SWA warns Hunt not to repeat spirits tax hike
Scotch whisky bosses have sent an early warning to the Chancellor not to discourage investment in the industry by repeating last year’s huge hike in duty.
In the 2023 Spring Budget Jeremy Hunt raised duty on Scotch whisky by 10.1% – the biggest alcohol tax hike in nearly 50 years.
In his Autumn Statement he chose to return to the duty freezes that the industry says will incentivise investment and boost Treasury revenue.
Today the Scotch Whisky Association (SWA) says the industry was worth £7.1 billion to the UK economy in 2022 and responsible for £3 in every £100 of Scotland’s total gross added value.
However, it warns that this will be put at risk if there are further tax hikes. The UK imposes the highest spirits duty rate in the G7 with 75% of the average priced bottle of Scotch whisky collected in tax.
Additional challenges include trade deals – including with India – still are still to be finalised. These combined with rapidly increasing competition from premium spirits in global markets puts future investment, growth and jobs at risk without government support, says the SWA.
Mark Kent, SWA chief executive, who described last year’s inflation-linked hike as a “historic blow”, says: “The Scotch Whisky industry has once again proven its economic significance to the UK domestically and on the world stage.
“The past five years have been turbulent for our sector, as we faced retaliatory tariffs in the United States, in addition to the global pandemic and the knock-on economic pressures.
“The Scotch Whisky industry has remained resilient, with capital investment directed towards fulfilling our collective sustainability ambitions, creating world-class visitor attractions, and building more distilleries that will help boost jobs and growth.
“Ahead of the UK Spring Budget on 6 March and this year’s General Election, it is vital that the industry is supported by government so that businesses can continue to invest in the UK economy.”
The report found that 75% of the total GVA of the Scotch Whisky industry is generated in Scotland, equal to £5.3bn annually.
It said the industry performs a crucial role in driving productivity across Scotland. The manufacturing of beverages in Scotland – dominated by Scotch – produces £273,000 GVA per employee. Comparatively, the industry is second only to the energy sector (including renewables) at £279,000 per head (in 2019).
The SWA reveals the industry supports 66,000 jobs across the UK, of which 41,000 are in Scotland.
Scottish Secretary Alister Jack said Scotch whisky “is of vital importance to Scotland, and the whole of the UK”, adding: “The UK Government wholeheartedly supports the industry.
“Scotch is not just Scotland’s but the UK’s most valuable food and drink export and that’s why we’ve given it 10 cuts or freezes in duty at the last 11 Budgets, as well as removing punitive tariffs imposed on the US market.
“We are pushing forward with new and robust global trade agreements that will continue to safeguard the interest of Scotch whisky, ensuring that the unique characteristics and reputation of Scotch are protected.”
Scotland’s Wellbeing Economy Secretary Neil Gray said: “The Scotch Whisky industry is extremely valuable to the Scottish economy in terms of production and exports and increasingly also for tourism and hospitality. It supports thousands of jobs – including in rural areas – and is a success story at home and internationally.
“Scotch Whisky is a world-renowned brand and our leading single food and drink export product. Continued growth in global markets means more jobs and investment across Scotland, our communities benefit and it entices visitors and residents to experience the incredible offer we have here in Scotland.
“The Scottish Government will continue to work with the whisky sector to drive further growth and success.”
Sara Thiam, chief executive of industry and economy group Prosper (formerly SCDI), said: “As well as detailing the vital contribution the whisky industry makes to the Scottish and UK economies this report also captures the increasing contribution that it makes to economic growth by generating a significant income and supporting thousands of jobs across the UK.
“The importance of the whisky industry as a flagship export sector could be further enhanced by governments through support of a business environment which promotes investment, innovation and decarbonisation.”