Deposit Return Scheme: Circularity Scotland calls in administrators

READ MORE: Circularity Scotland set to collapse as drinks firms pull funding

It emerged last Thursday that Circularity Scotland (CSL), set up to administer Scotland's DRS, had sent home staff and warned them that they may not be paid for the rest of the month unless their stakeholders agreed to fund a "hibernation" until the delayed scheme launches in October 2025. 

However, the British Beer and Pub Association, the British Soft Drinks Association and the Scottish Retail Consortium have later confirmed that they did not have the "confidence required to provide further voluntary funding for the company."

Answering a question in Holyrood about the future of the firm and the fate of its 60 staff, Ms Slater said: "We have learned today that a process is underway to appoint administrators to CSL leaving their staff in an extremely difficult position.

"This is an unforgivable consequence of the UK government's eleventh hour intervention, which undermined our deposit return scheme, made progress impossible and is now resulting in these jobs being lost.

"This is clearly a concerning time for staff at Circularity Scotland, and we have been in regular contact with Circularity Scotland since the UK Government's decision."

The delay to the DRS was announced after UK ministers made clear the Scottish Government would only be given the necessary exemption to the UK Internal Market Act if they made a number of substantial changes.

This included removing glass from the scope of the scheme and a demand that ministers in Edinburgh agree to standardise the deposit charge and labelling with the other UK schemes.

Ms Slater said the lack of detail around conditions laid down by Whitehall, including not knowing what the deposit charge would need to be, meant the scheme could not go ahead as planned.

However, CSL insisted that the scheme could comply with the UK Government's demands and still launch next March. 

READ MORE: Deposit Return Scheme delayed until October 2025 at the earliest

Responding to a topical question in parliament from Labour's Sarah Boyack, Ms Slater said: "We continue to liaise with Circularity Scotland to consider how we may be able to support its staff, including providing PACE support, which is the Scottish Government's initiative for providing advice and guidance to people at risk of redundancy. 

"In terms of when the Scottish government knew that circularity Scotland faced financial challenges, we warned the UK government repeatedly that a failure to agree an exclusion to the UK internal market Act would jeopardise the scheme.

"At 9.45pm on Friday the 26th of May having first spent the day briefing the media, the UK government informed us that they would only grant a partial, temporary and highly conditional exclusion. It was clear then that the UK Government had torpedoed Scotland's scheme."

Ms Slater said Circularity Scotland was "reacting to this situation that has been inflicted on us by the UK government who have changed its mind."

Tory MSP Douglas Lumsden pointed out that the Scottish National Investment Bank had invested £9m into Circularity Scotland. 

"Is that money now gone? he asked.

Ms Slater replied: "The Scottish National Investment Bank is independent of government and ministers are not involved in the decision-making at the Scottish National Investment Bank.

"Its investments are a commercial and in-confidence matter between the bank and CSL."

READ MORE: Tories table vote of no confidence in 'out of her depth' Lorna Slater

News of the administration comes ahead of a Vote of No Confidence in Ms Slater. The Tory motion will be debated in Holyrood on Thursday evening, with support from Labour and the Lib Dems. 

Responding to the news of the administration, Tory MSP Maurice Golden said: “Despite confirming that Circularity Scotland has gone into administration – something that she admitted was a ‘disaster’ for its workforce – Lorna Slater is still refusing to take any responsibility for the collapse of her Deposit Return Scheme.

“Circularity Scotland themselves, like the UK government and other stakeholders, were absolutely clear that the scheme could have remained viable and gone ahead without glass, but instead she pulled the plug.

“The loss of jobs and the eye-watering sums invested – for which Scottish firms should be compensated – are entirely due to her stubborn and petulant decisions. No minister who has failed on such a scale can possibly command any confidence and she must now go.”

Green MSP Mark Ruskell said: “This is a significant and deeply frustrating development that will leave dozens of people looking for new jobs, undermine future investment, and erode trust in what any UK scheme might be able to achieve given it is the Tories that caused it to collapse. 

“People will rightly question the role played by the Scottish Secretary Alister Jack in all of this, as well as the lack of climate leadership from his Prime Minister Rishi Sunak. 

"Most significant though, is the sharp focus it has brought on the Tories’ commitment to using Westminster’s powers to undermine the Scottish Parliament and the devolution settlement.”

A UK Government spokesperson said: “The operation of Circularity Scotland is a matter for them and the Scottish Government. Earlier this year the drinks industry raised concerns about the Scottish Government’s Deposit Return Scheme differing from plans in the rest of the UK. 

“The UK Government listened and worked at pace to accept the Scottish Government’s request for a UK Internal Market (UKIM) exclusion on a temporary and limited basis to ensure the Scottish Government’s scheme could proceed while aligning with planned schemes for the rest of the UK. 

“The Chief Executive of Circularity Scotland was categorical that the scheme remained viable on this basis and that many other successful schemes run without glass. But the Scottish Government decided not to proceed and instead further paused the scheme until October 2025. Delaying the Scottish scheme was entirely a decision made by the Scottish Government."