Chancellor George Osborne has been urged by Alan Reid MP to cut the duty on Scotch whisky by two per cent in his final budget before the general election in May. With 14 distilleries in his Argyll and Bute constituency the LibDem MP said the cut in duty would boost the economy.
Mr Reid called for the tax-cut when he introduced a debate in the Commons (on Thursday 12 February) on the contribution of the Scotch whisky industry, following a new report, by the economic advisers 4-consulting, on the economic impact of Scotch Whisky production in the UK.
He told the House that whisky is bigger than the UK's iron and steel, textiles, shipbuilding or computer industries, it provides 40,000 jobs directly and indirectly across the UK, 7,400 of which are in Scotland's rural communities.
"Scotch whisky is the UK's largest food and drink sector accounting for a quarter of the UK's food and drink exports; it adds £3.3 billion directly to the UK GDP and once indirect jobs are taken into account, its total impact is to add almost £5 billion to the UK economy," said Mr Reid, "every pound of value added in this industry produces an additional 52 pence of value in the wider economy."
"The whisky industry provides jobs in remote communities where alternative work would be hard to find," said the Argyll and Bute MP. "With eight distilleries whisky is clearly very important to Islay. On Jura, with its small population the island's distillery is a vital part of the economy. There are also distilleries in Campbeltown, Oban and Tobermory which contribute significantly to the economies of those communities."
"But a bottle of whisky is taxed at 80 per cent. Most people are shocked when they become aware of that statistic and agree that it is far too high,” said Mr Reid.
Last year when the Chancellor abolished the alcohol duty escalator and froze the duty on whisky there was a small boost to the volumes of single malts sold at the end of the year, suggesting that the duty freeze had resulted in industry growth. Mr Reid called on the Chancellor to go one step further this year and cut tax by two per cent.
"I hope this afternoon's debate has shone a light on this unfair treatment of an iconic Scottish and British product and its vital contribution to our economy," said Mr Reid, ending his speech,"slàinte mhath".
Treasury Minister Priti Patel MP, said in reply to Mr Reid, “The hon. Member for Argyll and Bute was right to talk about the lobbying on the abolition of the hated duty escalator in the Budget last year. I campaigned for that myself, so I am familiar with the campaign. Of course, it demonstrates that we should not punish a successful, world-famous industry with excessive taxation.”
Mr Reid made the following points during the debate.
- The whisky industry spends £1.8billion annually on supplies from Britain.
- If it wasn't for whisky, the 2013 trade deficit would have been 16 per cent larger.
- Ninety per cent of the industry's operating expenditure is spent with UK suppliers; packaging from Wales, yeast from Staffordshire, glass from Yorkshire and logistics from Essex as a result, Scotch whisky supports over 40,000 jobs directly and indirectly across the UK.
- The highly skilled jobs within the whisky industry see its workers the third best paid in Scotland, only behind energy and life sciences.
- Whisky is about half the size of the UK's pharmaceutical or aerospace industries and about a third of the size of the entire UK car industry.
- The UK is the third largest market for Scotch whisky yet the domestic trade has been in decline in recent years - a particular obstacle for the new and small-scale distillers who rely on a thriving domestic market to grow and they claim the current duty regime is damaging their prospects.
- Cash flow in the whisky industry is very unusual; whisky has to mature in a cask for many years before it can be bottled, investors have to wait for many years to get their money back, so confidence in the future is vital before they will invest.
- Excise duty on Scotch whisky is now 44 per cent higher than it was in 2008.
- Speaking after the debate, Mr Reid said, “I was pleased to hear a Treasury Minister say that a successful industry should not be punished with excessive taxation and so I hope the Chancellor will cut duty by 2% in the Budget.”
Read Alan Reid's article on the debate for PoliticsHome at: https://www.politicshome.com/energy-and-environment/articles/opinion/house-commons/alan-reid-mp-uk-economy-rocks-scotch-whisky