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Deadline for UK Government rethink on deposit return scheme.

First Minister Humza Yousaf has written to the Prime Minister urging him to revoke the UK Government’s rejection of glass in Scotland’s deposit return scheme (DRS) by Monday next week (5th June).

The First Minister said the UK Government’s demands, including the removal of glass from DRS, would impact the environment, detrimentally affect businesses based in Scotland, and threaten the viability of the scheme.

The full text of the letter is below:

Rt Hon Rishi Sunak

Prime Minister

10 Downing Street

London

SW1A 2AA

02 June 2023

Dear Rishi,

On Friday 26 May the secretaries of state for DEFRA, LUHC and Scotland wrote to me indicating the UK Government is not prepared to agree a full exclusion from the Internal Market Act for Scotland's Deposit Return Scheme (DRS), and instead insist on the exclusion of glass, among other conditions.

These conditions will have a stark environmental impact and detrimentally impact businesses based in Scotland.

Specifically, the letter sets out that the UK Government is only prepared to agree to a temporary exclusion if we remove glass, agree a UK-wide cap on deposit levels, achieve reconciliation between scheme administrators to ensure fair distribution of payments, have one administration fee per participating company, and agreement of a single common UK logo. The removal of glass fundamentally threatens the viability of Scotland’s DRS with reduced revenue for the scheme administrator.

Removing glass will also have a significant impact on business. For example, C&C Group – owners of the iconic Tennent’s brand – has been explicit that the decision by the UK Government to remove glass threatens investment and jobs. Other Scottish businesses have raised similar concerns privately with us.

We cannot – and will not – put Scottish businesses at a competitive disadvantage by the UK Government’s eleventh hour changes to the range of materials included, impacting Scottish jobs, inward investment and potentially reducing choice for consumers in Scotland.

The UK Government had intended to include glass in the English DRS from 2019 right up until March 2022 – two years after our Regulations were passed by the Scottish Parliament, and we planned our scheme on this basis. As late as January 2023, the UK Government confirmed that it was for devolved governments to decide the scope of their DRS. The Welsh Government’s stated intention has been to include glass in their DRS, meaning that it is the English scheme which is out of step with the design of other UK schemes.

In relation to interoperability, we have already been working with your officials to ensure alignment and we agree in principle that this is desirable.  The conditions imposed by your letter of 26 May, however, are so lacking in detail as to make this requirement effectively impossible to meet. The reality is that your scheme is at such an early stage of development that you are unable to provide the operational details required to allow the schemes to be interoperable. Businesses need certainty and they need it now – not in two years’ time when the UK Government scheme potentially, hopefully launches. The UK Government has significantly undermined the clarity and certainty that businesses unanimously tell us they need.

Businesses need firm evidence that the UK scheme will actually launch in 2025. There is no UK legislation in place yet or scheme administrator appointed. Until the full design and timescales of your DRS are in place it is unclear what operational detail we are being asked to align with or agree to.

In essence your letter asks the Scottish Government to either remove glass and sign up to a list of unfinalised and vague conditions to allow us to proceed in March 2024 or delay and align with a more limited UK Government scheme that is, frankly, unlikely to proceed in October 2025.

There are much wider consequences of the decision. This UK Government intervention at such a late stage demonstrates a major erosion of the devolution settlement. I urge you to revoke the conditions set out in your letter and grant a full exclusion for Scotland’s DRS, to be implemented as per the regulations agreed by the Scottish Parliament in this area of devolved competence. Without this, the Scottish Government is not prepared to put Scottish businesses at a competitive disadvantage due to the last minute demands the UK Government has made. There is little doubt your Government’s action have put the future of DRS in grave danger not only in Scotland but also in the rest of the UK due to the damage to consumer and investor confidence.

I would be grateful for a reply by close on Monday 5 June to enable my Cabinet to consider the matter and the Scottish Parliament to be updated thereafter.

HUMZA YOUSAF

Background

The Scottish Government asked the UK Government to grant a full exclusion under the Internal Market Act that would allow Scotland’s all-in DRS, including glass, to go ahead in March 2024.

On Friday 26 May, after almost two years of discussion, the Scottish Government learned that the UK Government are only willing to grant a temporary exclusion if certain conditions are met, including the removal of glass from the scheme – a key part of Scotland’s DRS proposals.