Deposit Return Scheme (DRS) operator Circularity Scotland has appointed administrators.
The not-for-profit company was established by a number of drinks companies in 2020 to help implement Scotland’s DRS. In 2021, it was appointed as the administrator of the scheme and subsequently secured key contracts with third parties to help set up the required operational and IT infrastructure.
Approximately 40 staff members were employed by Circularity Scotland as it, and the drinks industry as a whole, geared up for the anticipated launch in August 2023.
However, it was announced in April that the DRS would be delayed until March 2024, and then on 7 June, the Scottish Government announced that the scheme would be delayed further until October 2025 at the earliest.
A statement from administrators Interpath Advisory noted that following the most recent announcement, it was clear that Circularity Scotland would be unable to meet various significant contractual obligations, certain of which would become due imminently, without additional funding.
While it was in active discussions with stakeholders to secure this funding, negotiations proved unsuccessful, so after exhausting all other potential options, directors took the decision to file for administration, ceasing to trade as of today.
The joint administrators’ focus will now be on securing and realising Circularity Scotland’s available assets, for the benefit of its creditors.
Blair Nimmo, chief executive of Interpath Advisory and joint administrator, said: “The ongoing uncertainty surrounding the future launch of the Deposit Return Scheme prompted the company’s backers to withdraw future funding, and as such, the directors were left with few options other than to seek the appointment of administrators.”
Alistair McAlinden, managing director at Interpath Advisory and the other joint administrator, added: “We are in the process of arranging a meeting with the employees to take place tomorrow morning to explain what the administration means for them.”
The Scottish Government blamed Westminster’s refusal to allow glass in the scheme for the latest delay.
Scottish Greens environment spokesperson Mark Ruskell said: “This is a significant and deeply frustrating development that will leave dozens of people looking for new jobs, undermine future investment, and erode trust in what any UK scheme might be able to achieve given it is the Tories that caused it to collapse.
“People will rightly question the role played by the Scottish Secretary Alister Jack in all of this, as well as the lack of climate leadership from his Prime Minister Rishi Sunak.
“Most significant though, is the sharp focus it has brought on the Tories’ commitment to using Westminster’s powers to undermine the Scottish Parliament and the devolution settlement.”
Circular Economy Minister Lorna Slater was asked about Circularity Scotland in Holyrood this afternoon.
She told MSPs: “We have learned today that the process is under way to appoint administrators to CSL [Circularity Scotland Ltd], leaving their staff in an extremely difficult position.
“This is an unforgivable consequence of the UK Government’s 11th-hour intervention, which undermined our deposit return scheme, made progress impossible and is now resulting in these jobs being lost.”
She said she had thanked staff for their hard work and expressed deep regret about the situation.
Labour’s Sarah Boyack said Circularity Scotland had said the DRS could go ahead without glass, asking: “How do we know what is going to happen next?
“Because the minister claimed she didn’t know last week when we were all reading it in the newspapers.”
Slater said other “unreasonable conditions” the UK Government sought to impose on the scheme, such as the need for a unified deposit level across the UK, also led to it being delayed.
In response to a question about the Scottish National Investment Bank’s £9m investment in Circularity Scotland, she said this is a confidential matter between the bank and the company.
Following Slater’s statement, the Conservatives repeated their calls for her to quit.
MSP Maurice Golden said: “Despite confirming that Circularity Scotland has gone into administration - something that she admitted was a ‘disaster’ for its workforce - Lorna Slater is still refusing to take any responsibility for the collapse of her Deposit Return Scheme.
“Circularity Scotland themselves, like the UK Government and other stakeholders, were absolutely clear that the scheme could have remained viable and gone ahead without glass, but instead she pulled the plug.”
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