I am happy to reiterate that statement. It is a long-established position that the legal advice that the Scottish Government receives is not published. The Scottish Government has received—[Interruption.]

The Presiding Officer

Please listen to the minister. Minister, I ask you to be as brief as possible.

Lorna Slater

The Scottish Government has received legal advice on matters relating to the DRS on an on-going basis as appropriate, including prior to any changes to the scheme being announced.

On the member’s final question about the deliverability of the Deposit return scheme, I will put before the chamber once again the three conditions that make it impossible for us to continue to deliver the scheme if we are to align with a UK scheme that does not exist.

There is the matter of the deposit, which I have set out. With what are we intended to align, since the UK has not raised it? There is the matter about the miniature sizing and the matter—[Interruption.] The UK has not said what size products will be in the scheme. How can we tell businesses to prepare when the UK has not said what will be included in the scheme?

On the matter of labelling, our regulations do not say anything about labelling. It is not possible for me to deliver a scheme that might include requirements for labelling when I do not know what those are and this Parliament does not have devolved powers on labelling.

It is for the UK Government to take responsibility for its decisions and for setting those impossible conditions on us.

The Presiding Officer

Thank you, minister. At this point, I state again that we have a great deal of interest in both topical questions this afternoon. I will simply have to exclude many members if we do not have concise questions and responses.

Sarah Boyack (Lothian) (Lab)

In written answers to me, the minister has indicated that industry has invested about £380 million in the scheme. Inflation, the cost of living crisis and on-going Covid recovery mean that businesses are taking an even bigger hit than before. How confident is the minister that the £380 million figure that she has mentioned is the total amount of investment that business has made?

In the minister’s discussions with businesses, have any of them raised concerns over their long-term survival and how they plan ahead, given the up-front costs—which they have already paid in good faith—of implementing this chaotically handled scheme?

Lorna Slater

I absolutely appreciate the investment that Scottish businesses have made in good faith. We intend to deliver a Deposit return scheme as soon as we can. Currently, that will depend on the UK Government’s timeline. It has said that it is aiming for October 2025, so that is when we will aim to go live.

On discussion with business, immediately after we found out about the partial temporary exemption from the United Kingdom Internal Market Act 2020, I met businesses—the First Minister and I met businesses. Overwhelmingly, in that discussion, businesses said that their preference was to align with the October 2025 date. We have listened to what businesses want to do in order to deal with the situation that we have been put in because of the partial temporary exclusion.

Ariane Burgess (Highlands and Islands) (Green)

At the very last minute, the UK Government at Westminster not only vetoed this Parliament’s decision to include glass in Scotland’s Deposit return scheme but imposed a number of other requirements, including harmonising the deposit. Does the minister agree that those requirements were designed to make Scotland’s scheme undeliverable and that the chaos that it has caused was the UK Government’s very intention? [Interruption.]

Lorna Slater

Despite the chuntering to my right, I have outlined very clearly to this—

Stephen Kerr (Central Scotland) (Con)

To your left.

Lorna Slater

Sorry—to my left. Thank you.

Despite the chuntering to my left—

Stephen Kerr

There is the answer!

Lorna Slater

Despite the chuntering to my left—[Interruption.]

The Presiding Officer

Thank you.

Lorna Slater

I have outlined very clearly to this chamber the impossibleness of the conditions that the UK Government has set upon us.

The UK Government has not even decided on those details yet. How can we set the same level of deposit as England when it cannot say what that deposit will be? How can we expect businesses to prepare without knowing one of the most fundamental details of a Deposit return scheme? That alone would make a March 2024 launch unworkable, given that no guarantees could be given to us that we would not have to change the deposit even after that date.

The Westminster Government knows full well the uncertainty that that creates. If there is one thing that every single business is agreed on, it is that certainty is needed. How can we ask them to go forward with a launch when we cannot even tell them the basics such as what the deposit might be?

Liam Kerr (North East Scotland) (Con)

Some businesses say that they will demand compensation, and the minister says that the Scottish Government is not liable to pay compensation. If, as has been suggested, this results in litigation, from which budget will the Scottish Government meet its legal costs and any award, and how much of a contingency has been made for that?

John Swinney (Perthshire North) (SNP)

Hypothetical.

The Cabinet Secretary for Social Justice (Shirley-Anne Somerville)

That is totally hypothetical.

Lorna Slater

That is, indeed, absolutely a hypothetical question. Although we recognise the steps that businesses have taken to be ready for Deposit return, ministers were required to respond to the significantly changed circumstances brought about by this late and partial temporary exclusion from the United Kingdom Internal Market Act 2020. We do not consider that the action that we have been required to take gives rise to any obligation to pay compensation.

Jackie Dunbar (Aberdeen Donside) (SNP)

Businesses in Europe are running schemes similar to the one that this Parliament has approved. Deposit return schemes that include glass exist in countries such as Denmark, Estonia, Germany and Latvia.

This is just another power play from the UK Government aimed at keeping Scotland bound to the economically devastating bandwagon of Brexit Britain. Does the minister agree that we can no longer afford to leave Scotland’s desire to live the values of a progressive nation in the hands of Westminster Tories?

Lorna Slater

Absolutely. Many Deposit return schemes already operate successfully across the European Union, and our scheme was modelled on those schemes, most of which include glass, because the economic and environmental case for including glass is clear.

It is important to note that, even within the EU, Deposit return schemes vary in terms of the level of deposit and the scope of what is covered. Although having different Deposit return schemes within the EU single market is not an issue, the UK Government has unilaterally decided that such variance within the UK would be so unacceptable that it has overruled the Scottish Parliament, with no evidence to support its last-minute decision. Look at the chaos and damage that it has caused. I have no doubt that, if Scotland is to take the action that is needed to protect our environment, the power to do so needs to be in the hands of Scotland, not Westminster.