The gateway review was carried out in March 2023 examining a go live date of August 2023, which was later pushed back to March 2024.It was published in response to a request from the Scottish Conservative MSP Edward Mountain.
In an accompanying letter to the review published this week (28 June) Ms Slater said the document highlights that “uncertainty created by the UK government” was to blame for the scheme ultimately not going ahead.
However, opposition MSPs have pointed out that the report highlights that the Scottish government was aware of the issues with the scheme but continued to progress it anyway.
Ms Slater said in the letter: “The review was conducted in March and in the context of the go live date of 16 August 2023 as was the case at the time. It found that the two ‘critical, high impact blockers’ to DRS delivery at this point were the lack of an IMA [Internal Markets Act] exclusion and lack of clarity on display of pricing from the UK Government. Indeed, the review noted that the uncertainty created by the UK Government’s delay in issuing an IMA exclusion meant that “retailers, producers and wholesalers are holding back investment decisions and plans to be ready.
The latest gateway review arrives on the back of similarly gloomy reports published last year, which led to parts of the DRS being scaled back (see letsrecycle.com story).
‘Major risks’
The gateway review said successful delivery of the DRS was “in doubt with major risks or issues apparent in a number of key areas”.
It warned that “urgent action is needed to ensure these are addressed, and establish whether resolution is feasible.”
Additionally, the report noted a “lack of clarity on pricing” which resulted in wholesalers and retailers being “unwilling to make changes”.
The previous Gateway Review of the DRS program highlighted weaknesses in its governance, particularly regarding the Scottish Government’s need to protect the public interest in the behaviour of the scheme administrator (SA). The DRS regulations passed by the Scottish Parliament placed the compliance burden on the private sector and allowed them to appoint one or more SAs. The SA chosen by the government was Circularity Scotland, a not-for-profit company which is now in administration.
Oversight and control of the SA relied on industry membership, but “this control was perceived to be limited by many interviewees, including CSL members” according to the report. Some members had sought government support to address the lack of internal control.
However, the report acknowledged the challenges faced in establishing a market ecosystem among competing interests within a tight timeframe.
Arrangements
The report emphasised the need for “effective governance across the entire system” and suggested that the Scottish Government should have explored additional or alternative governance arrangements. Measures, the report outlines the government that could have been taken include placing non-executive directors on the SA board, “adopting governance codes used in the finance and other sectors like the UK corporate governance code, and incorporating stakeholder perspectives through independent published surveys and benchmarking operational performance with other jurisdictions.”
Reconsidering the governance of the DRS would have required a significant change to its current structure and necessitate further examination of policy, legal aspects, and governance advice. The aim was to ensure the full public interest is maintained and to influence a comprehensive approach to system development and operation.
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