Deposit return scheme ‘will leave grocers out of pocket’
Scotland’s convenience stores say they will be left out of pocket when the new deposit return scheme (DRS) comes into effect next year.
The government’s recycling programme encourages consumers to return bottles and cans to shops in return for cash.
But the Scottish Grocers’ Federation (SGF) said the proposed level of fees retailers would receive would not cover the cost of running the scheme and will therefore hit their bottom line.
Circularity Scotland will administer the scheme and has proposed that retailers get 2.69p for every item deposited. For automated returns, the fee would be 3.55p for the first 8,000 before dropping to 1.35p.
The SGF says those fees will not cover retailers’ costs and would add to other burdens on small firms such as rising energy bills and interest on debt.
Pete Cheema, chief executive of the SGF, said concerns had been raised with Lorna Slater, the minister in charge of the deposit return scheme, and that Circularity Scotland is being challenged to reveal its methodology.
Mr Cheema said: “SGF has been and remains fully committed to working with a range of stakeholders to ensure that Scotland has a world-leading scheme.
“It is essential however that the deposit return scheme remains cost neutral to return point operators and does not leave them with an additional cost burden or put them out of business.”
The Scottish government said: “The scheme administrator, Circularity Scotland, is an industry-led body, representing drinks producers, retailers and trade bodies. They are responsible for setting the retailer handling fee, which is designed to make the scheme cost neutral for retailers.”
A spokesperson from Circularity Scotland 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.
“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.”
The Scottish National Investment Bank has injected £9m into Circularity Scotland which was crucial to securing an additional £9m capital from the Bank of Scotland.
The investment was welcomed by the Federation of Independent Retailers which was the first retail trade association to support the introduction of the DRS.
However, the scheme has suffered a number of delays and UKHospitality Scotland said businesses remain in the dark about key elements of how it will operate, and how much it will cost firms in staff time and investment in secure storage for empty containers.
It also raised concerns that the Scottish scheme was diverging too far from the way in which a similar scheme will operate in England.
The Scottish Environment Protection Agency will regulate the scheme and is responsible for the producer registration service, which opens in January 2023.
Kath McDowall, SEPA’s unit manager for the Deposit Return Scheme, said: “It is important businesses prepare for DRS now.
“We’re here to help and our latest guidance sets out what producers need to do to prepare for registration. This includes information on routes to register, a guide to help determine which drinks are part of the scheme and operational plan guidance.
“If you’re a drinks producer and you want to sell your products to consumers in Scotland, you need to be registered with SEPA to be part of the scheme. If you’re not registered by 1 March 2023, then you might not be able to sell your drinks in Scotland after August 2023, when the scheme goes live.”