Scotch Whisky Industry

Debate between Priti Patel and Peter Bottomley

Thursday 12th February 2015 Commons Chamber

[The Exchequer Secretary to the Treasury (Priti Patel)]

I congratulate the hon. Member for Argyll and Bute (Mr Reid) on securing this debate, and I thank him for the constructive points he has raised today. Anyone who has enjoyed a dram will recognise the historic whisky producing names in his constituency. Islay and Jura in the hon. Gentleman’s constituency has some of the finest malt whiskies in the world, and that is something that we should all commend, celebrate and be proud of. The world-famous whiskies and distillery experiences on offer are also key contributors to the tens of thousands of visitors who come over every year. I absolutely understand the significance of tourism in his constituency thanks to the whisky industry, which translates into jobs.

There is no doubt, as we have heard from both the hon. Member for Argyll and Bute and the hon. Member for Paisley and Renfrewshire North (Jim Sheridan), about the wider economic benefits of Scotch whisky to the Scottish and British economy. They are significant and have also been highlighted in the report by the Scotch Whisky Association. It is only fair and right that I should pay tribute to everybody who has spent time engaging with me, including all hon. Members in the Chamber this afternoon and the all-party group. In particular, I thank them for highlighting that Scotch whisky is the biggest food and drink sector in the United Kingdom, representing nearly a quarter of our food and drink exports.

The industry supports, both directly and indirectly, more than 40,000 jobs, 92% of which are in Scotland. The significance of the industry is phenomenal, with a contribution of in excess of £3 billion directly to UK GDP, and an overall impact of £5 billion.

Distilleries and visitor centres add an additional £30 million to the Scottish tourism industry every year. Of course, this is also about the tremendous image that the industry presents of both Scotland and the United Kingdom across the world. The hon. Member for Argyll and Bute talked about the export markets, and in particular the work of UK Trade & Investment, the work we do across Government to ensure that Scotch whisky is a major economic asset to Scotland and the UK, and why it is important that we keep it in its unique position.

For example, we have introduced the spirits verification scheme to protect the integrity and high reputation of Scotch whisky brands in the export market, which is where 90% of Scotch whisky ends up. It is about having high standards and setting standards on production and labelling for producers to sign up to. That particularly helps with non-compliance in the industry, ensuring that those who buy Scotch get the real deal. That is of course a step change and we have worked in conjunction with the SWA. The hon. Gentlemen will be very familiar with that work. Of course, UKTI has an important role to play in supporting Scotch whisky across our worldwide network of embassies and in bringing it to new and emerging markets, from Lebanon to India to Taiwan, all of which have seen exports increase by more than a quarter in the past year alone.

The hon. Member for Argyll and Bute was right to talk about the lobbying on the abolition of the hated duty escalator in the Budget last year. I campaigned for that myself, so I am familiar with the campaign. Of course, it demonstrates that we should not punish a successful, world-famous industry with excessive taxation. The all-party group on Scotch whisky and spirits has been very good in its representations and I thank it for that. It is fair to say that although I am naturally not in a position to discuss anything to do with the Budget at this stage, I have heard clearly from all Members this afternoon the arguments that have been made about the level of taxation on whisky, particularly when compared with other alcoholic drinks. Those points have come out in my meetings with stakeholders and the industry, too.

[Sir Peter Bottomley (Worthing West) (Con)]

I speak not as a producer but as a drinker of whisky, as are many of my constituents. The archivists at HMRC and the Treasury might be able to dig out the meetings some of us had with the then Chancellor, my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke), back about 19 years ago, when he was convinced that it was better not to increase and to drop the whisky duty. That led to an increase in revenue, so was fair to drinkers, to producers and to the Revenue, which seems to be a sensible thing to do, and we look forward with confidence to the Budget.

[Priti Patel]

I thank my hon. Friend for his recommendations and advice to go back and look in the archives. I shall certainly do that.

I need no persuading of the considerable impact that the industry brings to Scotland and the United Kingdom. Obviously, all decisions on taxation are under constant review, and we are particularly receptive to helping industries flourish in some of our most remote regions. As I have said, decisions on the duty will be made by the Chancellor at the Budget, and I do not wish to pre-empt anything in relation to the Budget. We want to ensure that Scotch whisky continues to be enjoyed around the world for many years to come, and we want Scotch whisky to continue to be a great flagship brand.

