Scotch whisky: US tariffs

Gavin Newlands Excerpts

Thursday 30th January 2020 Westminster Hall

[Gavin Newlands (Paisley and Renfrewshire North) (SNP)]

It is a pleasure to serve under your chairmanship, Ms Buck. I congratulate the right hon. Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell) on securing the debate. It is good to see him making the most of his release from the clutches of the ministerial machine and giving us an opportunity to debate this vital issue.

UK Governments of both shades have for far too long viewed whisky simply as a cash cow to top up the Exchequer’s coffers. I welcome the fact that the Government have started to listen to the industry in the past couple of years and have delivered a freeze, but more must be done.

There are more direct and indirect whisky industry jobs in my constituency than in any other in Scotland. That assertion has not been challenged in the nearly five years since my election in 2015, and I think I stand on very solid ground in making it. I have Diageo at Shieldhall and Blythswood; Chivas at Paisley for the time being, until it is moved to Kilmalid in the summer; the Glasgow distillery in Hillington, which I share with my hon. Friend the Member for Glasgow South West (Chris Stephens); and logistics jobs at many haulage firms across Renfrewshire. Trump’s tariffs, following a Boeing-Airbus trade dispute that is wholly unrelated to Scotch whisky, are putting the jobs of my constituents and hundreds of others across Scotland at risk.

The Scotch whisky industry is a modern, efficient, high-value industry that marries tradition with modernity in a way that is rare—in many ways unique. It has brought increasing success and economic benefits to Scotland. As has been said, new distilleries are opening and former ones are coming out of mothballs to come on stream and meet the demands of an industry that has been a roaring success over the past years. I am deeply concerned that, with Trump’s re-election campaign looming, those jobs will be collateral damage in the pursuit of electoral college votes, and that further harm will be wreaked not just on the economy as a whole but on local economies such as my constituency and those of many of my hon. Friends, and indeed hon. non-Friends—[Interruption.] “Non-Friends” is better.

One example of the impact of the sudden imposition of tariffs and the stark possibility of further tariffs being levied on single malt or blended Scotch comes from the aforementioned Glasgow Distillery. In October, a large retailer in the US agreed to take on board its Glasgow 1770 single malt, to be launched this June. It was a planned investment of more than £100,000 to enter the US market, and would have included taking on extra staff and doubling its distillery capacity over the year to help with anticipated demand from the US, at the cost of a further £500,000. Less than 24 hours after the deal had been agreed, the Trump Administration put in place the 25% tariff. The distillery’s plans for its US launch are now on ice until that is resolved, particularly given the threat of a 100% tariff on all Scotch whisky hanging in the air. It also planned to launch a blended malt in March-April, which would allow it to enter the US market with a product not included in the tariff, but it needs clarity on the second tranche of tariffs to plan with any certainty.

I worry that the UK Government, despite some warm words, are doing little to mitigate the impact of Trump’s tariffs. As has been mentioned, excise duty on Scotch whisky remains among the highest in the world. Domestic demand is flattening at the same time as the US tariffs are affecting demand across the Atlantic. We need a root-and-branch review of taxation on alcohol to look at the balance to be struck between protecting public health and tackling alcohol abuse, and ensuring that a quality industry such as Scotch whisky and booming sectors such as gin distilling—a massive growth industry in Scotland and elsewhere—is taxed fairly in a way that supports employment.

The UK Government must ensure that jobs in my constituency, across Scotland and right across the UK—the industry has a wide supply chain across the UK—are not sacrificed in their desperation to secure a trade deal. The kamikaze Brexit that they support but that Scotland most certainly does not begins to take effect tomorrow night. Scottish National party Members and many others have consistently warned the UK Government of the real and substantial economic impact that Brexit would have on our trading relationships with the rest of the world. Trump’s tariffs are evidence of that. I call on them—as I hope colleagues from all parties will—to put our modern, productive whisky industry near the top of their list of priorities for the coming months and years.