Scottish Government sued for £200m over botched deposit recycling scheme

A waste firm is suing the Scottish Government for £200 million over the doomed deposit return scheme, it has been revealed.

Biffa has announced it has started legal action for the losses it suffered by investing in the Government’s recycling scheme, which was due to go live last summer.

Opposition parties say if the legal action is successful, it will mean former Green minister Lorna Slater will be “the most expensive MSP in the history of the Scottish Government”.

A Scottish Government spokesperson has said it could not comment given the “ongoing litigation” at the Court of Session in Edinburgh.

The deposit return scheme would have seen 20p added onto every drinks container, which would then be refunded when the container was taken to be recycled.

However, this was blocked after the UK government refused to grant an exemption to the Internal Market Act unless the Scottish scheme excluded glass. The UK government had said it was too complicated and expensive to include glass.

The firm set up to manage this was Circularity Scotland, which ended up going into administration in June last year, with Biffa Waste Services Ltd one of its largest creditors.

Biffa was appointed to collect the recycled containers across Scotland on a ten-year deal, but now says “appropriate compensation” needs to be given by the government.

It is understood Biffa may also sue for lost profits on top of the money it invested. It was agreed in court that a debate should take place later this year into legal issues affecting the case.

In a statement, Biffa said: “Biffa was selected by Circularity Scotland Ltd as the logistics partner for the delivery of the Scottish deposit return scheme and invested significant sums to support its timely and successful implementation.

“This was done in good faith and on the expectation and understanding that the delivery of the scheme had been mandated by the Scottish Government. Having carefully reviewed our position with our advisers, we can confirm that we are taking legal action to seek appropriate compensation for the losses Biffa has incurred.”

As part of the Bute House Agreement, the power-sharing deal between the SNP and the Scottish Greens, Ms Slater was made government minister for green skills, circular economy and biodiversity, and given responsibility for overseeing the deposit return scheme.

When the Greens were thrown out of government by former first minister Humza Yousaf earlier this year, responsibility for the deposit return scheme was transferred to SNP just transition minister Gillian Martin.

Liam McArthur MSP, the Scottish Lib Dems’ climate spokesman, said: “If this legal bid succeeds, Lorna Slater will have been the most expensive MSP in the history of the Scottish Government.

“Businesses were caught in the middle of a spat between two governments, strung along, incurring costs and left to navigate the uncertainty. Deposit return schemes have operated successfully around the world - there is no reason why Scotland should be any different.”

Douglas Lumsden, the Scottish Conservatives’ net zero spokesman, added: “It’s no wonder that Biffa are taking this action, given that the SNP-Green Government’s incompetence was the only reason the deposit return scheme collapsed.

“It had widespread support in principle, but Lorna Slater made such a mess of it that it became unworkable. Thousands of firms were left out of pocket and, although the UK government offered help to make it work, the SNP and the Greens chose to pull the plug instead.”

After the UK government refused to give an exemption to the Internal Market Act, the Scottish Government delayed the scheme until 2025. Earlier this year the UK-wide scheme was pushed back until 2027.

Advocate Roddy Dunlop KC will represent Biffa, and Advocate Gerry Moynihan KC will represent Scottish ministers.

The Scottish Greens declined to comment.