Companies bidding to run the Welsh government’s deposit return scheme will insist on a “bail out clause” that could see them pull the plug if it goes it alone with radical plans for mandatory reuse and glass bottle returns, The Grocer understands.
The deadline for bids to run Wales’s DRS runs out on Friday. The Grocer understands there is only one bid in the running, led by the same companies that were appointed to run DRS in the rest of the UK in April last year.
However, in submitting their plans to run the Deposit Management Organisation (DMO) in Wales, companies including the likes of Coca-Cola, Tesco and the Co-op have made clear they are still strongly opposed to major elements of the Welsh plans, which are threatening to wreck the chances of a UK-wide rollout in October next year.
Welsh ministers are continuing to insist that the Welsh scheme includes a DRS for glass, unlike the rest of the UK. They also want to incorporate pioneering plans to shift to a mandatory reuse system for drinks containers across Wales.
“I think there still a gap between where the industry is prepared to go and where the Welsh government wants it to go,” a source close to the discussions told The Grocer.
“But at the same time it’s not as if the Welsh government has different bids queueing up to run the DMO. There is effectively one game in town and that is the UK DMO, and the DMO has major reservations about key elements of the Welsh government’s plans, which are the subject of negotiations.
“Whilst this is not going to stop the bid to run the DMO, I think it means effectively there will be a bail out clause and limits on what the companies will commit to.”
Chaos warning
Supermarket bosses and drinks companies have repeatedly warned of cross-border chaos if the Welsh government goes ahead with a scheme including glass, while the rest of the UK does not include the material.
Meanwhile, suppliers have warned the Welsh government’s radical plans to set mandatory reuse levels for drinks containers could impose costs on manufacturers that “dwarf” those of EPR.
As well as overcoming opposition from the industry, the Welsh government is also still to hear if the Westminster government will attempt to block its plans to diverge from the rest of the UK scheme under the Internal Markets Act, as it did, with fatal repercussions, for the previous Scottish scheme.
The Welsh government has warned it will pull the plug on its scheme if the UK government tries to block it.
However, industry sources said the experience of the Scottish collapse had meant firms were determined to receive assurances from the Welsh government over the resilience of its DRS plans before committing to them at huge cost.
Last week a Scottish court threw out a £50m lawsuit against the Scottish government over its failed DRS from waste giant Biffa.
The company had claimed a letter from the former Scottish Greens co-leader Lorna Slater in 2022 was akin to a guarantee the plans would go ahead – prompting them to invest millions in the scheme, which collapsed a year later.
They alleged the detail in the letter was a misrepresentation of the government’s position at that time and sought £51.4m in damages.
However, judge Lord Sandison rejected the claims, describing the way Biffa interpreted the letter as “wishful thinking” on a par with trying to turn “base metal into gold”.
Biffa said it was “reviewing its position with its legal advisers”.
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