THE deposit return scheme has been delayed because of the Covid-19 pandemic, Brexit and issues with the Treasury over VAT, Lorna Slater has said.
The Greens minister said that the bottle recycling scheme, one of the key parts of her portfolio, will be delivered “as soon as practically possible” but did not give a firm date.
However there has been criticism levied at the Minister for Circular Economy for delaying the scheme and allegedly giving into lobbying from industry, which she criticised for being too slow to implement before she was elected.
The bottle and can deposit scheme would require shops to install recyling machines and charge a 20p deposit on any can and bottle and was due to be launched in July next year.
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But, earlier this week it was reported that the scheme will now not start until March or October 2023.
Slater told MSPs in Holyrood on Wednesday that it was “deeply disappointing” that the Treasury had said they do not see a “route to remove VAT from deposits”.
She added that industries most hard-hit since 2020, such as hospitality businesses, are the ones who will be “instrumental” in making the scheme work.
During a ministerial statement, Slater told MSPs that the legislation to establish the deposit return scheme (DRS) was passed in 2020 with the intent of being operational by 2002.
However, she added a caveat that it had “unfortunately been an unprecedented year”.
Slater said: “The global pandemic and Brexit had a major impact on businesses, particularly retailers and those involved in their supply chains and challenges persist today.
“Unfortunately the very businesses who will be most instrumental in making the DRS operate including hospitality businesses, small convenience stores and small brewers were and still are badly affected by the pandemic and the mismanagement of Brexit.
“There have also been unresolved issues such as lack of clarity from the UK Government on the VAT treatment of deposits which add unnecessary cost, time delay and risk to the project.
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“I have written with the UK Government twice and offered to meet to discuss further as did the former cabinet secretary for the environment.
“Industry too has written, however, I only heard yesterday from the financial secretary to the Treasury that they do not see a route to remove VAT from deposits.
“This is deeply disappointing.”
Slater added that the Financial Secretary to the Treasury has offered to work with her officials on “potential VAT adjustments”.
She said that this falls “well short of what is needed” but that her officials have been tasked to work on this “urgently”.
Slater (pictured) added: “The government is committed to the scheme being operational as soon as practically possible.”
Slater added that interacting with the UK Government over VAT issues had been “very frustrating” and that they had only responded to her for the first time on Tuesday.
She added: “There are still many unresolved questions about the VAT, details that industry needs to implement this scheme.
“We will continue to work with the UK Government and with industry to figure out the details of all these matters around VAT because it is a complicated issue.
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“It is frustrating that the UK Government is so slow to come back to us on this scheme and appears to be dragging their feet.”
Scottish Tory MSP Liam Kerr said that Slater “blamed her government’s latest failure on deposit return on everything except her government”.
He added: “However, she says her and her officials have been working hard, so can she tell me what are the projected start-up costs of the scheme and how will this be funded?”
Slater responded: “The scheme is being run by an independent administrator which is a private company, they are responsible for pulling in the funding and planning it.
“It is external to government, it is a separate body.”
Slater added that the scheme is being led by industry and that Circularity Scotland is the private firm tasked with overseeing it.
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