Holyrood and Westminster are heading for another showdown as the UK government prepares to block a second policy move by the Scottish government this year. Alister Jack, the Scotland secretary, intends to deny a request from the SNP government for a trade exemption for its flagship recycling scheme, in a move that experts say could fatally undermine the plans. Under the scheme, which is due to start in August, Scottish retailers will have to add 20p to the price of single-use bottles and cans, which consumers can then reclaim by returning them to be recycled. It is a key part of the Scottish National party’s environmental platform, but most experts believe that to work properly it needs an exemption from UK-wide rules that prevent different regulations applying to the same product in England and Scotland. Jack has criticised the scheme as badly designed and inflationary, telling the Commons recently that it would be bad for businesses and consumers. Talking specifically about the likelihood of granting an exemption, he said: “The exemption bar is very high indeed, otherwise what is the point of the UK internal market?” Environmental campaigners say the scheme is vital for reducing litter as well as CO2 emissions. But business leaders say it will add huge costs to their products, not only through the extra price of a bottle, but also with the associated production and administration costs. Jack told the Commons recently that under the scheme the price of a 12-pack of Scottish water sold at Aldi would rise from £1.59 to £3.99. If he persuades the cabinet to agree to refuse Holyrood’s request, it is likely to provoke another constitutional row with the Scottish government just two months after Westminster blocked the Scottish gender recognition bill. That decision triggered acrimony between the two governments, arguably contributing to the decision by Nicola Sturgeon to resign as first minister weeks later. A spokesperson for the Scottish government said: “We expect a decision from the UK government as soon as possible given that this is what is needed to give industry absolute clarity.” One Holyrood official said the bottle deposit scheme was “wholly within devolved competence and approved by the Scottish parliament in 2020 with cross-party support”. Scottish ministers have been planning the DRS for years, with Lorna Slater, the green minister, calling it a “massive national undertaking”, involving 4,000 producers, 10,000 “takeback” machines, and 2bn drinks containers. The rest of the UK is planning its own bottle deposit scheme, but that will not start for another two years – and England will exempt glass bottles. In the intervening two years, separate barcodes will be needed for Scottish drinks to prove where they were bought. Senior SNP politicians have expressed doubts about the plans, including all three of the party’s leadership candidates. Humza Yousaf has suggested he would exclude small businesses in the scheme’s first year of operation. His main rival, Kate Forbes, has said the scheme would cause carnage for businesses. Ash Regan has said she would scrap the scheme in its current form. Nevertheless, the Scottish government is pressing ahead with the plans, and this month it asked for an exemption from the UK Internal Market Act, which was passed in 2020 to replace the European single market and make sure goods continue to move freely around the UK. The importance of the exemption is disputed. Supporters of the bill recently commissioned a legal opinion from Stuart MacLennan, a professor of law at Coventry, which said the scheme could operate without one. UK ministers believe the exemption is needed for the scheme to apply to the 85% of drinks sold in Scotland that are made elsewhere. Some experts believe that without the exemption the entire scheme would be illegal. Kat Jones, the director of the Association for the Protection of Rural Scotland, said: “We know that there has been a lot of work behind the scenes between UK government and the Scottish government officials to establish how the Scottish systems can operate most effectively in a UK context, and so this intervention from the secretary of state feels like an attempt to disrupt deposit return.”