Meeting of the Parliament [Draft]

Meeting date: Tuesday, April 18, 2023

Official Report 1071KB pdf

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Topical Question Time

The next item of business is topical question time. If a member wishes to ask a supplementary question, they should press their request-to-speak button or enter the letters “RTS” in the chat function during the relevant question. In order to get in as many members as possible, short questions and succinct answers would be appreciated.

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Deposit Return Scheme

To ask the Scottish Government whether it will provide an update on the deposit return scheme, in light of the First Minister recently stating that he was actively looking at options around the scheme and that he was “taking advice”. (S6T-01313)

Delivering a deposit return scheme is an important part of our environmental ambitions, and we remain committed to the scheme. However, we continue to need a decision from the United Kingdom Government on an exclusion for the scheme from the United Kingdom Internal Market Act 2020.

Over the past few weeks, the First Minister and I have made it clear that we want more to be done to support small businesses to be part of our deposit return scheme. That includes looking at options to address their concerns with a view to identifying fair, legal and simple solutions that will allow this important scheme to go ahead. The First Minister will provide an update this afternoon on the Scottish Government’s priorities for Scotland, which will include the deposit return scheme.

There was no answer there; I hope that the minister will be able to define the scheme, so that the UK Government can then make a decision.

With just four months to go until the scheme begins, the minister and the First Minister have floated major changes. As we stand here today, we have no clarity on what those changes will be, so I will ask the minister a very easy question. She has proposed changes in relation to small producers. What is the definition of “small producer”?

On working with businesses of all sizes, we want all businesses to participate in Scotland’s deposit return scheme that are included by the regulations. As I said, the First Minister will provide an update this afternoon on the Scottish Government’s priorities for Scotland, which will include the deposit return scheme, and I will provide further details in my statement on Thursday. The First Minister and I have made it clear that we want more to be done to support small businesses to be part of our deposit return scheme, and we continue to assess the options.

There was no definition and no understanding of the difference between a small producer and a small business. It is no wonder that the scheme faces such severe problems, but there is more. The minister welcomed the award of the collections contract for deposit return to a multinational company with a dubious environmental record. When the Scottish Government agreed the proposition of DRS in 2021 with Circularity Scotland, it agreed that no new vehicles would be purchased and that no new sheds would be built, yet 200 gas-guzzling vehicles have been purchased and up to eight new sheds have been built. Why did the minister not hold Circularity Scotland to account?

Like similar deposit return schemes around the world, and under the legislation as passed by the Parliament, Scotland’s deposit return scheme is an industry-led scheme. It is led by Circularity Scotland, which is a private not-for-profit company whose business decisions are for it to make. Circularity Scotland was set up by producers, retailers and wholesalers and, as a private company, it decides how to deliver the scheme for Scotland.

As members can imagine, I have received a number of requests for supplementaries. I very much doubt that I will get them all in, but I will try to take as many as I can.

I understand that the current system of packaging waste recycling notes will end when Circularity Scotland’s system kicks in. Who will benefit from the loss of PRNs? Who will experience a disbenefit?

The current PRN system is part of the producer responsibility system. The deposit return scheme is also a producer responsibility system, so we are working with the PRN scheme to ensure that, in the transfer from the existing scheme to the new scheme, anyone who has participated in the PRN scheme is not double charged and does not have to pay a producer responsibility charge twice.

In a letter last week to the First Minister, the Campaign for Pubs spoke for the many small producers in my region when it said:

“DRS exists in many jurisdictions and is the right policy for our time, but couldn’t be realised in a worse manner than the Scottish proposed scheme ... The few winners ... appear to be large industrial drinks producers and one large recycling company, who are delighting in the sweeping away of SME competition.”

Why has the minister got this so badly wrong that so few small producers have signed up for the scheme, which they see as destroying their business?

I am not sure that the member has that right—hundreds of small producers have signed up to the scheme. Six hundred and seventy producers have signed up, including many hundreds of small producers. [Interruption.]

Members.

As I have said, the First Minister and I have been clear that we want more to be done to support small businesses, including small producers, to be part of our deposit return scheme.

I will not pre-empt the statements from the First Minister or myself. The First Minister will provide an update on the Scottish Government’s priorities this afternoon and I will provide further details in my statement to Parliament on Thursday.

