The controversial deposit return scheme (DRS) has been delayed until March next year, the First Minister has said.

Making the announcement as he laid out his priorities for government, Humza Yousaf said the shift was part of a “reset” between government and business.

The scheme, which would see customers pay a 20p deposit on drinks in cans and bottles that will be paid back when the containers are returned, has come under fierce criticism in recent months.

The scheme will require an exemption to the UK-wide Internal Market Act, given by Westminster, to be able to go ahead given possible implications elsewhere in the UK.

But the First Minister said no such decision was forthcoming.

Speaking in Holyrood, Mr Yousaf said: “I remain committed to this scheme as a way to increase recycling, reduce litter and help achieve our net zero ambitions.

“But we recognise the uncertainty that continues to be created as a result of the UK Government delaying the decision to exclude the scheme from the Internal Market Act. We had hoped for that decision this week – but it has not come.

“At the same time, I – and the circular economy minister – have heard the concerns of business, particularly about the scheme’s readiness for launch this August. As a result, we will now delay the launch of the scheme to March 1 2024. This provides 10 months for businesses to get ready.

“We will use that additional time to work with businesses, and Circularity Scotland, to address concerns with the scheme and ensure a successful launch next year.”

The circular economy minister answered a question about the scheme just minutes before it was delayed by the First Minister (Jane Barlow/PA)

A package of measures, Mr Yousaf said, would also be put in place to “simplify and de-risk” the scheme.

The announcement fell just minutes after circular economy minister Lorna Slater fielded a topical question about the scheme’s future, where former Scottish Government minister Fergus Ewing described the initiative as a “Green poll tax”.

Mr Ewing – who has become a fierce critic of the government, particularly around its powersharing deal with the Greens – said business organisations had written to the First Minister to say the DRS would increase prices on consumers – something previously accepted by the head of the company charged with implementing the scheme.

“Even David Harris, the boss of (Circularity Scotland Limited), paid £300,000 a year, admits that is the case,” he said.

“Does the minister agree with the boss of her own agency? And if so, why is she so intent as a Green Party representative of imposing at the height of a cost-of-living crisis, price hikes to the poorest people in Scotland, a kind of Green poll tax?”

Responding to the accusation, Ms Slater said: “I will remind the member that Circularity Scotland is a private, not-for-profit company, not an agency of the Scottish Government.

“And I will also remind the member that the regulations for the deposit return scheme were passed by this parliament and we are implementing those regulations.”

Speaking after the First Minister’s statement in Holyrood, Ms Slater rejected assertions from the UK Government there had not been a formal request for an exemption to the Internal Market Act.

The scheme was due to come into force in August (Jonathan Pow/PA)

“That is absolutely not the case,” she told journalists.

“There are formal processes involved through the frameworks by which the governments work together and the UK Government has agreed that at every point we followed the process exactly.”

Ms Slater is set to make a statement to parliament on Thursday on the scheme, which will likely provide more detail on the delay.

The Federation of Small Business (FSB) welcomed the delay, but stressed the importance of using the time to refine the scheme.

Andrew McRae, the body’s Scottish policy chairman, said: “It is essential that the Scottish Government now capitalises on this pause and engages in meaningful conversation with businesses to understand and address their concerns.

“Only then can DRS be delivered in a way that will work.”

That sentiment was echoed by Scottish Retail Consortium director David Lonsdale, who said the pause must have “purpose”.

But the British Soft Drinks Association, which represents some of the biggest drink firms in the country, said it was “disappointed” with the delay.

Director general Gavin Partington said: “Our members have committed to the introduction of deposit return schemes and have spent several years and millions of pounds on its planned launch in Scotland.”

He added: “Further delay now leaves the Scottish scheme in a precarious position and we will be looking to the Scottish Government to protect the considerable industry investment to date.”