Chamber and committees

The communications between Circularity Scotland, SEPA and businesses are under way and on-going. I think that some of the frustration results from things that are being reported in the media, including the press, which are simply not accurate. The correct way to get the right information that businesses need is to go directly to Circularity Scotland, and we are signposting people to that organisation.

Circularity Scotland is employing a communications expert to support the communications with businesses. It has held workshops throughout the country with businesses to help them to understand their role in the scheme, it has an excellent website, and it has call handlers who can answer phone calls and emails at all hours of the day and night. I recommend that any businesses that are not clear about their role should, instead of reading something on Twitter, get in contact with Circularity Scotland to get the right information that they need.

Whenever the public are asked about such schemes, they are always very enthusiastic about them. Generally, such schemes have broad public support. Schemes like ours work very well in other countries. They are very straightforward and well understood. In fact, people in this country are often nostalgic. They have memories of similar schemes that ran when they were young in which they returned their bottles to get their money back.

When someone buys bottles or cans, the cost of 20p is added to each bottle or can. People can, of course, get that money back when they return those materials. Therefore, there is a net neutral cost to the consumer when they purchase those materials.

The final date by which SEPA needs to receive completed registrations is 30 June 2023—registrations must be completed by that date.

I encourage all producers to start their registration before then, because the registration process is reasonably detailed. Producers have to enter all their products, the details of their barcodes and so on, and SEPA needs time to process the applications and publish the register of producers before the scheme goes live on 16 August. Retailers need to know which products they can continue to carry by 16 August. Therefore, SEPA needs to publish a list that shows all the producers that can continue to sell in Scotland, to ensure that retailers comply with the legislation.

SEPA has said that it will be very pragmatic in how it implements that, and I support that, because we want to ensure that businesses are on a pathway to compliance. I said that we are looking at how we can bring on board small producers who have not yet registered, and one thing that we are in discussions about in relation to that is working out what the pathway to compliance will look like for each business.

Each business is quite different and has different requirements and barriers, and we do not intend to be punitive or come after businesses—that is not the idea. The idea is to support businesses to comply with the scheme, because we want businesses to continue to be able to sell in Scotland, and we want them to understand their obligations under the scheme, and, in fact, to take advantage of it. Clearly, for businesses that are registered with the scheme and can continue to be stocked, that will be a competitive advantage.

The member has asked some really good questions. Circularity Scotland is a membership-based not-for-profit company. Its members include trade associations that are associated with small convenience stores, such as the Association of Convenience Stores, the National Federation of Retail Newsagents and the Scottish Grocers Federation—so they not only have a direct line to the information; they are also influencing Circularity Scotland’s decision making. The mechanism by which Circularity Scotland interacts with convenience stores is through their membership of those trade associations.

I meet those associations—and the Scottish Grocers Federation in particular—regularly and they have flagged up two categories of concern. First, they have emphasised that they want their members to participate in the scheme. They consider it a matter of footfall: where small grocers participate in the scheme, people will come through their doors, which is exactly what they want. They have asked me to help them to be involved in the scheme, and they are very supportive of it.

Secondly, some small businesses, particularly tiny ones, were concerned about their lack of storage space. Bakeries that sell bottled juice were also concerned, as you cannot have broken glass in a bakery. As the member pointed out, there are exemptions for such situations.

Let me give the high-level picture so that everybody understands. If you sell bottles and/or cans of juice, wine or anything else in Scotland, you have three options: you can choose to be a manual return point; you can choose to have an automated return point, which means installing a reverse vending machine; or, if it is applicable to you, you can choose to be exempt.

The grounds for exemption are proximity. For example, if several small stores are close together but a big store is nearby, the small stores might decide that they are not up for being return points and they can ask the big store to take their returns. Equally, they might decide that they want to work together to be a return point so they might pull together and get one reverse vending machine between them.

There are different models and it is up to each business to decide how it wants to proceed. If a business wants to be a return point, it can be a manual return point. That is the most cost-effective model if the business is collecting small amounts. That is probably what a convenience store would do. If a store has a small floor area, it might not have room for a reverse vending machine and it might not have high sale numbers of those products, so it would take them back as returns. In that case, customers would hand their bottles and cans over the counter.

The reverse vending machine infrastructure is probably most appropriate for bigger stores that not only have the space for them but the capital to do the up-front installations and the resource to do the administration of getting planning permission and all the things that go with that.

It is likely that big stores will have the reverse vending machines, small stores will have manual return points and other businesses that apply for an exemption—that is, small businesses or businesses with bakeries in them and so on—will be exempt.

On how we will know, we are the point at which it is with businesses to make their applications. Return point applications are open, so businesses can look at the evidence and decide what to do. Once the period of applications for return points is complete, we will have a picture of how many we have in Scotland and will know the mix—how many are manual and how many are RVMs. Then, knowing how much volume of material there is, we will be able to estimate how many will go to each point.

That will allow Biffa to work out its logistics. If there are more return points, that means fewer items per return point, whereas fewer return points means more items. Working out the logistics depends on exactly how many businesses sign up, where they are and what their volumes are, so it is an iterative process whereby we see what businesses have signed up.

I hope that I have answered the question. I might have drifted off a bit.

