While being supportive of Government’s aims to increase recycling, NTIA Scotland cannot support the implementation of the Deposit Return Scheme as currently planned.
This scheme in it’s current form has been designed with no thought or consideration given to the operational concerns of thousands of Scottish SME’s, and is completely unworkable for the vast majority of small businesses in the hospitality sector and the night time economy.
It is simply untrue for Ministers to suggest that Scotland’s DRS scheme is comparable to those elsewhere. The proposed DRS in Scotland is one of the most complicated, costly, inefficient and badly designed schemes in the World. It is also untrue for Ministers to suggest that this scheme will be paid for by producers under a ‘polluter pays’ principle. Scotland’s DRS adds cost and complexity at all levels of the supply chain, which will all ultimately be passed on to consumers in the price of the everyday products we all buy.
For a typical hospitality small business, we estimate that Scotland’s DRS will cost between £3,000 and £5,000 in advance setup and infrastructure costs and also result in a further, additional, and permanent cashflow deficit of up to £5000 per premises. Furthermore, the exclusion of crushed cans and bottles will result in an unacceptably high percentage of deposits failing to be returned, leading to substantial and ongoing financial losses. And the overly complicated ongoing administrative, storage and operational challenges will be cost prohibitive and therefore unmanageable for far too many small businesses.
This scheme will inevitably lead to significant numbers of business failures and job losses.
We note that all three candidates to be the next First Minister have expressed a desire to either scrap, delay or amend the scheme, with the current Cabinet Secretary for Finance warning it will lead to ‘economic carnage’. We also note that the scheme does not currently have exemption from the UK Internal Markets Act, with the UK government warning such exemption may well not be granted due to the DRS creating trade barriers and restricted market access for thousands of small producers and importers.
Without such UKIMA exemption it will not be possible for the scheme to proceed, and it is little short of reckless and negligent for government to ask businesses to invest capital in a scheme which may well be unlawful. This is the legislative equivalent of building a house without first obtaining planning permission.
On many occasions over the last few years, a wide variety of business groups have raised their concerns in detail, however, both Scottish Government and CSL have been unwilling to make reasonable modifications to the scheme or provide the required level of clarity in addressing those concerns.
This is why just 16% of producers have signed up for the scheme so far, with 84% refusing to do so.
And it is, regrettably, also why the NTIA is today issuing a recommendation to our members and the thousands of businesses in the night time economy across Scotland not to sign any agreement with CSL to participate in the scheme at this time.
The sign up window for hospitality and retail businesses has now opened, however, upon viewing the CSL terms and conditions we are alarmed that what appear to be a number of onerous and unfair terms have been included.
We do not believe it would be responsible or prudent for any business to sign such an agreement without taking independent legal advice and being fully aware of the implications.
It is now clear that this scheme cannot successfully launch as planned in August 2023, and the continued refusal of Scottish Government to accept reality is now putting large numbers of Scottish businesses at risk of failure.
We call on the Scottish Government to pause this scheme, rethink, and work with businesses to design a solution that works for all stakeholders.
Meanwhile our members will continue with the extensive recycling which the vast majority of operators already undertake.