Does the minister not recognise that the Scottish Government’s succession of changes and many U-turns on the proposal has, as Colin Smyth suggested, undermined any prospect of it delivering the scheme? Such schemes are being successfully operated in countries around the world, but the Government has made an absolute shambles of it. Does she realise the damage that that is causing businesses across the country?

I do not agree with the member’s characterisation of the scheme. There have been no U-turns, and we have been committed to the scheme from the start.

We have been listening to business and systematically working through business interests to ensure that they can participate in the scheme by, for example, streamlining the exclusion process, working on cash-flow issues and working on labelling issues for smaller runs of product. We have been doing all that in line with business requests. We will continue to work with businesses to make sure that they can all fully participate in the scheme.

If the member is concerned about uncertainty, I am sure that he is as shocked as I that, with just four months to go, the United Kingdom Government continues to keep us and Scottish businesses in limbo by not granting an exclusion from the United Kingdom Internal Market Act 2020 in a timely fashion. The uncertainty is frustrating progress on the scheme and undermining certainty for businesses. I reiterate my call to the UK Government to follow the process and to grant the exclusion urgently, so that we can give businesses the certainty that they need.

According to Circularity Scotland’s branding and communications plan, we should be two months into the consumer campaign ramp up for DRS. What precisely has been produced? Has the campaign started? If so, is it on track?

The beginning of the communications plan for the deposit return scheme is to ensure that businesses understand what they need to do. Circularity Scotland has ramped that up in the past two months in particular, to ensure that producers know and that those acting as return point operators understand what their obligations are, and it has been working them through the process of their signing up to and fully participating in the scheme.

First, we had producer registration. Now, we have return point operator registration open. Consumer comms will be part of that as that goes forward. In terms of communicating with consumers, all those steps are part of that communication plan.

Last week, in a letter to the First Minister, the Scottish Chambers of Commerce, the Federation of Small Businesses, the Scotch Whisky Association, the Confederation of British Industry and many other business organisations—virtually all of them—argued that the DRS would increase consumer prices above the 20p deposit, hitting the poorest hardest. Even David Harris, the boss of CSL, who is paid £300,000 a year, admits that that is the case. Does the minister agree with the boss of her own agency? If so, why is she as a Green Party representative so intent on imposing, at the height of the cost of living crisis, price hikes to the poorest people in Scotland? It is a kind of green poll tax.

I remind the member that Circularity Scotland is a private not-for-profit company, not an agency of the Scottish Government. I also remind the member that the regulations for the deposit return scheme were passed by this Parliament, and we are implementing those regulations.

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Council Tax (Second Homes)

To ask the Scottish Government how much additional revenue it anticipates that local authorities would be able to raise, in light of its reported proposals to enable them to double council tax on second homes. (S6T-01312)

As set out in the business and regulatory impact assessment, which was published alongside our joint consultation with the Convention of Scottish Local Authorities, we estimate that there will be additional revenues of up to £35 million nationally.

Our proposals would give councils discretionary powers to set fairer and more appropriate council tax levels to support thriving communities and to prioritise homes for living. That, in conjunction with other action such as owning investment in building an additional 110,000 affordable homes, will contribute to achieving our aim for everyone in Scotland to live in a safe, warm and secure home in the place where they want to be.

People say that imitation is the sincerest form of flattery, so I am delighted that the Government has decided to proceed with our proposals for an empty homes council tax escalator, which could raise an additional £30 million on top of the £35 million that the minister mentioned. The longer someone leaves a home empty, the more the absent owner should pay, but dragging out the doubling of council tax on second homes through yet more consultation is typical of the Government. It is wasting time, depriving our communities of cash that councils could be collecting right now.

The Government already has the powers, so can the minister confirm that primary legislation to deliver a council tax escalator, which will be key to the Government’s new deal for local government, will be ready for councils to use in the next financial year?

The actions that we are taking reflect the commitments that we gave in our “Housing to 2040” strategy and, indeed, in the Bute house agreement. I appreciate that, from the calm waters of Opposition, the member’s job is to simply call for things, but the Government has to deliver. In delivering legislation, we have a responsibility to consult, not least because engagement is a key part of our framework for tax.

