Scotch whisky: US tariffs

Andrew Bowie Excerpts

Thursday 30th January 2020 Westminster Hall

[Andrew Bowie (West Aberdeenshire and Kincardine) (Con)]

It is a pleasure to see you in the Chair, Ms Buck. I congratulate my right hon. Friend the Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell) on securing this important debate. It is timely not only because of the importance of the issue, but because it is Burns season. I am sure that everybody present is doing their part to support Scotland’s biggest export, and that they have been doing so over the past few weeks.

The contribution that the whisky industry makes to Scotland’s economy is huge, and exports are a crucial part. The industry exports the equivalent of 41 bottles of Scotch whisky every second, and it was worth £4.7 billion in 2018 alone. The contribution to our national productivity runs at £210,000 gross value added per employee, and the industry supports more than 42,000 jobs across the UK—these are figures we have already heard. The industry directly employs 10,500 people in Scotland, 7,000 of whom are in rural constituencies such as my own in west Aberdeenshire, where we have the well-known and loved brands Royal Lochnagar and Fettercairn. It is important not to forget that the tariffs also adversely affect small or micro-distilleries, such as Lost Loch or Deeside Distillery in West Aberdeenshire and Kincardine.

There is strong support for the whisky industry from every party represented in the Chamber. We all want an end to the unfair tariff regime imposed by the United States. I want the interests of Scotland’s whisky industry to be central to future trade negotiations with the United States, and I have faith that the UK Government will champion the industry in those talks. However, we can unilaterally take immediate action, both domestically and internationally, to help the industry through this difficult time. The response needs to come from both the UK and Scottish Governments, because it is not a party political issue. Targeted funding is needed to help the industry weather the tariffs, perhaps by investing in Scotch whisky tourism. We could do something similar to the Distilled Spirits Council of the United States, which provides the US whiskey industry with funding of over $1 million to promote American whiskies in Europe; we could respond to that in kind with our own ring-fenced fund, which could be a cross-government initiative. The UK Government in Westminster have a significant role to play, especially with the Budget coming up.

The industry has welcomed the freeze on duty in every Budget since 2017, and we need that to continue in the next one. When the freeze was introduced, the Treasury forecast that the revenue would increase by 3% in 2018-19. It did not: it increased by more than 10%. We have the fourth-highest spirits duty rate in the European Union, with only Sweden, Finland and Ireland having higher rates. Our producers are competing in suboptimal conditions, which, sadly, look likely to worsen before they improve. I want the Government to engage in radical thinking and to give serious consideration to cutting the duty, perhaps on a trial basis to see how the revenues respond. Ministers might be pleasantly surprised by the results.

As I said, all right hon. and hon. Members here today are champions of Scotland’s largest and most successful export. It is time that the parties worked together party to resolve the problems and to make the case for Scotch whisky, wherever we are.