‘Deep disappointment’ at how Tories treat one of Scotland’s largest and longest-standing industries!

By stewartb

I see the Scotch Whisky Association (SWA) is having a go at the Tory government following the Chancellor’s Budget announcements! This is quite a change of tune: the SWA has been fulsome in its praise of the Tory government for trade deals post-Brexit – including the one with Australia condemned by many farmers. The SWA is clearly not happy with the Chancellor but what of the Tories in Scotland, what is the SWA’s view of the party’s ‘influential’ leader, Douglas Ross? Might we see an end to cringe-worthy photo ops for Tory politicians at SWA members’ distilleries – at least for a while?

The SWA’s website today sets out its complaint (https://www.scotch-whisky.org.uk – with my emphasis):

‘The Chancellor’s Spring Budget breaks the government’s pledge to “ensure the tax system is supporting Scottish whisky”

‘The Scotch Whisky Association (SWA) has slammed the decision by the Chancellor to raise duty on Scotch Whisky by 10.1%, in one of the largest tax hikes in recent decades, and further increase the competitive disadvantage faced by spirits – breaking the UK government’s pledge to “review alcohol duty to ensure our tax system is supporting Scottish whisky.”

On the breaking of a ‘pledge’, we get this background: ‘In the Queen’s Speech following the 2019 General Election, the UK government announced the review and promised to “review alcohol duty to ensure our tax system is supporting Scottish whisky and gin producers and protecting 42,000 jobs supported by Scotch across the UK.’

Noting more on what the Tories ‘pledged’: “…. over the past two years we have frozen the duty on spirits, cutting the price of a bottle of Scotch by 30p. Now, we want to do more, which is why we will review alcohol duty to ensure that our tax system is supporting British drink producers.”

On the latest budget decisions, the SWA explains: ‘The duty rate on spirits will rise to £31.64 per litre of pure alcohol, meaning that of the £15.22 average price of a bottle of Scotch Whisky, £11.40 is collected in taxation through duty and VAT. The tax burden on the averaged priced bottle of Scotch Whisky has risen from 70% to 75%. ‘

‘The SWA had called on the UK government to continue the freeze announced by the UK government back in December. Instead, HM Treasury has further added to the UK tax burden on the Scotch Whisky industry in the UK which is already the highest among the G7 developed economies.’

Then there is this quote from Mark Kent Chief Executive of the SWA now playing his ‘Scottish card’: ‘We have been clear with the UK Government that increasing duty would be the wrong decision at the wrong time, so it is deeply disappointing that one of Scotland’s largest and longest-standing industries has been treated in this way.’

And the challenge to Mr Ross and the other Tory MPs with seats in Scotland: “Now that the Chancellor has chosen to increase tax on Scotch Whisky, we call on all MPs to reject this unjustifiable tax hike in the Finance Bill and clearly demonstrate their support for the Scotch Whisky industry.”

We also learn this from the SWA website: ‘Leader of the Scottish Conservatives and MP for Moray Douglas Ross has previously called tax increases on the Scotch Whisky industry “counter-productive” and recognised that “duty freezes on spirits have increased government revenue when Treasury forecasts have predicted the opposite.”

In a previous statement, dated 17 February 2023, the CEO of the SWA said: ‘“Unlike other parts of the alcohol industry, distillers have been left out in the cold and unable to access the government’s business energy relief scheme, so any rise in duty would further compound the pressures they currently face in paying rising energy costs.’

On 17 October 2022 we read this in an article in The Northern Scot (https://www.northern-scot.co.uk/news/hunts-alcohol-duty-u-turn-will-hurt-moray-economy-say-polit-290803/ )

‘Drinks industry tax cuts, including a freeze on alcohol taxes and increased duty-free shopping, will be scrapped after new chancellor Jeremy Hunt announced budget measures early today (October 17). The U-turn comes less than a month after ex-chancellor Kwasi Kwarteng announced the tax cuts for drinks manufacturers.’

In that article, Mark Kent, chief executive of the SWA is quoted: “Business can only work on the basis of certainty and stability. That has been stripped from the Scotch whisky industry following the Chancellor’s decision to u-turn on the duty freeze for Scotch whisky announced just over two weeks ago.”

The same newspaper article notes that: ‘Scottish Conservative MP for Moray and MSP for Highlands and Islands Douglas Ross previously welcomed the tax cuts, and has suggested scrapping them “could be counter-productive”.

He said: “The Government has had to look at all measures to restore confidence and security in the economy and the markets, but it seems some of the decisions, like on spirit duty, could be counter-productive. I know that duty freezes on spirits have increased government revenue when Treasury forecasts have predicted the opposite and I am making these points to the new Chancellor.”

The Northern Scot piece told us back in October 2022: ‘At the time of the mini budget’s announcement, Moray MP Douglas Ross said: “I will be raising a glass at his (Kwasi Kwarteng’s) decision to cancel the planned rise in duty on scotch whisky. That is extremely welcome for such an important industry for Moray which provides so many jobs and will also help support hospitality businesses in this area as well.”

So two questions, one minor and tactical and one major and strategic:

• how will Messrs Bowie, Duguid, Jack, Lamont, Mundell and Ross respond in upcoming Commons votes on the Finance Bill ? – I suspect the issue won’t trouble Mr Jack too much; and
• what will it take for the SWA and its members to realise their interests are marginal to those of Westminster governments but, because of the industry’s size and economic importance, they would be core to those of a Holyrood government in an independent Scotland? –  not least a government wishing to reinstate the benefits to trade the SWA once claimed it had whilst within the European Union AND one that could ensure domestic industries have stability and certainty over access to less expensive renewable energy.