Companies who have spent tens of millions paving the way for the UK’s first deposit return scheme are demanding compensation after the plans were shelved for a third time.
Scotland’s new first minister Humza Yousaf this week ended weeks of speculation over the troubled scheme, revealing the planned launch date of 16 August had been put back until 1 March next year, to give companies more time to prepare.
The move followed warnings from supermarket bosses, and other sections of the industry, that the plans for an August launch of DRS were heading for disaster. Yousaf said the delay would give companies more time to prepare and the government a chance to tackle ongoing concerns over the impact of the scheme on retailers and producers.
However, The Grocer understands ministers have already faced angry calls from companies about how it will safeguard their investment in the project. Major drinks producers havie been instrumental in raising more than £100m to fund the scheme’s launch, while retailers had earmarked more than £200m this year to fund the infrastructure, with much of it already spent.
Huge investment
Scotland circularity minister Lorna Slater met with producers and retailers after the announcement to discuss the next steps, with plans in the rest of the UK having already been put back until at least October 2025.
“She was adamant that the scheme would still go ahead,” said an industry source. “But there was a stream of questions about what is going to be done to safeguard that huge investment companies have made.”
Seed funding from major producers was essential in allowing administrator Circularity Scotland to raise more than £100m to fund the launch of the scheme.
“Our members have committed to the introduction of deposit return schemes and have spent several years and millions of pounds on its planned launch in Scotland,” said BSDA director general Gavin Partington.
“Further delay now leaves the Scottish scheme in a precarious position and we will be looking to the Scottish government to protect the considerable industry investment to date.”
Sources said the exact investment made by companies was still unclear but that “it must run into tens of millions”.
Andrew McCaffery, chief strategy officer at Ecoveritas, said the Scottish government was coming under pressure to compensate companies that had invested in DRS, when tens of thousands of producers and retailers had failed to sign up.
“You do have to feel for responsible businesses that have kept on top of this legislation, developed and changed to meet these new requirements,” he added. “The delay penalises those that have acted quickly.
“You have to wonder whether there might be temporary support or reimbursement for those who have diligently prepared and significantly invested.”
As well as major producers, retailers have made major investments in preparing the infrastructure for the scheme.
“There are retailers who have signed contracts for reverse vending machines which they are now committed to,” said a source. “What are they going to do now that it has been shelved?
“Meanwhile, presumably the government will be expecting producers to put their hands in their pockets again to make sure the scheme doesn’t collapse before the new start date.”
Justified decision
Glasgow store owner and deputy vice president of the Federation of Independent Retailers, Mo Razzaq, one of the retailers to have installed a reverse vending machine ready for the DRS launch, said while the decision to postpone the launch was justified given concerns over the scheme, retailers should not be left out of pocket.
“We still have a lot of unanswered questions and we will be demanding compensation for those retailers that have already entered into expensive contracts for the RVMs required to operate the scheme.
“Many of our members have spent large sums of money buying RVMs and altering the layout of their stores to be prepared for the launch of the scheme in August.
“We will also continue to push the government for grants to help pay for the machines. The Irish government has said it will help smaller retailers in this way, and we urge the Scottish government to follow Ireland’s lead.”
Major drinks producers including the likes of Coca-Cola and AG Barr had urged Yousaf to push ahead with the scheme as planned, but it faced unprecedented opposition from supermarket bosses who came out to urge for a delay.
David Lonsdale, director of the Scottish Retail Consortium, said: “It has been apparent for months that Scotland’s deposit return scheme could not be delivered successfully in August despite the very significant investment by the retail industry.
“The decision to delay is sensible; but this must be a pause with a purpose. Far too many elements of the scheme remain unworkable.
“The problems with Scotland’s DRS need to be dealt with, not deferred.”
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