Deposit return scheme could be ‘catastrophe’ for business, Sturgeon warned

A former member of Nicola Sturgeon’s Cabinet has challenged the First Minister to halt her Government’s “fatally flawed” deposit return scheme, claiming it will be a “catastrophe” for business if it is not paused.

Fergus Ewing, who was the rural economy and tourism secretary until May 2021, said businesses in the drinks sector are “in a state of fear and even despair” about the initiative, which he said could “damage the reputation of Scotland as a place to do business”.

The deposit return scheme is due to begin in August and will see shoppers pay an extra 20p when purchasing drinks in a can or bottle, with this deposit then returned to them when they bring back the empty container for recycling.

Mr Ewing said some 600 drinks producers have raised concerns about the impact on their businesses “and the survival of them in relation to the deposit return scheme”.

In November last year, hundreds of leading figures from businesses across the food, drink and hospitality sector signed a letter to Lorna Slater, the circular economy minister, calling for the initiative to be paused so it can be revised.

This week, it emerged that leading lawyer Aidan O’Neill KC had advised that concerns it would create a trade barrier between Scotland and England are “well founded”, as it would require different prices to be charged for the same product on each side of the border – with this potentially breaching the UK Internal Market Act 2020.

Speaking about the impact deposit return could have on businesses during First Minister’s Questions, Mr Ewing warned: “Some will close, some will fail and others will no longer sell their own produce in their own country of Scotland.

“Unless halted now, this scheme, which most businesses believe to be fatally flawed, will damage the reputation of Scotland as a place to do business.

“First Minister will you instruct a pause of this disaster of a scheme before it becomes a catastrophe?”

Mr Ewing argued there should be a “thorough and independent review” of how better to achieve the aims of deposit return.

He also insisted glass bottles should be excluded from the remit of the scheme.

Ms Sturgeon said the Government will “continue to listen to and where possible address concerns that have been raised”, telling MSPs that industry feedback has already resulted in a reduction in the costs to producers from deposit return.

She added: “We continue to work with industry to ensure that there are pragmatic approaches to implementation, and we will do so right up to the point of implementation.”

She said she is “particularly concerned” to see if more can be done to reduce the impact on small firms, saying “some of the concerns being raised there are not unreasonable”.

Ms Sturgeon continued: “In terms of glass, there are 44 countries and territories operating deposit return schemes, only four of them don’t include glass.

“Of course it is the case there are strong environmental reasons for including glass.

“But of course on all these issues, we will continue to listen.”

She stressed ministers will “continue to take a responsible approach, listening to the concerns of business and responding responsibly in the face of them”.

Speaking to journalists after First Minister’s Questions, a spokesman for Ms Sturgeon said the scheme will continue as planned.

“We are proceeding as planned for the launch of the scheme later this year,” he said.

“I wouldn’t anticipate any change to that.”

“Obviously there’s been a lot of concerns expressed by the sector, I also think a lot of the specific issues have been addressed or are in the process of being addressed.”

Asked if the First Minister is concerned about the criticism coming from within her own party, the spokesman added: “Fergus is obviously free to express his views as he chooses and he obviously did so very clearly today and that’s his prerogative as an elected parliamentarian.”