London is preparing to scuttle a Scottish recycling scheme

Rishi Sunak's government is preparing to thwart a controversial recycling scheme for Scotland, which is heading into another constitutional clash with London.

A 20p deposit will be added to single-use drink cans and bottles in Scotland in an effort to encourage more recycling. Consumers can take the empty containers to thousands of 'reverse vending machines' in supermarkets and elsewhere to redeem the deposit.

The Sunak government fears the scheme could create a trade barrier between England and Scotland because it would involve different prices for the same product on both sides of the border, which could run counter to Britain's Internal Market Act 2020.

The UK government is preparing to decide whether to allow Scotland an exemption from UK legislation for the scheme.

Alastair Jack, the secretary for Scotland, said last month that he had urged the Scottish government to 'pause the scheme' and hinted that it would not grant an exemption, making the scheme virtually unworkable.

"The exemption bar is already very high, otherwise what's the point [UK Internal Market Act]?" he told the House of Commons.

According to Allies, Jack is now in discussions with his Cabinet colleagues on the issue of rejecting the Scottish government's request for an exemption.

The row over the proposed recycling scheme threatens to become the latest constitutional battle between London and Edinburgh, after Sunak's government vetoed a Scottish law in January. The law in question would have made it easier for trans people to get legal recognition of their gender.

Nicola Sturgeon, the outgoing first minister and leader of the SNP, wrote on Twitter last month that if the British government did not exclude the scheme from the UK's Internal Market Act, it would confirm fears that the legislation would be used to undermine devolution.

Alister Jacques urged the Scottish government to stop the scheme and hinted that he would grant no dispensation. LINK Jacques / FT

The three candidates seeking to succeed Sturgeon were criticized for the strip, adding to the uncertainty about his future.

At a meeting last week, the Scottish government sought 'urgent clarification' from London on whether the scheme would be exempt from UK internal market law. The Scottish government is concerned that the scheme may not be exempt from UK internal market law, which would have implications for the devolved government's authority.

Officials in Edinburgh believe that it would be difficult to present a workable plan, according to people familiar with the situation.

"We expect a decision from the UK Government as soon as possible given that this is what is needed to give the industry absolute clarity," said a Scottish Government spokesperson.

Although British ministers do not intend to provide the scheme with an exemption from UK Internal Market Law, they believe it would need to apply to 85 per cent of drinks sold in Scotland being made outside the country.

The Scottish minister for green skills, Lorna Slater, said that 664 producers who are responsible for more than 90% of drink containers sold in Scotland each year have already signed up to take part in the recycling scheme.

Slater's data was criticized as being misleading because it reflected the turnout of the largest producers, while obscuring the fact that smaller companies largely failed to score.

The Scottish drinks industry has warned that the initiative will cut off choices and disrupt trade, and the SNP has urged the governor to wait for the launch of the UK-wide recycling scheme.

"There's involvement from the retail sector in the recycling scheme, as companies want clarity on what Sturgeon's successor would do," said Ewan MacDonald Russell, vice-chairman of the Scottish Retail Confederation, a trade body.Russell said companies had not answered questions about their compliance with UK legislation and wanted clarity on what Sturgeon's successor would do.

"The fact that so few small businesses have signed up to the scheme is an indictment on it," said Jamie Delap, Scottish director of the Independent Brewers Association, another trade body.