Retailers have confirmed they plan to take legal action against the Scottish government’s deposit return scheme, claiming it will impose impossible financial demands on thousands of businesses.
Lawyers working on behalf of the Scottish Grocers’ Federation have issued a pre-action letter to Circularity Scotland (CSL), which was appointed by the Scottish government to run the scheme in 2021.
With less than a year to go before the delayed scheme is set to roll out, the letter claims the retailer handling fees announced by Circularity Scotland will not cover the huge costs of DRS rollout for many retailers. These could potentially lead to the closure of thousands of businesses, it adds.
Last month, Circularity Scotland announced small retailers that will manually take back containers in the scheme would receive 2.69p per container while for automated returns – through reverse vending machines – the fee proposed was 3.55p for the first 8,000 containers received and 1.35p for each additional container.
It claims the fees mean retailers will face having to install RVMs or make a loss when they are already facing huge financial pressures.
The Grocer revealed in March that the SGF was planning to take legal action, with the body disputing the impact assessment produced by ministers and the extent of the predicted environmental gains to be achieved from DRS.
It claims the potential impact of the scheme on smaller traders has been overlooked and large retailers given too much influence in the rollout of the scheme.
‘’SGF have repeatedly called for CSL to explain how these retailer handling fees were calculated and to this end have met with both Lorna Slater, the minister responsible for DRS, and CSL directly to highlight the significant risk to convenience operators and have provided evidence to CSL that the retailers’ handling fee is insufficient,” said SGF CEO Pete Cheema.
“CSL have refused to review the retailer handling fee, suggesting if SGF members can’t make it work with this fee, they should opt out and not participate in the scheme, placing their businesses at risk.
“However, as they know, the regulations make that practically impossible.
“As a trade body we must respond to the concerns and be accountable to our retail members, which is why we instructed our legal team to send a pre-action letter to Circularity Scotland Limited as the scheme administrator requesting that the relevant information be made available as a matter of urgency and to provide clarity around how and on what basis the proposed retailer handling fees was set.”
Cheema added: “It is important that we once again highlight that thousands of local convenience stores are at risk due to insufficient funding through an inadequate and potentially illegal retailer handling fee structure. They are faced with the choice of taking on a significant financial burden to set up reverse vending machines, with no means of properly recovering this cost through the scheme, or being forced out the scheme altogether and risk losing all their footfall to large businesses.”
A Circularity Scotland spokesman said: ”The Return Handling Fees for the first year of the scheme were calculated in line with an approach agreed by our members, who represent the breadth of drinks producers and retailers in Scotland.
”During the process we consulted closely with industry and appointed independent advisers to develop a detailed cost model aligned to the requirements of the regulations. Data to populate the model was sourced from the broad range of Return Point Operators that will operate in Scotland. We also used data and insight from other operating schemes that are in place around the world.
”The model is designed to reflect the variation in costs across different types and sizes of Return Point Operators and the different materials that will be captured under the scheme.
”We will continue to work closely with industry and all the relevant authorities to ensure the scheme is a success as we build up to the go-live date of 16 August 2023.”
No comments yet