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The Minister for Food Security and Rural Affairs (Daniel Zeichner)
It is a pleasure to serve with you in the Chair, Dame Siobhain. I thank the hon. Member for Moray West, Nairn and Strathspey (Graham Leadbitter) for securing the debate and providing such an excellent and thorough introduction. I commend my hon. Friends the Members for Paisley and Renfrewshire North (Alison Taylor) and for Livingston (Gregor Poynton) on their contributions. I am sure that they will all be delighted to hear how much I enjoyed my visit in the summer to the Glendronach distillery in Aberdeenshire.
The Government recognise and celebrate the global success of the Scotch whisky industry, which is of historical and cultural significance and plays a huge role in the UK’s economy and balance of trade. In 2023, exports of Scotch reached almost £6 billion in value. That success comes from the industry’s well-earned reputation for quality and high standards, and we are committed to working with the industry to champion and protect that reputation.
Douglas McAllister
The Scotch whisky industry supports 41,000 jobs across Scotland, many thousands of which are in my West Dunbartonshire constituency, including at Chivas Brothers in Dumbarton and Auchentoshan in Clydebank. The October Budget backed Scottish whisky, introducing measures called for by the industry, and I welcome the Government’s move to address long-running discrepancies in the treatment of the Scotch whisky industry by ending duty stamps, and to reduce and deliver parity in the fees for the spirit drinks verification scheme. Can the Minister share when details of that very positive announcement on reduced fees will be confirmed?
Daniel Zeichner
I will come to the Budget measures in a moment, but first I endorse my hon. Friend’s point about the number of jobs the industry supports—41,000 in Scotland and a further 25,000 across the rest of the UK, many in rural areas.
Collectively, whisky distilleries are now Scotland’s most visited tourist attraction, bringing in thousands of domestic and international tourists every year, largely to rural areas, and creating many opportunities for employment. Whisky is also a hugely important trade good. In 2023, the equivalent of 53 bottles of Scotch every second were sold overseas. That is important to delivering growth at home, which is why we are committed to supporting the Scotch whisky industry to export its fine products to overseas markets. We do that by leveraging free trade agreements and removing barriers to market access across the world. We are currently working on no fewer than 29 markets.
Wendy Chamberlain
It is important that we recognise, particularly when we look at the US, that exporting Scotch is not the only challenge. The Scotch whisky industry needs ex-bourbon casks to produce the whisky we all know and love. Does the Minister agree that the Government need to ensure that conversations with the US Administration take place? Otherwise, our supply will be impacted.
Daniel Zeichner
I am grateful to the hon. Lady. We are well aware of the importance of those casks to the industry and their value.
As well as working with Governments overseas to increase market access, we work closely with the industry at home to catalyse its ability to reach export potential. We offer a wide range of support for businesses that want to start exporting or to expand into new markets, as well as a compelling programme of trade shows and events to support Scotch whisky exporters to access new markets, build buyer connections and increase marketing in target countries. We also have a network of international trade advisers offering one-to-one support across England, and teams with embedded sector expertise in Scotland, Wales and Northern Ireland. Overseas, we have a network of trade advisers and international market teams supporting agriculture and food and drink businesses in more than 100 markets, supplemented by a network of 15 highly skilled agricultural attachés focusing on removing trade barriers in key markets. We are aware of the challenges faced by Scotch whisky in international markets and we work closely alongside their representatives.
Officials across Government are working on trade deals and breaking down export barriers to ensure that Scotch whisky is traded on a fair playing field and has opportunities to grow in new and expanding markets. An important part of that work is securing geographical indication status in major export markets, to add to Scotch whisky’s domestic protection. The status is a special form of protection that defends the iconic product from imitation and counterfeiting. Last August, the Government were pleased to announce our role in securing this form of protection in Brazil, a country which is in the top five global growth markets for alcohol, and is worth almost £900 million in Scottish exports.
In the Budget a firm commitment was made to support spirits producers by, among other measures, investing up to £5 million in the spirit drinks verification scheme, which will reduce the fees paid by businesses for verification of their use of the Scotch whisky geographical indication, and go towards upgrading the overall verification scheme the Government provide. The specifics on how the funding will be used to improve the service will soon be announced by His Majesty’s Revenue and Customs.
Mr Angus MacDonald (Inverness, Skye and West Ross-shire) (LD)
The share price of Diageo is down by two thirds, that of Pernod Ricard has halved—the whisky industry is in a difficult place. In the Budget, the duty added to a normal bottle was 32p, taking the total duty on a bottle of spirits up to £9.18. Does the Minister not think that we are plucking the golden goose once too often?
Daniel Zeichner
I hear those concerns. We are addressing a whole range of financial issues across the economy, and we think this is a fair and balanced approach.
To continue outlining some of the measures that we have taken to support the industry, we have announced measures to reduce business costs and encourage growth. We will be doing away with the alcohol duty stamp scheme from 1 May. About 3,500 spirits producers, bottlers and labellers will no longer need to comply with the duty stamp requirements, saving an estimated £6.5 million annually.
We will also simplify the administration of alcohol duty, reducing burdens and supporting growth. From March 2025, HMRC’s arrangements for duty returns and payments will be reformed, supported by a new online service. Additionally, reform of the production approvals required by spirits producers means that many will no longer be required to operate separate excise warehousing facilities for the storage, bottling and labelling of their own products.
The industry has always been innovative in sustainability practices. That is reflected in the strategy developed by the Scottish Whisky Association, supported by the UK Government as we strive to develop a more circular economy. The strategy involves a number of packaging reforms, such as the deposit return scheme and extended producer responsibility. We genuinely believe that this partnership working toward a common outcome will help us all to achieve wider sustainability goals.
We are aware that some distilleries in Scotland have struggled in recent years with delays and limitations to connection with the national grid, creating a barrier to growing their businesses. Reducing electricity network connection timescales and expanding network capacity to connect and to power businesses are both top priorities for the Government. We are working closely with Ofgem and the National Energy System Operator to accelerate network connections. The newly announced mission control for clean power 2030, alongside planning reforms to speed up infrastructure development, will play a vital role in unlocking grid connection delays for Scotch whisky distilleries, especially those in rural areas.
I thank the hon. Member for Moray West, Nairn and Strathspey again for securing this debate. In the contributions today, we have heard Members’ passion for this vital and important industry in Scotland and the wider United Kingdom. We have also demonstrated the strong support the UK Government are giving the Scottish whisky industry by listening to and acting on the industry’s concerns, and by working collaboratively toward common goals.
Question put and agreed to.