A £9 million fund given to Circularity Scotland is expected to be lost, according to the chair of the Scottish National Investment Bank.
After the company created to run Scotland's deposit return scheme called in administrators, Willie Watt expressed his hope to MSPs that he wouldn't lose the entire amount.
Having been placed in an "impossible position" by Westminster, said Minister for the Circular Economy Lorna Slater, she was compelled to postpone the program until 2025.
The UK government denied this assertion.
The Scottish government, according to a spokesperson, made the final decision to postpone.
Even after the UK government imposed restrictions, such as the elimination of glass from the initiative, Circularity Scotland CEO David Harris said the program was still "viable.".
In May 2022, Circularity Scotland and the publicly traded Scottish National Investment Bank reached an agreement for a £9 million debt facility to pay for start-up expenses associated with the operation of the deposit return scheme.
The collapse of the company was described by Ms. Slater, who on Tuesday survived a vote of no confidence in parliament, as a "disaster" for its 66 employees.
We are unsure of the exact effects, but I believe it is fair to say that the loan we made to Circularity Scotland will suffer sizable losses, Mr. Watt told Holyrood's Economy and Fair Work Committee. ".
"I'm sure the losses will exceed fifty percent, but I hope they are less than one hundred percent," he continued. ".
The non-profit organization Circularity Scotland, which receives funding from the beverage industry, was reportedly not equipped with "sufficient capital" to handle the delay from March 2024 to at least October 2025, according to the investment bank chair.
According to Mr. Watt, administrators are addressing a "hierarchy of creditors" that includes employees, business creditors, and banks before reporting back in a "short number of weeks.".
He insisted that the loan had been approved after the bank had conducted "significant due diligence" and claimed that the Scottish government had not been involved in the decision.
He claimed, "We completely dissociate ourselves from the Scottish government in making any decisions.". Our institution is fiercely independent. ".
The scheme was delayed earlier this month, according to Ms. Slater, who spoke to BBC Radio's Good Morning Scotland, because the UK government made "pernicious" demands at the "last possible moment.".
The interference from the Conservative government at Westminster to sabotage our plan, she said, "had these negative consequences for Scottish businesses, for Scottish workers, and of course for our flagship recycling scheme.". We are all devastated by it. ".
The Scottish government's request that a 20p deposit be placed on some items should be in line with UK plans for a program that will be introduced in 2025, according to the Green MSP, was in addition to its demand that glass be removed from the program.
She told BBC Scotland, "But the worst part is they don't have the rules for that and they can't tell me what those are.".
Although it's not the ideal way to operate a scheme, it is possible to construct deposit return schemes without glass. There are a few of them in existence.
"The issue is these additional requirements that the UK government suddenly threw on us. They made it unachievable. ".
She remarked that she was unable to comment on what would happen to the funding provided by the Scottish National Investment Bank or the £9 million provided by RBS.
According to Ms. Slater, the Scottish National Investment Bank makes its own investment decisions and is not influenced by the government.
In preparation for the program, Circularity Scotland, investors, and retailers are said to have spent hundreds of millions of dollars, while its service partner Biffa has invested about £80 million in infrastructure.
We do intend to move forward with the deposit return scheme, Ms. Slater said, so I don't believe that will be lost.
"It has been postponed until 2025 because that is when the UK government claims they will be able to launch their program. ".
Under the plan, the cost of single-use beverage containers sold in Scotland would have been increased by a 20p deposit.
The customer would then receive their deposit back when they returned the empty container to a return location, either manually at a store counter or automatically at a reverse vending machine.
According to sources close to Circularity Scotland, there have been claims that employees have not received a full month's worth of pay.
Ms. Slater, however, informed the chamber that she believed the staff had been compensated for their efforts.
She claimed that the government's redundancy assistance program, Partnership Action for Continuing Employment, had also offered support to the staff.
