THE Scotch Whisky Association (SWA) has said the Chancellor’s decision to further increase alcohol duty has broken the Prime Minister’s commitment to "back Scotch producers to the hilt".
In a visit north of the Border last year, Keir Starmer had said: “Labour will put growth at the heart of our government and back Scotch producers to the hilt.”
Scottish Labour leader Anas Sarwar was also left red-faced after telling reporters last month that he and Rachel Reeves had spoken "specifically about the whisky industry in Scotland" and "the soft power of Scotland and selling brand Scotland in terms of our trade opportunities," adding "that’s something that she accepts and respects”.
However, in her first Budget, Reeves announced that alcohol duty rates on non-draught products will increase in line with RPI from February next year.
However, duty on draught products — or pints pulled in pubs — will be cut by 1.7%, meaning “a penny off a pint in the pub”, she said.
The latest hikes to duty on wine and spirits, including whisky, follow increases in August last year that were the largest in almost 50 years, adding 20% to excise duty on more than 85% of all wines on the UK market and more than 10% to duty paid on full strength spirits.
The SWA had previously called on the new Chancellor to take the opportunity to reverse the 10.1% increase, and SNP MPs representing key whisky-producing areas in the north east also raised concerns that an increased excise duty was having a negative impact on both the industry and the public purse.
That letter was also signed by Scottish Labour's Douglas McAllister, LibDem MP Wendy Chamberlain, and Tory MP Andrew Bowie – who was a minister in the UK Government when the excise duty came in.
Chief executive of the Scottish Whisky Association Mark Kent said: "This duty increase on Scotch whisky is a hammer blow, runs counter to the PM's commitment to 'back Scotch producers to the hilt' and increases the tax discrimination of Scotland's national drink.
"On the back of the 10.1% duty increase last year, which led to a reduction in revenue for HM Treasury, this tax hike serves no economic purpose.
"It will damage the Scotch Whisky industry, the Scottish economy, and undermines Labour's commitment to promote 'Brand Scotland'.
"She has also increased the tax discrimination of spirits in the Treasury's warped duty system, and with 70% of UK spirits produced in Scotland, that will do further damage to a key Scottish sector."
His words come after the UK Spirits Alliance (UKSA), which represents more than 280 distilleries and micro-businesses across the UK, described the duty increase as a “kick in the teeth”.
The whisky industry has been warned that further tax hikes will not deliver the revenue ministers have been promised but will hurt businesses, the hospitality sector and hard-pressed consumers.
Alcohol duty is paid by manufacturers when they make their products, and the duty is generally passed onto consumers by manufacturers, but product price increases are at their discretion.
Moray West, Nairn and Strathspey MP, Graham Leadbitter, who is also a Vice-Chair of the APPG on Scotch Whisky, said the move “defies common sense, independent analysis, and Labour’s own promises” before warning it would “come back to bite them.”
Leadbitter said: “What Keir Starmer and Rachel Reeves have signalled today is that Labour’s word means nothing.
“In opposition they were happy to appear for photo-ops and make grand promises to support the sector, but now they’re in government they haven’t just turned their backs on Scotch Whisky - they’ve slammed the door on the industry.
“This is a move that defies common sense, independent analysis, and Labour’s own promises - and it’ll come back to bite them.
“Analysis has proved that when whisky duty is raised, Treasury receipts fall and the industry suffers.
He added: “Successive Westminster governments have had the Scotch whisky industry over a barrel, and now it appears it’s Labour’s turn to hold back one of Scotland’s key industries and world-class exports.
“I represent some of the finest Scotch whisky brands in the world, whose success has come from, in some cases, literal centuries of crafting and perfecting incredible products. They’re now being held back by a Westminster tax regime that simply sees the industry as a cash cow.
“The SNP recognise the importance of Scotch Whisky and its role in our economy, history, and our presence on the world stage - we’ll stand against these damaging proposals.”
