Support for the Scotch Whisky Industry

Wendy Chamberlain Excerpts

Wednesday 12th February 2025 Westminster Hall

[Graham Leadbitter]

Absolutely. As I have mentioned, 43 bottles of whisky are exported every second—that will be 75,000 bottles of whisky by the time we have finished this debate. That is a phenomenal export contribution not just to Scotland’s economy, but to the wider UK economy at the moment. I welcome the efforts made by the UK Government in the area of trade; the question is whether more can be done, and whether those efforts can be made more quickly.

[Wendy Chamberlain (North East Fife) (LD)]

It is right to give credit to the UK Government for some of the work happening on exports. However, does the hon. Member agree that the changes that the previous Government made to spirits duty, which this Government have refused to change, mean that the Treasury is losing out on money by not treating alcohol as alcohol across the different categories?

[Graham Leadbitter]

Absolutely. That is another point that I will expand on in a bit more detail shortly.

We must continue to strengthen our trade relationships. While this debate is rightly focused on UK actions, it will not have bypassed hon. Members that there has been significant media comment on tariff actions taken by the US Administration in recent weeks, and on what potential future actions may be taken. Combined with global headwinds affecting the wider luxury brands market, it has unsurprisingly generated comment and speculation, both from within the sector and elsewhere. Maintaining a watchful eye and accentuating the positives of the existing trade relationships remain vital.

On excise duty, the current tax regime is unsustainable. Scotch whisky and other spirits have faced a 14% increase in excise duty in just 18 months. Over the past 18 months the Treasury has lost £255 million, or £500,000 per day, in spirits revenue—a far cry from the £600 million that the Office for Budget Responsibility forecast that the increase in spirits duty would raise. That Treasury loss from lower sales was projected by the industry to increase as the Chancellor’s recent decisions start to bite.

If we want to examine the impact higher taxes have had on the retailers and the producers themselves, we need look no closer than right here. Last year a freedom of information request revealed that in the first 10 months of 2024, a year after the Conservatives hiked whisky tax, sales of whisky in Parliament’s gift shops plummeted, with average monthly sales of 5 cl bottles down 36% and 70 cl bottles down 16% by the end of October. That means that, when Labour MPs approved the Chancellor’s plans to further increase taxes on whisky products, they did not even need to leave the building to pass a shop adversely affected by the tax.

--- Later in debate ---

[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.