All return points use the same process. Hospitality falls into two categories. I am sorry, but this is about to get horribly technical. There is closed-loop hospitality and open-loop hospitality. If you go to a small cafe, such as the local Greggs, for your sausage roll and bottled juice, you will take that bottle away. That is an open loop. Under the scheme, because customers take bottles away from that business, it is an open loop and it is obliged to be a return point unless it is exempt. A small cafe or Greggs bakery, for example, have probably got very clear grounds for exemption because it cannot have broken glass on the premises. It would probably apply for exemption on health and safety grounds, meaning that it would not operate as a return point.

Equally, it might be that the small bakery is in a parade of shops that has a larger convenience store at the end, so it might decide to ask the convenience store to take its returns. It would then get an exemption on the basis that there is a return point within the same parade of shops. It is for those businesses to make the right choice for themselves.

Closed-loop venues are the other type of hospitality venue. For example, you might be at a restaurant and order a bottle of wine with your dinner. You would not take that bottle away with you when you leave the venue, however much you might wish to. That bottle will not incur a deposit, because you will not take it away. However, the venue will have paid a deposit when buying the bottle from its wholesaler, so it will need to get its deposit back. It will do that through a closed-loop system. For that system, Biffa will collect materials separately. That process does not affect the consumer.

We are starting to get into technical matters, but those are two different ways in which hospitality venues can manage the process.

No, that is not right. Closed-loop hospitality venues are not return points. A restaurant that serves drinks to customers at their table and does not give them the bottles to take away is not obliged to be a return point, whereas a cafe or small bakery—

It is common for both local shops and the big shops to take returns, so that consumers can decide where they want to make returns.

I do not agree with the member’s representation that small businesses will be disproportionately impacted. The measures that we have put in place have been designed to support small producers in particular. I can go through them again. One of the measures that we have put in place to support small producers is proportionate producer fees, so that small producers will pay the same as large producers, proportionally, because the fee is charged per container. There are, similarly, cash flow measures specifically to help small producers.

When it comes to our small retailers, the fees that will be paid for operating manual return points are the highest in the world for small retailers: our small retailers who operate manual return points will be better off than their compatriots around the world. With our scheme, we are doing more for small businesses than other highly successful schemes around the world are doing. Therefore, I do not agree at all with the member’s representation of the scheme.

Absolutely. The scheme, as it will look on 16 August, will probably look quite different 18 months down the line. When these sorts of schemes launch, there is a first stage—what we call the cut-over period—that is always challenging. In this case, most of what you have in your house, most of the litter in the streets and so on will not at that point be scheme articles. If, after 16 August, you do your citizen’s duty by picking up a can at the side of the road and taking it to a return point, the can will be rejected. It will not be a scheme article because it was sold before the date.

During the cut-over period, some scheme articles will be in circulation; however, quite a lot of material that is not scheme articles will be in circulation, too, and it will take a number of weeks for scheme articles to become predominant. A big part of what we have to manage, therefore, is the ramp-up into the scheme. There are tried and tested ways of doing that, and there are learnings that we can take from other countries. It will be a challenging period, and our communications to consumers must be clear so that customers understand why the bottle that they bought on 17 August can be returned whereas the one that they bought on 15 August cannot.

That is definitely challenging for us to manage, because we all want people’s first experience of the scheme to be a positive one. We want them to have their bottle accepted, to get their 20p back and to spend that on their shopping or whatever they wish. The cut-over period will be absolutely critical.

Moreover, as those materials gradually ramp up, we will be able to see consumer behaviour. It goes back to the convener’s earlier point: does the consumer tend to bring things back to the big shops, or do they use a mix of small and large shops? How does it work? Biffa and Circularity Scotland will have to be very reactive and dynamic, and we will be working with them on processes and mechanisms that will allow them to deal with any small business that says, “Oh my goodness—my bins are full! Biffa, come and get them,” and to be able to update things so that people can say, “Do you know what? I thought that we were going to get 10,000 items a week back, but we’re getting only 3,000. We need to adjust our schedule.”

There will have to be a period of adjustment and optimisation as the scheme settles in, and, as a result, I would expect what you have suggested to be the case. I expect that communities will tell us, “We have no return point that’s convenient for us. How can we get things collected?” We will have to be dynamic in addressing those sorts of issues. It is my intention, therefore, to facilitate some sort of reaction force so that people and businesses know whom to call when their bins are overflowing or they cannot return things and so that there is a process by which people can find out how to get their 20p back.

The scheme will ramp up and adapt to things over the first year. In fact, the recycling targets that we have set will come into effect after a year—or perhaps two years; I will see whether that needs to be corrected—in recognition of the fact that we will not have 90 per cent recycling on day 1. As the scheme beds in, we will work towards that 90 per cent recycling target.

We already know that 95 per cent of materials, by volume, are signed up to the scheme. The way to counteract any risk is to bring all producers online so that they can continue to sell in Scotland. All the measures that we are using to support producers to sign up to the scheme, including cash-flow measures, labelling measures and any further measures that we agree with them, are meant to do exactly that—to allow that variety of producers to continue to sell in Scotland.

The labelling measure is of particular interest when it comes to the importation of wines. It was a specific ask from our wine importers, because you can imagine the difficulty if they were importing only 500 bottles of wine from a winery in France. They would not want to have to put a Scottish label on that number of bottles, which is quite reasonable. That is exactly the kind of situation for which the labelling measure was designed. Our estimate is that about 15,000 products will use the sticky label solution.

It is absolutely not the vision that our products will be restricted. We are working to continue to have a wide variety of products on the market.