Scottish Government facing millions in compensation claims over botched deposit return scheme

First Minister Humza Yousaf - Robert Perry/PA
First Minister Humza Yousaf - Robert Perry/PA

First Minister Humza Yousaf is facing millions of pounds of compensation claims by shops that have installed recycling points for his botched deposit return scheme after the UK Government ruled glass bottles cannot be included.

The Scottish Grocers' Federation (SGF) said its members would require compensation from the SNP-Green administration at Holyrood after they installed “expensive” reverse vending machines to handle glass returns by customers.

Dr Pete Cheema, the trade body's chief executive, lambasted the Scottish Government for forcing retailers to install the machines without ministers first obtaining a required exemption from the UK Internal Market Act (IMA).

He said the exemption - needed so that the scheme applied to glass bottles imported from the rest of the UK and abroad - “should have been sorted out before” ministers pressed ahead with the scheme.

On Friday night the UK Government confirmed it would grant the scheme an IMA exemption if Scotland's deposit return scheme (DRS) for drinks containers was aligned with one it plans to roll out in England in October 2025.

Although plastic drinks containers and cans could be included, the UK Government compromise plan would see glass bottles excluded.

Similar labelling and barcodes would also be introduced in both schemes, allowing customers to return empty containers anywhere in the UK and removing trade barriers the DRS would have otherwise created between Scotland and England.

Lorna Slater, the Green minister in charge of the scheme, reacted furiously by threatening to axe the entire plan rather than accept the compromise.

In contrast, business leaders broadly welcomed the UK Government plan.

'The ball's in their court'

Dr Cheema told BBC Radio's Good Morning Scotland programme that glass should never have been included in the scheme but retailers had been “forced into a corner” by SNP and Green ministers.

He said: “We're going to be sitting with these machines that are of no use now because they're not going to be able to take glass.

“So that means that we need compensation from the Scottish Government - who we've asked time and time again to sort [it] out.”

Dr Cheema said SGF members “have invested a lot of money in this expensive infrastructure and we will now need compensation”, adding: “There is no question about that.”

He argued that the Scottish Government “always knew” it needed an IMA exemption, concluding: “They need to provide us with the compensation. The ball's in their court.”

Warning that there were “so many other operational issues” with the scheme that were yet to be resolved by SNP and Green ministers, Dr Cheema said this “leaves my members in a precarious position,” but excluding glass would make it “a bit more viable.”

Bottles in a recycling bin - Ken Jack/Getty Images Europe
Bottles in a recycling bin - Ken Jack/Getty Images Europe

'Severe concerns' over rollout

SNP and Green ministers want to boost recycling rates by forcing buyers to pay an extra 20p deposit on single-use drinks containers, including cans and bottles, that would be refunded when returned.

Every outlet that sells takeaway drinks would also be required to act as a return collection point, with automated reverse vending machines outside supermarkets, community centres and other public places.

Mr Yousaf has already delayed the start date for the scheme from August to March next year in an attempt to deal with a litany of major flaws highlighted by business groups.

His government could still opt to include glass in the scheme but, without an IMA exemption, it would only apply to bottles for drinks produced in Scotland and not those imported from the rest of the UK or abroad.

But Maurice Golden, a Tory MSP, said he had “severe concerns” that the Scottish Government “aren't able” to roll out “any deposit return scheme”.

He said: “They've shown that consistently they are unable to deliver basic tenets of the scheme. Removing glass at this stage simplifies the scheme, perhaps builds more confidence in the scheme and allows us to salvage some form of launch.”

Ms Slater said: “We are grateful to all businesses for the investment they have made in preparing for [the] DRS and we remain committed to all of the benefits of a successful Deposit Return Scheme for all the environmental and economic gains it will bring.

“However, we are now looking very seriously at where this leaves the Scottish scheme and talking to businesses, delivery partners and other organisations over the coming days.”