Industry bodies have warned that thousands of stores could be at risk of closing due to issues with Scotland’s Deposit Return Scheme (DRS).
The Scottish Grocers’ Federation (SGF) said that while it is committed to a fit for purpose DRS, the present scheme “fails to provide this”, while warning that many stores could face closing due to cash flow issues or significant loss of footfall once the initiative starts.
The DRS involves shoppers paying an extra 20p when purchasing drinks in a can or bottle, with the deposit returned when they bring back the empty container for recycling.
The SGF claimed that the scheme administrator - Circularity Scotland - has “significantly changed” the payment terms for all return point operators in Scotland without sufficient notice.
It said this will mean that many businesses will face the scenario of being in financial distress while waiting for significant sums of money back from Circularity Scotland.
SGF chief executive Dr Pete Cheema said: “We have met extensively, for over 18 months, with both Circularity Scotland the scheme administrator, and the Scottish Government with a view to securing the guidance, clarity and support needed, to allow us to help our members successfully play their part in the scheme.
“To date however, there is still uncertainty around key aspects of the scheme and there is the real risk of thousands of stores closing due to cash flow issues or significant loss of footfall.”
First Minister Nicola Sturgeon has vowed to press ahead with the DRS, which is due to start in August, despite opposition pleas for her to listen to businesses and pause it.
SGF said that many return point operators have committed to Reverse Vending Machines (RVMs) based on seven-day payment from when items are scanned into the RVMs in their stores, as Circularity Scotland previously highlighted.
However, the federation said that operators have now been informed it will be a full month before payments are made to them.
It said that many simply do not have the cash flow to cope with this very late change to maintain their business.
SGF said: “They are being confronted with the scenario of putting their business at risk by signing up to prohibitive terms and conditions, or stop selling drinks in Scotland which will put thousands of community stores out of business.”
Ewan MacDonald-Russell, deputy head of the Scottish Retail Consortium, which has also written to the First Minister with concerns, explained that the biggest issues retailers have with the scheme remain unresolved.
“Retailers don’t know what price to put on shelves, which producers they can buy from, which shops will or won’t be exempted, and when containers will be collected.
“They still have no transparency over the retail handling fee and are still legally compelled to an online take-back requirement which is impossible to deliver.
“There is a miasma over the future of the scheme,“ he continued. “Candidates vying to be the next First Minister have wildly different views on the scheme, which means businesses will have no certainty until late this month or more likely well into April.
“The Scottish Government’s decision to effectively waive the legal requirement for producers to register by the end of February raises the question which other parts of the regulations are now optional.”
A Circularity Scotland spokesman said: “Circularity Scotland is committed to ensuring the most efficient and easiest possible system for payment of fees, particularly for smaller businesses.
“Scotland’s Deposit Return Scheme will have the highest fees of any scheme in the world, the payment terms for all manual return point operators and hospitality venues will be seven days, slightly longer terms are now in place for larger locations with automatic return points.
“Any retailer concerned about any aspect of the scheme should get in touch with Circularity Scotland so we can discuss their particular circumstances and support them.”
A Scottish Government spokesman said: “Implementing DRS is a big change for businesses, that’s why we are continuing to work with industry, including retailers, to ensure there are pragmatic approaches to implementation.
“Producers responsible for more than two billion drinks containers have now signed up with Circularity Scotland; this means more than 90% of the annual total volume of products are now included in the scheme.
“For the producers that have not yet registered, the Scottish Environment Protection Agency will continue to work with Circularity Scotland and producers to support businesses with compliance before the go live date.
“We have always said we will take a pragmatic approach to implementation, to ensure that as many businesses as possible can be part of Scotland’s DRS and can continue to sell in Scotland after the scheme comes into effect.”
Don't miss the latest headlines with our twice-daily newsletter - sign up here for free.
