THE Labour Government has been challenged to “make good” on Keir Starmer’s promise to “back Scotch producers to the hilt” after analysis suggested that high taxes on whisky are actually costing the Treasury money.
In a letter to Chancellor Rachel Reeves ahead of the Labour Government’s first Budget, SNP MPs representing key whisky-producing areas in the north east raised concerns that an increased excise duty was having a negative impact on both the industry and the public purse.
“The 10.1% increase in excise duty last year has hit Scotch whisky producers in both of our constituencies incredibly hard,” SNP MPs Graham Leadbitter and Seamus Logan wrote.
“This not only affects domestic consumption, but also impacts key foreign markets. As a result, analysis done by the Scottish Whisky Association has shown that duty revenue received by the Treasury has decreased by £298 million a year after the increased excise duty was introduced.”
Leadbitter represents Moray West, Nairn and Strathspey at Westminster, while Logan holds the Aberdeenshire North and Moray East seat.
Leadbitter has also signed a similar letter to the Chancellor co-ordinated by the Scotch Whisky All-Party Parliamentary Group (APPG) which also raised concerns about the whisky excise duty.
It said: “You have been clear that your guiding principle will be to follow 'securonomics’. The evidence has shown last year's increase in duty on Scotch has resulted in less tax revenue, fuelled inflation, and hurt businesses across the UK.
“We know that stability for the sector has consistently allowed growth and investment that brings more money into the government. Backing Scotch whisky in the Budget is the right decision in delivering the economic growth and stability we all want to see.”
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.
🚨 There is now cross-party consensus on the need to #SupportScotch in the @hmtreasury Budget Office bearers of the #ScotchWhisky APPG @wendychambLD @AndrewBowie_MP @GrahamSNP @Labour_Douglas have urged @RachelReevesMP to “back one of our great industries” 👇 pic.twitter.com/1IkpTO4rhG
— Scotch Whisky Association (@ScotchWhiskySWA) October 17, 2024
In their own letter, the SNP MPs went on to raise further concerns that, from January 1 2025, Scotch whisky producers “will pay three different taxes per bottle: £8.86 duty, 20% VAT, and Extended Producer Responsibility (estimated at around £0.15 per bottle)”.
“The cumulative burden of three separate taxes on each bottle of Scotch whisky sold must also be taken into consideration by the UK Government in the upcoming Budget.”
Leadbitter pointed to Prime Minister’s Keir Starmer’s words, from November 2023, when he said on a visit north of the Border: “It's clear Scotland’s whisky industry isn't getting the stability it needs from the Tories and the SNP.
“Labour will put growth at the heart of our government and back Scotch producers to the hilt.”
Hearing from staff at @InchDairnieDist, it's clear Scotland’s whisky industry isn't getting the stability it needs from the Tories and the SNP. Labour will put growth at the heart of our government and back Scotch producers to the hilt. pic.twitter.com/XaFutlO5wa
— Keir Starmer (@Keir_Starmer) November 16, 2023
Leadbitter said it was now time for Labour to “make good on their promises”.
He went on: “I’m fortunate enough to represent some of the finest Scotch whisky brands in the world, but the potential of their world-class products are being hindered by the UK Government’s over-regulation and Westminster-centric policy making.
“I’d invite anyone from the UK Government involved in the regulation of whisky to visit my constituency and see for themselves the damaging impact their policy has on the producers and people based here.
“If Scotch whisky is to thrive and meet its potential, at home and abroad, while also providing a source of income to the Treasury, the UK Government has to reevaluate the burden placed on the industry.”
Logan added: “It beggars belief that the Conservatives slapped an eye-watering 75% tax on bottles of Scotch whisky which support more than 40,000 jobs in Scotland.
“The Tory whisky tax held back growth in this globally renowned industry and punished local distilleries for paying billions into the Treasury’s coffers.
“The question for the new Labour Government now is; will they persist with the Tory Whisky Tax or take the opportunity to support this important Scottish industry?”
A UK Government spokesperson said: “We’re committed to supporting businesses, including Scotch whisky producers, through capping corporation tax at 25% and publishing a business tax roadmap so that future investments can be planned with confidence.”
