Scottish hospitality trade-body call on pubs and clubs to delay DRS out of fears of ‘significant business failures and job losses’

‘This scheme will inevitably lead to significant numbers of business failures and job losses’

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The Night Time Industries Association (NTIA) Scotland have said they have significant concerns about the Deposit Return Scheme currently being implimented by the Scottish Government and are advising businesses not to sign up for the new rules.

The NTIA said that while they’resupportive of Government’s aims to increase recycling, NTIA Scotland cannot support the implementation of the Deposit Return Scheme as currently planned.’ The hospitality trade-body believe that ‘no thought or consideration has been given to the operational concerns of thousands of Scottish small and medium enterprises’ and that the scheme is ‘completely unworkable for the vast majority of small businesses in the hospitality sector.’

The sign up window for hospitality and retail businesses is underway with the scheme set to be implemented in August 2023, however the NTIA has advised their member not to sign up for the DRS scheme as they believe their to be ‘a number of onerous and unfair terms included’.

So far, only 16 per cent of producers have signed up for the scheme so far, with 84 per cent refusing to sign up for the Deposit Return Scheme - which led to the NTIA ‘recommending’ to Scottish hospitality businesses to not sign any agreement to participate in the scheme in it’s current form.

NTIA believe ‘it would be responsible or prudent for any business to sign such an agreement without taking independent legal advice and being fully aware of the implications.’ It’s hoped by the trade-body that the Scottish Government will pause the scheme, rethink it, and work with business to ‘design a solution that works for all stakeholders.’

Of the three candidates up for the First Minister post - Ash Regan, Kate Forbes, and Humza Yousaf - all three have expressed a desire to either scrap, delay, or amend the scheme - with the current Cabinet Secretary for Finance, Kate Forbes, warning that the scheme will lead to ‘economic carnage’.

A spokesperson for NTIA Scotland said:”It is simply untrue for Ministers to suggest that Scotland’s DRS scheme is comparable to those elsewhere. The proposed DRS in Scotland is one of the most complicated, costly, inefficient, and badly designed schemes in the World.

“It is also untrue for Ministers to suggest that this scheme will be paid for by producers under a ‘polluter pays’ principle. Scotland’s DRS adds cost and complexity at all levels of the supply chain, which will all ultimately be passed on to consumers in the price of the everyday products we all buy.

“For a typical hospitality small business, we estimate that Scotland’s DRS will cost between £3,000 and £5,000 in advance setup and infrastructure costs and result in a further, additional, and permanent cashflow deficit of up to £5000 per premises.

“Furthermore, the exclusion of crushed cans and bottles will result in an unacceptably high percentage of deposits failing to be returned, leading to substantial and ongoing financial losses. And the overly complicated ongoing administrative, storage and operational challenges will be cost prohibitive and therefore unmanageable for far too many small businesses.

“This scheme will inevitably lead to significant numbers of business failures and job losses.”

The aim of the scheme is to reduce the amount of single-use drinks containers ending up in landfill or as litter by offering a cash incentive to consumers to dispose of them properly.

The Deposit Return Scheme, the final design of which is still being debated, was originally due to be delivered in March 2021. But the launch was postponed, first to July 2022 and then, as a result of the pandemic, to the current date this August.

The NTIA statement continues:”We also note that the scheme does not currently have exemption from the UK Internal Markets Act, with the UK government warning such exemption may well not be granted due to the DRS creating trade barriers and restricted market access for thousands of small producers and importers.

“Without such UKIMA exemption it will not be possible for the scheme to proceed, and it is little short of reckless and negligent for government to ask businesses to invest capital in a scheme which may well be unlawful. This is the legislative equivalent of building a house without first obtaining planning permission.

“On many occasions over the last few years, a wide variety of business groups have raised their concerns in detail, however, both Scottish Government and CSL have been unwilling to make reasonable modifications to the scheme or provide the required level of clarity in addressing those concerns.”