I encourage all members and all stakeholders across Scotland to engage in that process. Through the existing legislative framework, there will be the opportunity, subject to the consultation, to introduce measures for the next financial year, 2024-25. As is set out in the consultation papers, going beyond that would require primary legislation. We will consider very carefully the feedback that we receive from the consultation and will, of course, update Parliament in due course.

Yesterday the First Minister said in his announcement that the powers will help to free up housing, which is an ambition that we share, because we need to use the stock that we have in a better way. However, missing from the set of proposals are powers for local councillors to force the sale or rent of a property to deliver Labour’s £1 home scheme for aspiring home owners or even the First Minister’s key workers homes proposals. We should be creating a complete and comprehensive package of powers to tackle the issues of long-term empty homes and homelessness.

Could we have a question, please, Mr Griffin?

The Government said that it would deliver compulsory rent and sale powers, and the Scottish Land Commission and the Scottish Empty Homes Partnership have agreed, so will the legislation that the minister talked about include those powers?

I cannot speak to legislation that will emerge via the consultation process, but the member raised a number of serious issues. I am sure that my colleague Paul McLennan, the Minister for Housing, would be happy to engage with him on particular aspects relating to housing.

On the matters relating to council tax and local taxation more generally—specifically, how such taxation can be used to achieve what I think are shared ambitions on housing—I would be more than happy to engage with the member on the detail during and after the consultation process. In the spirit of co-operation and being collegiate, I welcome the Labour Party’s support for the Scottish Government’s proposals.

Three members have requested to ask a supplementary question. I would like to take all three, but I will need the co-operation of members: there will need to be brief questions and succinct answers.

Given the clear and pressing issues relating to the lack of local housing in rural locations, particularly in my Perthshire South and Kinross-shire constituency, does the minister believe that doubling the council tax levy will be sufficient? Will he outline what other measures could be implemented to enable local authorities to achieve the policy aim of easing housing pressures?

The consultation invites views on the scale of council tax that it would be appropriate to apply to second and empty homes. I am pleased to say that, subject to the consultation outcome, we will be able to charge a double rate on second homes from April 2024, and we are certainly interested in views on granting powers for a more than 100 per cent increase in the longer term.

This is one of a raft of measures that we are taking to ease housing pressures in rural areas. More details will be announced in the First Minister’s forthcoming statement.

I, too, am concerned that people on modest wages cannot afford to live locally, particularly in areas such as the east neuk of Fife. That is affecting the sustainability of those communities.

Like Jim Fairlie, I am not sure whether doubling the council tax on its own will be enough, because some people will happily pay the extra council tax in order to keep their second home. Has the minister considered licensing measures and planning powers to control the number of second homes?

The member will be aware of the work that we are undertaking on short-term lets, through both the planning system and licensing. He makes the point that tax in isolation will not necessarily achieve the outcomes that we want, but it can be an important tool. Through the consultation, we are primarily looking at the issue around council tax for empty homes and second homes and, in the short term—that is, from the next financial year—providing the ability to double the existing council tax levy. However, we are looking at what would be a reasonable amount beyond that. That would require change via primary legislation. We are also looking at the thresholds—

Minister, could you direct your comments to the microphone, please?

I beg your pardon.

We are also looking at the thresholds on non-domestic rates, which apply to short-term lets as well. The consultation covers a number of areas. As I said, I am more than happy to engage with any member on the detail of that.

Doubling the council tax on second and holiday homes is great and welcome progress, but I am really glad that the Scottish Government is interested in going further than that. Can the minister confirm whether the legislation that would be required to go further will come in the form of a new bill or will be part of upcoming legislation that is already planned, such as the local democracy bill or the housing bill? Regardless of which method is used, in which financial year does the Government expect local authorities to have that power to go further than 200 per cent?

Subject to the responses to the consultation, we will take immediate action, to the extent possible in secondary legislation, to deliver changes in time for the 2024-25 financial year. That will allow for a premium of up to 100 per cent to be charged. As I mentioned, changes to allow councils to charge in excess of a 100 per cent premium on council tax on second homes and long-term empty properties would require primary legislation, so the outcome of that would be determined by the parliamentary process. Subject to the various responses that we receive in the consultation, we will assess the different routes to introduce changes, including any planned legislative vehicle such as the local democracy bill. I am happy to update Parliament and the member in due course.