Moray reacts to Hunt alcohol duty freeze U-turn
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A GOVERNMENT U-turn on freezing alcohol duty will seriously affect the whisky business, industry bodies have said.
Drinks industry tax cuts, including a freeze on alcohol taxes and increased duty-free shopping, will be scrapped after new chancellor Jeremy Hunt announced budget measures early today (October 17).
The U-turn comes less than a month after ex-chancellor Kwasi Kwarteng announced the tax cuts for drinks manufacturers.
Mark Kent, chief executive of the Scotch Whisky Association, said: “Business can only work on the basis of certainty and stability.
"That has been stripped from the Scotch whisky industry following the Chancellor’s decision to u-turn on the duty freeze for Scotch whisky announced just over two weeks ago.
“Time after time, duty freezes on spirits have increased government revenue contrary to what the Treasury’s forecasts have predicted.
“With the average priced bottle of Scotch Whisky already taxed at 70%, a double-digit rise in spirits duty will now seriously reduce the industry’s ability to support the UK economy through investment, job creation and rising revenue to the Treasury."
The whisky industry is a major employer in Moray, with Moray Council figures claiming that 36% of people work in food and drink production compared to 4.4% in Scotland as a whole.
Moray politicians have also reacted to the news, criticising the change in policy.
Moray MSP Richard Lochhead said: “The whisky industry is vital to Speyside and Moray’s economy and, like all industries, whisky producers need clarity and stability in these challenging times.
"Instead, this key sector is being caught up in Tory chaos and promises to freeze duty on Scotch whisky have now been taken back by the new Chancellor.
“Just three weeks ago the sector was planning for a tax burden of 70% on a bottle of Scotch – after the new Chancellor’s announcement that climbs to 78%.
“The mini-budget has been a complete shambles and this Tory Government has treated people in Moray, and the whisky industry in Speyside, with nothing but contempt.”
Scottish Conservative MP for Moray and MSP for Highlands and Islands Douglas Ross previously welcomed the tax cuts, and has suggested scrapping them "could be counter-productive".
He said: “The Government has had to look at all measures to restore confidence and security in the economy and the markets, but it seems some of the decisions, like on spirit duty, could be counter-productive.
“I know that duty freezes on spirits have increased government revenue when Treasury forecasts have predicted the opposite and I am making these points to the new Chancellor.”
At the time of the mini budget's announcement, Moray MP Douglas Ross said: “I will be raising a glass at his (Kwasi Kwarteng's) decision to cancel the planned rise in duty on scotch whisky.
"That is extremely welcome for such an important industry for Moray which provides so many jobs and will also help support hospitality businesses in this area as well."
The U-turn is one of a host announced by new chancellor Jeremy Hunt since the sacking of his predecessor.
These include abandoning plans to reduce the rate of basic income tax to 19p and shortening the planned two year energy price cap to only six months.
Mr Kent also said that scrapping drink tax cuts would worsen inflationary and energy pressures on the whisky industry.
He said: "It will add to pressures in the UK hospitality industry, and household budgets as costs inevitably increase.
"Distillers are facing increasing economic headwinds and rising costs, the duty freeze offered much needed support.
"The industry has been an economic anchor, even in times of volatility.
"We urgently need that commitment to be reinstated.”
