Taxpayer 'exposed' as firms sue Scottish Government over DRS

Fergus Ewing says he fears "this suit could be followed by many, many others" from companies who spent vast sums preparing for the DRS.

Biffa were appointed to collect all the recycled containers across Scotland on a 10-year deal.

They had expected to make more than £100m profit and spent around £55m on new trucks.

They were in the process of hiring new staff when the then circular economy minister Lorna Slater announced a two-and-a-half year delay.

READ MORE: Slater blamed as Biffa take legal action over Deposit Return Scheme

That came after UK ministers made clear that 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, according to the Sunday Mail, Biffa had gone ahead with their multimillion pound purchase after getting a personal assurance from the Green.

A source told the paper that the recycling firm believes the Scottish government "negligently misrepresented the assurance it gave" and "made no reference to any outstanding need to seek UK Internal Market Act approval.”

Biffa is seeking not only a return of its £55m but also compensation for lost profits.

The company's Petition appeared in the Court of Session rolls on Thursday.

A spokeswoman said: "We can confirm we are taking legal action to seek appropriate compensation for the losses Biffa has incurred.”

READ MORE: Circularity Scotland owes £70m following DRS collapse

Mr Ewing said he feared further legal action was likely.

He told The Herald: “The taxpayer is now exposed to shelling out to this company simply eye-watering sums of money.

“The losses are said to be £55m plus loss of profits.

"This is proof positive that the Greens should never have been in Government, and that their reckless disregard of all advice from thousands of businesses that the bottle scheme was a disaster were ignored.”

The MSP for Inverness and Nairn - who was suspended by the SNP after voting against Ms Slater in a confidence motion last year - said he would raise this with the government as a matter of some urgency.

"My fear is this suit could be followed by many, many others, from companies who shelled out huge amounts to fund the failed Circularity Scotland - including the Scottish National Investment Bank whose loan of £9m looks like a total write-off.

"I shall seek to raise this in Holyrood on Tuesday as a topical question and ask if the Scottish Government will make a detailed oral statement candidly setting out the position.

"One must, however, also ask why a newbie MSP with no ministerial experience was placed in charge of a hellishly complex scheme with an estimated total cost over 25 years of £1.817m "Would any private sector business ever have put a trainee manager in charge of a billion-pound project?"

A number of businesses including shops, brewers and hotels and pubs spent substantial sums preparing for the DRS, investing in new vehicles, counting centres and the like.

The minister’s claim that the Scottish scheme would need to wait until the UK scheme was up and running was always disputed by Circualtity Scotland, the industry-led body set up to facilitate the DRS.

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

Shortly after the minister’s announcement, they went into administration and now owe more than £70m, with £65m of that due to Biffa.

In the last report filed with Companies House, administrators Interpath warned that the companies and other unsecured creditors were likely to only “receive a nominal dividend.”

They also confirmed that the publicly owned Scottish National Investment Bank (SNIB) has received just £1m back from their £9m loan to CSL.

READ MORE: State bank to lose £8m from Circularity Scotland after DRS collapse

The Scottish Government recently announced that the DRS would be delayed until 2027 after the UK’s Department for the Environment, Food and Rural Affairs confirmed that their scheme would not go live until October 2027.

The Scottish DRS would have required customers to pay a 20p refundable deposit when they bought a drink that comes in a single-use containe made of PET plastic, glass, or steel and aluminium drinks cans.

They would then get their money back when they returned the empty container to one of tens of thousands of return points.

The delay until 2027 marks the fourth delay of the Scottish scheme.

Meanwhile, the UK and devolved governments have nonw agreed on a timeline to establish a deposit-management organisation company from Spring 2025.

This will, in effect, replace Circularity Scotland, and cover the whole of the UK. the company behind the rollout of the country’s DRS, went into administration.

There are still disagreements over the collection of glass.

A Scottish Government spokesman said: "The Scottish Government cannot comment on ongoing litigation."

The Scottish Greens declined to comment.