Companies owed more than £70million from the SNP and Green government’s “mishandling” of a failed recycling scheme will get only a fraction of their money back.

The administrators of Circularity Scotland, the company set up by ministers to run the bottle and can recycling initiative, has confirmed to The Times that the prospects for unsecured creditors are bleak. The Scottish National Investment Bank (SNIB), which is funded by public cash, has received back only £1million of the £9 million it had lent to Circularity Scotland.

An update lodged at Companies House by Interpath, the administrators, shows that at the end of last year there was only about £850,000 still to be distributed to creditors of the deposit return scheme (DRS).

As a secured creditor, SNIB will be in line to get some of that but “will not recover its indebtedness in full”, according to Interpath. Another six-figure sum may become available if a VAT refund can be agreed with HM Revenue & Customs.

Lorna Slater, the minister in charge of DRS, had hoped the initiative would encourage greater recycling of items and reduce litter. The plan was to levy an additional 20p charge on cans and bottles with the money refunded when the containers were taken to a designated return point.

It eventually collapsed last June when Slater announced that Holyrood would not comply with caveats to exclude glass which had been asked for by Westminster. Circularity Scotland went into insolvency a few weeks later with the loss of dozens of jobs.

Murdo Fraser, from the Scottish Conservatives, said: “All of this could have been avoided if Lorna Slater had listened to the numerous warnings from business, rather than obstinately ploughing ahead when it was clear her plans were falling to pieces.”

SNIB confirmed it had received a £1 million payment from the administrators while Biffa declined to comment.

A spokesman for the Scottish government said: “The administration process is a matter for [Circularity Scotland’s] board and its administrators.”

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