DRS: Scottish Grocers’ Federation issues pre-action letter to Circularity Scotland

Edinburgh, United Kingdom

The Scottish Grocers’ Federation (SGF) issued a pre-action letter to Circularity Scotland Limited (CSL), who were appointed by Scottish Government in 2021 to administer Scotland’s Deposit Return Scheme (DRS). SGF are representing the largest group of Return Point Operators in Scotland, as well as being the convenience sector lead for over three years in all DRS discussions.

With a year to go until the introduction of the scheme in August 2023, SGF is of the opinion that the retailer handling fee levels, as presently proposed by CSL, will not cover the costs borne by retailers following the introduction of DRS. This will impact on their sustainability and business survival is at risk with potentially thousands of businesses facing closure next year.

For manual take back, CSL have proposed that retailers will receive 2.69p per container while for automated returns – through reverse vending machines - the fee proposed by CSL will be 3.55p for the first 8,000 containers received and 1.35p for each additional container.

SGF CEO Dr Pete Cheema OBE said:

‘’SGF have repeatedly called for CSL to explain how these retailer handling fees were calculated and to this end have met with both Lorna Slater, the Minister responsible for DRS, and CSL directly to highlight the significant risk to convenience operators and have provided evidence to CSL that the retailers handling fee is insufficient. CSL have refused to review the Retailer Handling Fee, suggesting if SGF members can’t make it work with this fee, they should opt out and not participate in the scheme, placing their businesses at risk. However, as they know, the regulations make that practically impossible. As a trade body we must respond to the concerns and be accountable to our retail members which is why we instructed our legal team to send a pre-action letter to Circularity Scotland Limited as the scheme administrator requesting that the relevant information be made available as a matter of urgency and to provide clarity around how and on what basis the proposed retailer handling fees was set, given it is the responsibility of retailers to set the fee and not the scheme administrator. The letter details our concerns in an accurate and carefully considered way.

SGF has been and remains fully committed to working with a range of stakeholders to ensure that Scotland has a world leading scheme. It is essential however that DRS remains cost neutral to Return Point Operators and does not leave them with an additional cost burden or put them out of business.

It is important that we once again highlight that thousands of local convenience stores are at risk due to insufficient funding through an inadequate and potentially illegal retailer handling fee structure. They are faced with the choice of taking on a significant financial burden to set up Reverse Vending Machines, with no means of properly recovering this cost through the scheme, or being forced out the scheme altogether and risk losing all their footfall to large businesses.

‘’This is particularly important given the challenging trading environment - convenience retailers are being exposed to soaring energy bills, escalating inflation, rising interest rates, the implications of Brexit and the war in Ukraine. In addition, the steady stream of legislation from government is also impacting on the sector thereby adding to their ongoing costs. When we receive a response from Circularity Scotland Limited, we will, in consultation with our retail members, consider our response in a balanced and measured way.’’

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