Scotland’s troubled deposit return scheme has been delayed until October 2025 – at the earliest – as the stand-off between Holyrood and Westminster prompted the threat of compensation claims from businesses.

Circularity minister Lorna Slater confirmed that the DRS will now be aligned with a UK scheme, claiming that the Scottish plan had been “sabotaged” by the UK government. The Tories said the SNP-Greens’ plan had been a failure and was never going to work.

An estimated £300 million has been invested in preparing for the scheme and companies affected will be deciding on their “next step”, which is expected to include compensation claims.

The scheme administrator Circularity Scotland is expected to issue clarification on how its operations and staff will be affected.

Businesses say the scheme was “not fit for purpose” but ministers ignored their warnings. Pete Cheema, the chief executive of the Scottish Grocers’ Federation, said his members were demanding compensation, while a number of other trade groups say the Scottish government must take responsibility for the cost and chaos.

Ms Slater said the omission of glass meant the current scheme could not go ahead and after discussions with industry “we are left with no other option than to delay until October 2025 – at the earliest” while negotiations continue.

“It will be more limited than this parliament voted for and more limited than I wanted,” she told parliament.

She said that businesses had wanted certainty but the UK government had “blown a massive hole in those certainties” by imposing a number of conditions.

These included a maximum cap on deposit levels agreed across all nations, one administration fee to cover all schemes across the UK and one barcode for use across all parts of the UK and one logo for all schemes. But detail was in short supply.

Ms Slater said the Scottish government cannot tell businesses to go ahead when these decisions remain unclear.

“These delays and dilutions lie squarely in the hands of UK Government that has sadly seemed so far more intent on sabotaging this parliament than protecting our environment,” she told MSPs.

Maurice Golden for the Conservatives said the proposed scheme had been a disaster and that Ms Slater was resorting to blaming Westminster for its failure. He accused the First Minister Humza Yousaf of “reckless scaremongering”.

Mr Golden said: “It’s important something is salvaged from the wreckage of a disastrous scheme, and this belated clarity offers businesses what they want: a scheme that works across the UK.

“We could have saved a great deal of time and energy if the SNP and Greens had listened to those businesses in the first place.

“Just days ago, Lorna Slater and Humza Yousaf were indulging in reckless scaremongering – threatening to scrap the scheme if glass wasn’t included. They tried the old nationalist trick of picking a fight with the UK Government.

“But it backfired. They were rumbled misrepresenting one of Scotland’s leading drinks producers. Then, Circularity Scotland and the logistics partner, Biffa, both confirmed the scheme can go ahead without glass.”

Scottish Labour Net Zero spokesperson Sarah Boyack said “This is a huge blow to our recycling aims and to businesses who have spent years of their time and millions of pounds preparing for an ever-shifting deadline. 

“The Tories have provided a convenient excuse to delay, but this scheme has been in chaos for months because of the SNP-Green government’s incompetence. 

“It is utterly absurd that our two governments are too dysfunctional to deliver a working recycling scheme without it descending into yet another constitutional row. 

“Lorna Slater has lost the confidence of businesses and proven herself to be a liability – she must now have her DRS responsibilities removed. 

“Both governments need to get round the table and come up with a way forward so we can boost Scotland’s recycling rates and protect our planet without further delay.” 

David Harris, Circularity Scotland chief executive, who said yesterday that a scheme without glass could still go ahead, said: “This is clearly a disappointing outcome, which will have a significant impact on investment in Scotland.

“We have made it clear that industry was prepared for the Deposit Return Scheme to go live in March 2024, and that a scheme without glass is both economically viable and is an opportunity for Scotland to provide a platform for a UK-wide DRS.

“Regrettably, further delaying the introduction of DRS will hinder Scotland’s progress towards net zero and mean that billions of drinks containers continue to end up as waste.

“The board of Circularity Scotland will now consider the impact of this announcement and our immediate priority will be communicating with our people. We will provide further updates in due course.”

Business to consider ‘next steps’

Ewan MacDonald-Russell, deputy head of the Scottish Retail Consortium, said businesses need to consider “the next steps” to take after investing in a scheme that was already delayed.

He said: “Scotland’s retailers have very significantly invested in good faith to deliver a deposit return scheme. That includes years of engagement with government, development of systems and store refits, and a financial commitment which already runs into the tens of millions. 

“Today’s announcement has serious implications for that investment, which has been committed at a time where retailers have devoted every other effort to grappling with the cost-of-living crisis.

“Retailers will need to take time to fully understand the implications of today’s decisions and consider what the most appropriate next steps are. In the short-term retailers are likely to pause any further investment until we have a clear operational plan and a final credible critical path to delivering the scheme.”

Leon Thompson, UK Hospitality Scotland’s executive director, said that “even before recent UK government interventions, [the DRS] was not ready to launch in March and businesses had made that clear to the Scottish government”.

Federation of Small Businesses Scotland policy chairman, Andrew McRae, said: “Today’s announcement is the final admission that Scotland’s Deposit Return Scheme has met its inevitable demise.

“The delay until a UK-wide scheme has taken shape will give much-needed breathing space for the small producers and retailers who have spent months wrestling with the implications of DRS for their operations.

“Now, as focus turns to what will replace the scheme, it’s critically important that we do not rush into any decisions. The issues that have plagued those small businesses on whom government will be relying to deliver and run any replacement scheme must be listened to and addressed. 

“The Scottish and UK Governments must work with each other and with all interested parties to ensure the successful rollout of a scheme that works for business, consumers and the environment.”

Tracy Black, director of CBI Scotland, said: “The motivations behind the DRS scheme remain sound, and our members strongly support efforts to reduce waste and build a more sustainable economy.

“However producers have long warned that the scheme, in its current form, is not fit for purpose and not only increases costs and complexity but reduces consumer choice.

“It is frustrating for many businesses that a decision on the scheme’s future was not made earlier, especially given the preparations they had made. We welcome the UK and Scottish governments’ commitment to deliver a UK-wide scheme in late 2025 and the priority must be that there are no further delays.”

Liz Cameron, chief executive of the Scottish Chambers of Commerce, said: “After weeks of uncertainty, businesses in Scotland will be relieved to hear that the DRS scheme has been delayed until October 2025 at the earliest. While the scheme has been well-intended and businesses have broadly supported its objectives, its design has been fundamentally broken and it has been clear for some time that it needs drastic change.

“We welcome the Minister’s intent to send the DRS back to the legislative drawing board where the business community will give its input onto the catalogue of changes that are required to make it cost effective and workable, particularly for SMEs.

“Compensation should be considered for firms which have already spent considerable time, investment, and resource into preparing for two separate go live dates. 

“We now need to see both the Scottish and UK governments constructively engage and work with each other to ensure effective implementation of DRS schemes across the UK.”

.