Scottish Government Faces £170m Lawsuit Over Abandoned Recycling Scheme

The Scottish government’s problematic bottle return scheme has generated considerable political repercussions, and its legal ramifications could prove equally substantial. A waste management company is pursuing legal action against the Scottish government for nearly £170m following the scheme’s cancellation. The Court of Session in Edinburgh has been informed that Scottish ministers were negligent in their assertions of the scheme’s viability. Conversely, the government’s legal representatives argue that the company was aware of the inherent risks, and therefore, the claim should be dismissed. The scheme, which had already been postponed, was originally scheduled to commence in August 2023. Just weeks before this date, its launch was further delayed until at least October 2025. This deferral occurred after a disagreement with the UK government, which declined to approve the scheme unless it conformed to a UK-wide framework that excluded glass. Circularity Scotland, the firm appointed to manage the scheme, subsequently ceased operations. This non-profit entity, funded by the drinks industry, dissolved with debts and liabilities exceeding £86m. Biffa Waste Services, identified as one of Circularity Scotland’s primary creditors, is now suing the Scottish government. The company, which was contracted to collect recycled containers, is seeking up to £166.2m in compensation. This figure includes approximately £115m in projected profits from a 10-year contract with Circularity Scotland. The remaining portion of the total, around £50m, represents expenditures Biffa claims to have incurred in preparing for the scheme, such as purchasing vehicles and specialized equipment, leasing vehicle depots and processing sites, and hiring additional staff. In its court summons, Biffa contended that it received “clear assurances” from former Green minister Lorna Slater – who has since left government following the conclusion of the SNP-Green power-sharing agreement – that the scheme would proceed. The firm cited a letter sent by Slater in May 2022, which reinforced the government’s commitment to the plans. Biffa stated it signed its contract with Circularity Scotland as a “direct” result, believing that ministers had “taken all necessary steps” to ensure its deliverability. However, the government maintained that the assurances in the letter were neither “new nor unique”. Its lawyers asserted that Biffa undertook a commercial risk and should have been aware of the legal challenges involved. The first day of a two-day debate at the Court of Session was held on Tuesday. The subsequent session is anticipated for Friday, before a judge considers a ruling. Should Biffa succeed, this could create a significant deficit in the government’s finances. Conversely, a victory for the government in court might result in substantial financial losses for a major employer. Deposit return schemes are implemented in numerous countries to encourage the recycling of beverage containers such as bottles and cans. Under the government’s proposals, a 20p deposit was to be added to all single-use drinks containers made of PET plastic, metal, or glass. Consumers could reclaim the deposit by returning the container to retailers and hospitality premises that sell such single-use takeaway products, or to specially-designed reverse vending machines. In recent months, ministers across the UK have been developing a four-nations scheme, but this has been delayed by two years until October 2027. Lorna Slater stated she had no alternative but to postpone the deposit return scheme, accusing Conservative ministers at Westminster of sabotage. A Scottish government review from March 2023 indicated that the scheme was plagued with problems months before the UK government halted it. In August, it was disclosed that the publicly-owned Scottish Investment Bank incurred an £8m loss on Circularity Scotland. SNP Westminster leader Stephen Flynn has cited the controversy surrounding the scheme among the “self-inflicted wounds” suffered by his party during July’s general election campaign. He told reporters at the SNP conference: “While the Scottish people were in the midst of a cost of living crisis, we were having an argument with the UK government about a bottle bank.”