£22 million for small businesses in deposit return scheme support

£22 million in cashflow support measures were announced yesterday by Circularity Scotland, the private scheme administrator established ​​by the industry to meet their obligations under the Scottish Deposit Return Scheme (DRS).

Plastic bottle manufacturingThe support will be aimed at Scotland’s at-risk brewers, distillers, importers and drinks manufacturers when the deposit return scheme comes into effect on 16 August 2023. In particular, it is intended to help SMEs who have voiced concerns over the impact of the scheme.

The package includes:

  • Upfront charges removed for lower sales volumes;
  • Improved payment terms for lower sales volumes;
  • Simple labelling option for niche products.

Cashflow support measures for Scottish deposit return scheme

Circularity Scotland will remove the ‘day one’ charges for producers who choose not to introduce Scotland-specific barcodes up to a threshold of three million units per year.

Day one fees were introduced for cases in which it wouldn’t make commercial or financial sense for producers to change their labelling. In those circumstances, a variable producer fee would be paid per container to reflect the increased risk of fraud for containers that don't have specific labels for scheme containers.

The ‘month one’ charges on deposits and producer fees will also be removed. This will apply to all producers up to the same three million threshold.

The package also provides two-month credit terms on deposits, producers' fees and retained European Article Number (EAN) or barcode fees for all producers up to the same three million volume threshold. The two-month credit terms will be made available to all producers, regardless of their size.

The option to use self-adhesive barcode labels will also be available to producers placing less than 25,000 units per year of a specific product onto the Scottish market. Circularity Scotland hopes this will provide a straightforward administrative solution for independent producers and importers for whom the cost of changing packaging to introduce new barcodes could be prohibitive.

Circularity Scotland has already announced reductions in producer fees of up to 40 per cent and offers the highest return handling fees of comparable schemes anywhere in the world.

“Mitigate the pressure on businesses”

David Harris, Chief Executive of Circularity Scotland, said: “This announcement is further evidence of how we are continuing to innovate and identify additional ways to mitigate the pressure on businesses.

“We know that smaller producers in particular have been concerned about the cashflow impacts of the scheme, and these measures will address those concerns.

“Circularity Scotland has successfully secured over £100m of third-party funding to establish the infrastructure of the [Scottish DRS], with only minimal up-front funding from the very largest producers. This funding approach allows producers both large and small to benefit on equal terms from this investment in world-class infrastructure and leading-edge technology and only pay their share of the costs once the scheme is in operation.

“These additional support measures further demonstrate our confidence in being able to deliver ongoing operational efficiencies once the scheme has gone live. We are committed to ensuring that the deposit return scheme works for Scotland, is cost-effective for business and helps protect our environment for generations to come.”

Scottish Circular Economy Minister Lorna Slater added: “This is a big and welcome change that responds directly to many of the concerns that have been raised, particularly those from smaller producers like craft brewers. It addresses initial cash flow challenges and provides a pragmatic and simple solution to the issues raised around barcodes for smaller product lines. This is a package that gives businesses the clarity and confidence they need to be part of [Scottish DRS].

“Over the last few months, I have been meeting industry regularly to listen to their feedback and this industry-led solution has been designed in direct response to its concerns. I remain committed to a pragmatic approach to implementation between now and 16 August. By working together we can lead the UK in delivering a deposit return scheme which will increase Scotland’s recycling rates from around 50 per cent to 90 per cent, cut emissions, tackle littering and address public concerns about the impact of plastic and other waste.”

Tory MSP Maurice Golden will today (22 February) lead a debate in Parliament calling on SNP members to support his calls for Scottish DRS to be delayed.