Hansard

When I updated the Parliament last month, I underlined the Scottish Government’s commitment to delivering an operational deposit return scheme as soon as is practicably possible. Since then, we have continued to work closely with both Circularity Scotland and the industry to agree a final timescale and clear milestones for delivery. Members have also had the opportunity to be briefed by Circularity Scotland on the implementation.

Last year, when the Parliament passed legislation to establish deposit return, we all hoped that, by now, we would be further along the path to introduction than we are. As a result of the pandemic and of the uncertainties caused by Brexit, an independent review of the scheme was commissioned. Today, we have published its report.

The review concluded that the implementation date of July 2022 was not achievable, and that delivery in July to September 2023 was possible but carried a significant risk to achievement. It also identified the following actions: agreeing a critical path with key stakeholders for the delivery of a viable product by the agreed start date; the United Kingdom Government reaching a decision on the VAT treatment of deposits; reviewing the governance structure so as to reflect the implementation phase and establish an objective assurance regime that is aligned with key milestones; and working with industry to develop and resolve practical issues in online sales.

Since taking up my position as minister for the circular economy I have worked intensively to put the DRS back on track. My background is in engineering project management, and I have made it my priority to develop and agree a project plan for delivering a scheme that I, the industry and stakeholders can have confidence in.

Implementing the deposit return scheme is a massive national undertaking, involving contracts with more than 4,000 producers, and tens of thousands of return points, for the management of more than 2 billion containers per annum, with a total turnover of around £500 million. It is essential that the scheme is a success not just in the short term but for decades to come.

Taking into account the independent advice that we have received, and input from stakeholders, I can announce that the work to implement Scotland’s—and the UK’s—first deposit return scheme will conclude with the scheme’s launch on 16 August 2023. However, work will intensify immediately and, as I will mention shortly, I hope that the scheme will operate on a voluntary basis in some premises before that date.

Our DRS will be among the most environmentally ambitious and accessible in Europe. It will include tens of thousands of return points for plastic, metal and glass containers, as well as pick-ups for online deliveries. Although some have asked for a reduction in the scope of the scheme, that will not happen. Having an ambitious deposit return scheme that can equitably cover both online and high street sales brings challenges, but I am confident that the industry can deliver solutions to those, particularly given the extra time that it now has. In early 2022, my officials will host a workshop with the Scottish Environment Protection Agency and retailers, to focus on the details of online take-back.

I confirm that, despite the delay, producers will be required to meet a 90 per cent collection target by the second year of operation, rather than by the third, as previously planned. That will ensure that the scheme maximises its environmental impact from 2024, as before.

I, Circularity Scotland and the Scottish Government are keen to support businesses in their planning to make sure that that implementation date happens. Retailers are playing an essential part in the scheme, as most of us will use their stores for returning the containers and receiving back the deposit. I know from speaking to them that they are strongly committed to the success of the DRS and that they have already put in a lot of time and resource in preparation for its roll-out, which will ramp up in the year ahead.

As part of the phased implementation of the DRS, a key milestone will be visible to consumers from summer 2022, when retailers will start rolling out the return infrastructure in stores. We are working with the retail industry to start phasing in the use of that infrastructure, on a voluntary basis, from November 2022.

We recognise that the needs of rural areas may be different from those of more populated parts of the country. I am therefore pleased to let members know that there will be a return scheme in place in Orkney, also from November 2022, which will provide immediate benefits to the community.

Regulations asking Parliament to approve the change in go-live date will be laid tomorrow. We will also take the opportunity to make several smaller amendments to the Deposit and Return Scheme for Scotland Regulations 2020. In the year and a half since the regulations were passed, many organisations across the private and public sectors have been working hard to consider how the DRS can best be implemented. Those discussions have thrown up points on which we accept that small changes will provide additional clarity or help to de-risk the scheme’s implementation.

I am looking forward to engaging with members from all sides of the chamber as we move into the scrutiny process. I can confirm that the changes will include allowing online retailers, and others selling through a distance sale, to refuse to accept a return of a disproportionately large number of containers. I will clarify that: for products that are filled and sealed in a retail or hospitality setting—for example, crowlers—the person filling them will bear the responsibility for their collection. The changes will also include creating a duty on wholesalers or others who are selling articles not intended for sale in Scotland to disclose that at the point of sale, thereby helping to prevent fraud, and bringing SEPA’s enforcement powers more into line with existing legislation.

There are a number of key milestones on the path to August 2023. By March 2022, Circularity Scotland will have signed contracts with partners to deliver its logistics, operations and information technology systems. By August 2022, the public awareness campaign will be launched and, in the same month, counting and sorting centres will start to be built. As I have mentioned, retailers will start rolling out the return infrastructure in earnest from next summer, and we are working with them to start using that infrastructure on a voluntary basis from November 2022. In January 2023, Circularity Scotland and SEPA will begin the process of registering producers. In July 2023, there will be end-to-end testing of a DRS container through the whole system.

Strong and robust governance structures must be in place to oversee the scheme’s implementation, recognising that, with the appointment of Circularity Scotland and the passage of legislation, responsibility for successful delivery is increasingly dependent on the actions of producers and retailers across Scotland. The scheme is a shared endeavour, and my officials will be establishing a system-wide assurance group early next year with all those who are involved in delivering it, so that, collectively, we can monitor delivery and manage risks.

Senior executives from the Scottish Government, Circularity Scotland and our environmental public bodies will meet regularly to review progress against milestones and take action where required. I have established a communications and engagement group, which is led by Zero Waste Scotland, to ensure that businesses and the public have the information that they need as we progress towards full launch. As with this year’s independent review, we will ensure that external expert assurance is provided at key points.

I will receive regular updates from those groups, and will personally regularly meet Circularity Scotland to discuss progress. That close oversight, coupled with the public milestones that I have laid out, gives me confidence that all organisations have the right governance arrangements in place to collectively deliver the deposit return scheme on time and in a way that works for the people and businesses of Scotland.

It could not be clearer that the purpose of deposit return is environmental, not to raise revenue, so it is hugely disappointing that the UK Government is maintaining that VAT applies. The issue is not just the additional cost that that brings. I understand from industry that there are still many details to be ironed out with the Treasury’s proposal, and that there are specific technical challenges that exist—for example, because VAT is not applied equally through all parts of the system—that will affect the financial flows between thousands of different actors in the scheme. We will, of course, continue to work constructively with HM Treasury, Circularity Scotland and wider industry to ensure that a solution is put in place in a way that is workable, effective and efficient for businesses.

Between now and August 2023, there is a lot of work to be done and a lot of investment to be made. I will keep in close contact with industry on the delivery of the key milestones as different parts of the system roll out their implementation plans.

Members will see from the documents that I have released today that the independent reviewers recognise the co-operation, effort and enthusiasm of all stakeholders in working constructively to achieve an effective scheme. I appeal to all members in the chamber today to work with us to make it the best scheme possible for Scotland.