RETAILERS have reacted angrily to Scottish Government plans for a deposit and return scheme for drinks bottles, after initial research found it could cost them £40m to set up.

Business leaders demanded a rethink after SNP Environment Secretary Roseanna Cunningham ordered further work on the recycling idea, followed by a public consultation.

However environmental campaigners welcomed the move, which is backed by Coca Cola, and said it ought to be “cheered from the rooftops”.

Up to 90 per cent of glass drinks bottles, 52 per cent of plastic ones and 60 per cent of aluminium drinks cans are already recycled in Scotland.

However, the government is keen to improve the figure.

A new report from quango Zero Waste Scotland found a deposit and return scheme, with customers paying a small premium for bottles which would be redeemed by returning empties, could cost retailers £40.7m to set up and packagers £44.5m a year to run.

Potential extra costs to shopkeepers included losses of sales and additional printing, security, deliveries and employee hours, with stores also having to store empty containers.

The report said a scheme could reduce litter costs across society by between £10m to £40m a year, but concluded the impact on people’s behaviour would be “marginal”.

Ms Cunningham said Zero Waste Scotland would now examine the design, costs and benefits of a scheme for Scotland’s "unique environment".

She said: “Clearly there are a number of issues for the Scottish Government to consider when it comes to deposit return schemes that can only be addressed by carrying out work to understand the design of a potential system.

“Progress will be overseen by a steering group involving representatives from the packaging industry, retailers and environmental groups, and followed by a full public consultation to ensure we are as well-informed as possible before any decisions are made.”

Jenni Hume, manager of the Have You Got the Bottle campaign, an alliance of businesses, councils and charities led by the Association for the Protection of Rural Scotland, said almost four in five Scots backed a fully returnable deposit on empty drinks containers.

She said: "This feels like a historic step in the right direction.

“We can now look forward to a proper discussion about a Scotland-specific proposal.

“If Scotland can take the lead here, as with the carrier bag charge, we are very optimistic that England would follow, and there's also growing interest in Wales and Northern Ireland.

“A wide range of businesses are already on board, from Coca Cola to small retailers, the public want to see action on litter on land and at sea, and local government want to save money."

However Ewan MacDonald-Russell, of the Scottish Retail Consortium, said Ms Cunningham had “fumbled the chance to toss this unfair, outdated concept into the rubbish bin”.

He said: “Scottish retailers face an incredibly uncertain economic situation right now. That has been exacerbated by the Scottish Government’s unwelcome and unhelpful decision to continue investigating this unnecessary, anachronistic, and expensive deposit proposal.

“This scheme will be hugely expensive for retailers, costing tens of millions to install reverse vending machines, cannibalising profitable floor space for unprofitable waste machines, disrupting operations and hugely inconveniencing customers.”

Colin Borland, of the Federation of Small Businesses, said there was “substantial concern” about how a scheme would work in practice, especially for small shops lacking storage space.

He said: “This is not the right time to be drawing up plans to increase small retailers’ costs and eat up time with new regulations. With inflation on the increase and margins squeezed, you need to ask whether this really is the right priority to be pursuing.”

Dr John Lee of Scottish Grocers Federation added: “The potential cost to retailers is reason enough for this idea to be scrapped now.”

LibDem environment spokesperson Mariam Mahmood said: “The evidence from Sweden, Denmark and Germany demonstrates a deposit return system can successfully meet the challenges of waste reduction, decreasing the need for landfill and removing dangers to wildlife. It is imperative that questions concerning local authority funding, investment in road-side recycling, and fundamentally who would operate a scheme are now answered.”