Lack of trust in business was 'fundamental failing' of DRS, Labour MSP says

The Scottish Government’s deposit return scheme (DRS) collapsed in part because the Holyrood administration made the “fundamental failing” of thinking businesses were “trying to diddle the system”, a Labour MSP has claimed.

Scottish Labour shadow economy secretary Daniel Johnson said the government failed to consult properly with business over how to implement the scheme, which was effectively shelved last year following a row between Holyrood and Westminster over when it should launch and what it should include.

Johnson, who prior to becoming an MSP was managing director of retailers Paper Tiger and Studio One, said part of the reason for the collapse was the “hullaballoo” created by the government’s failure to hold constructive consultation with businesses.

“I remember sitting down at a roundtable discussing how to register barcodes […] and businesses were having to do separate registrations for different product lines when most businesses will use standardised policies,” he said. “I don’t know how I’d have made that work if it was my business. It was frustrating.

“The whole system was set up on the presumption that [businesses] had to prove at every point that they were telling the truth.

“I wonder if the real lesson is that we have to do things in partnership with business but that this demonstrated the real lack of trust with business.

“Most businesses know that it’s not worth your time to try to diddle the system. There needs to be trust – I wonder if that is one of the fundamental failings and why this thing hasn’t gone ahead.”

Johnson was speaking at a Holyrood magazine fringe event held at the Scottish Labour Party conference in conjunction with Coca-Cola, which was one of the businesses that lost money when Circularity Scotland – the company set up to run the DRS – went into administration last year.

The business folded after the scheme was abandoned, with circular economy minister Lorna Slater saying it had been "sabotaged" by the UK ministers after the two governments failed to reach agreement over an exemption from the UK-wide Internal Markets Act.

The exemption was required because Scotland was attempting establish its DRS before the one that is planned for England and Wales. Because the DRS concept requires consumers to pay extra for products and get that sum back when they return their container, it would have led to different pricing for drinks north and south of the border.

Jim Fox, head of public affairs at Coca-Cola Europacific Partners, said the issue ultimately led to a constitutional fight between the two governments.

“At one stage it wasn’t about DRS at all, it was about the relationship between Westminster and Edinburgh and that relationship wasn’t at its best then,” he said.

“I think it’s improved greatly since but at one point in time, although the ministers were saying differently, we didn’t see evidence that there was good communication on a day-to-day basis.”

Speaking at the UK Covid Inquiry earlier this month, Scottish Secretary Alister Jack admitted that relations between the Scotland Office and the Scottish Government deteriorated during the pandemic, saying that “tensions existed before the pandemic and during the pandemic, and [they] exist today”.

Johnson said the relationship between the Scotland Office and Holyrood would be something that would have to be looked at if Labour wins the general election.

“We need the Scotland Office to be doing a great job,” he said. “Rather than hovering over Scottish politics then leaping in and doing a gotcha it needs to be listening and not taking everybody by surprise.

“We need to make sure the Scotland Office actually works for Scotland rather than working for Whitehall.

“Most of us in Scotland believe we need to do things differently in Scotland, that’s the whole point of devolution.”

Sarah Boyack, shadow cabinet secretary for net zero, energy and just transition, told the event that as and when the DRS does move ahead it will be vital for all UK governments to work constructively to make it a success.

“Defra [the Department for Environment Food & Rural Affairs], the Scottish Government and Wales are talking to each other and now things are moving in Northern Ireland [with the re-establishment of the Stormont administration] I’d like to think there’s an element of pragmatism here,” she said. “This should not be beyond us.”

The Scottish Government postponed implementation of the DRS until October 2025, the same point at which the UK Government’s scheme is due to be launched.

However, Fox said it is unlikely that timetable will be met as the upcoming general election is likely to lead to delays in agreeing the required regulatory landscape.

“We want it done as quickly as possible but as well as possible,” he said. “There are three countries, four if you include Northern Ireland, involved.

“The big thing that they can do to get it right is create interoperability and we need to get the regulations in the countries to be as similar as possible.

“If we get that it will be a reasonably quick step to implementation.”