Question put and agreed to.

Beer Duty

Debate between Priti Patel and Peter Bottomley

Thursday 5th February 2015 Commons Chamber

[Priti Patel]

Of course, the answer is yes to the delegation. My hon. Friend is right that the wine industry makes an enormous economic contribution. Earlier, he referred to English wines. I speak proudly as the Member of Parliament for Witham as I, too, have a good vineyard in my constituency. The wine sector is to be supported and commended as well. I will take him up on his offer; he is very welcome to come and meet me at the Treasury.

As my hon. Friend the Member for Burton pointed out, the previous Government’s beer duty escalator hit the industry hard. It led to pub closures and cost people their jobs. Of course, we have made changes to the escalator. In recognition of what happened in the past, we went on to cut tax on a typical pint of beer by one penny at Budget 2013 and another penny at Budget 2014. I am delighted that he celebrates the fact that the duty on a typical pint of beer is now 8p lower than under the previous Government’s plan. According to the British Beer and Pub Association, the jobs of 16,000 people have been secured by our duty cuts, and for them the duty cuts have been fundamental to their livelihoods. The duty cuts have also boosted confidence in the brewing and pub sector and, importantly, they have led to greater investment and greater economic security when it comes to jobs.

Research for the British Beer and Pub Association estimates that an additional 186 million pints will be sold in the on-trade this year as a result of our beer duty cuts. To meet that increase, it estimates that there has been a 12% rise in investment—in monetary terms, an additional £44 million—in the sector in the last year directly as a result of the cut in duty. According to a recent survey, 86% of its members are planning to increase their investment in the UK. That strengthens our economic case, and shows that we are serious about supporting the pub sector.

As my hon. Friend said, nearly two thirds of all the alcohol sold in pubs is beer, but other drinks are important to pubs. To ensure that help is extended to pubs that have diversified away from beer, at Budget 2014 we froze duties on spirits and ordinary cider. Of course, we ended the escalator on wine as well; I am somewhat familiar with the campaign in favour of that.

Pubs are benefiting from the wider changes that the Government have made to support business. Three quarters of pubs are benefiting from a £1,000 reduction in their business rates this year. The reduction will rise to £1,500 next year. We have extended the doubling of small business rate relief to April 2016, which, as my hon. Friend knows, will particularly help the eight out of 10 pubs run as individual small businesses. Pubs will benefit from our national insurance changes. The £2,000 employment allowance has reduced employer national insurance contributions for all businesses. Pubs will also benefit from the reduction in employer NICs for young people, which is particularly important because 46% of the people employed in pubs are aged between 18 and 24. We have introduced regulatory changes to make it easier for pubs to play live music, and to allow beer and wine to be served in glasses of different sizes.

As I am sure my hon. Friend will know, there is no such thing as a typical pub. There are as many different types of pub as there are types of customer, so pubs should have the flexibility to meet customers’ needs. It is fair to say that customers want reasonably priced drinks, naturally, and I am glad to say that our duty cuts are translating directly into more beer for your buck. Beer prices in the on-trade are rising at their lowest rate for more than 25 years: 96% of British Beer and Pub Association members have said that they plan to reduce or freeze their prices as a result of our policies. That is fantastic news for the 32 million people in the UK who drink beer each year; incidentally, that is more than the number of people who voted in the last general election.

Our customers want choice. It is great news that more than three quarters of respondents to the British Beer and Pub Association survey intend to launch new products directly as a result of the cut in beer duty. Small brewers relief has reduced the beer duty paid by micro-brewers by up to a half. That has encouraged new micro-breweries to be set up and to expand. There are now 1,000 more breweries in the UK than in the year before small brewers relief was introduced.

I am particularly interested in how we can do more to help those industries, because there are many associated benefits from having more thriving breweries, not just in exports, but in the tourism offer, as my hon. Friend has said.

[Sir Peter Bottomley]

Regional brewers also matter. Will my hon. Friend allow me to pay tribute to Hall & Woodhouse, which is one of the many? It set up the community chest in Dorset and West Sussex, which gives grants to good organisations. Not all of the organisations are run in the pubs, but the pubs and brewers want to support them.