MSPs have rejected an appeal to pause the problem-hit deposit return scheme over concerns the policy is being “fronted by a secretive company put in place without a competitive or transparent process”.

The Scottish Conservatives called for the scheme to be put on holdwhile an urgent independent review is carried out amid fears the flagship policy will cause harm to businesses who are being asked to sign up to the policy without knowing the full costs.

It is feared the policy could lead to increased costs for businesses and consumers and reduced choice on the shelves.

Read more: Greens minister Lorna Slater lobbied by industry 48 hours before delaying deposit return scheme

Conservative MSP Maurice Golden called on MSPs to back his motion, appealing for the scheme to be paused, but Holyrood voted 65 to 58 against his plea.

But a row has emerged after Mr Golden accused the Greens minister in charge of the scheme of putting an American hedge fund ahead of small businesses in Scotland in relation to a key contract.

Mr Golden raised questions about the scheme’s administrator, Circularity Scotland Limited (CSL), saying it had awarded a contract for waste management collections to Biffa – which is owned by an American hedge fund, Energy Capital Partners.

Ministers had refused to extend the scope of Freedom of Information laws to Circularity Scotland, which is exempt as it was set up as a private company.

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Mr Golden said: "This is a government-run scheme, often fronted by a secretive company put in place without a competitive or transparent process.

“The Scottish Government have so far refused to issue a section five to allow FOIs into Circularity Scotland.

"It’s a dereliction of duty that raises questions around procurement practices and dodgy dealings.”

Pointing to the contract awarded to Biffa, Mr Golden complained that no SMEs (Small and Medium Enterprises) in Scotland were invited to bid for the work.

The Herald: Maurice GoldenMaurice Golden (Image: PA)

He challenged Green circular economy minister Lorna Slater over this.

He said: “Will the minister consider releasing the details of that procurement and explain to SMEs in Scotland why an American hedge fund is more important than them when they face financial ruin as a result of that procurement process?”

Ms Slater said she was “very surprised” to hear a Tory MSP call for a “private enterprise” like Circularity Scotland to be subjected to Freedom of Information.

She also highlighted a £22 million package it announced this week to help address some of the concerns raised by small businesses about deposit return.

Read more: UK Government 'profiting' from Scotland's deposit return scheme amid VAT row

The scheme, which will see shoppers charged an additional 20p on every drink they buy in either a glass or plastic bottle or in a can, comes into force from August 16, with producers having until the end of February to sign up to the scheme – something they have to do if they wish to sell their products in Scotland.

Under the Scottish Government proposals, the 20p deposit on cans and bottles will be returned when customers take empty containers back, with Ms Slater saying it would increase recycling rates for such items to 90%.

While opponents at Holyrood and some businesses have urged the Government to push back the start date for the scheme, the minister insisted: “In the context of the current climate emergency, Scotland needs a deposit return scheme now.”

She stated: “It will reduce carbon dioxide emissions by four million tonnes over 25 years.

“It will reduce litter by a third, cutting the £46 million of public money – that’s local authority money – spent cleaning up litter every year.

“It will drive an increase in recycling rates from 50% to 90% of scheme materials.”

But Mr Golden told her that while “improving recycling and reducing litter are goals we all share”, the Scottish Government had left preparations for the scheme to “the last minute”.

Read more: Concerns deposit return scheme will create unlawful UK trade barrier

As a result, he said: “The Scottish Government finds itself in the middle of an almighty mess of its own creation.”

Mr Golden continued: “Producers are being rushed to sign up to a scheme without having full details or costs. If they don’t sign, they can’t sell their products – it’s a lose-lose scenario.”

He called on ministers to establish an immediate review “to consider how we manage to launch this scheme successfully, with the deadline for producer registration to be extended”.

Ms Slater insisted she took “the concerns of small producers very, very seriously”, saying she had met with the sector last week, with further discussions planned for Thursday.