Scotch Whisky industry says UK government has broken commitment to ‘back Scotch producers to the hilt’

The Scotch Whisky Association (SWA) has said the Chancellor’s decision to further increase duty on Scotch Whisky has broken the Prime Minister’s commitment to ‘back Scotch producers to the hilt.’

In her first Budget, Chancellor Rachel Reeves announced an RPI inflation increase to alcohol duty, but cut duty on draught products in the on-trade by 1.7%. Scotch Whisky and other spirits are excluded from this tax relief. 

The SWA had called on the new Chancellor to take the opportunity to reverse the damage done by the 10.1% increase in August 2023. Instead, the damage done to the industry and to government revenue has been compounded by further increasing the tax burden on the sector, which is already the highest in the G7.

Spirits revenue fell by hundreds of millions of pounds as a result of the 10.1% duty increase last year, and the industry has warned that this further tax hike will not deliver the revenue ministers have been promised but will hurt businesses, the hospitality sector and hard-pressed consumers.

Commenting on the Budget, Chief Executive of the SWA Mark Kent said:

“This duty increase on Scotch Whisky is a hammer blow, runs counter to the Prime Minister’s commitment to ‘back Scotch producers to the hilt’ and increases the tax discrimination of Scotland’s national drink.

“On the back of the 10.1% duty increase last year, which led to a reduction in revenue for HM Treasury, this tax hike serves no economic purpose. It will damage the Scotch Whisky industry, the Scottish economy, and undermines Labour’s commitment to promote ‘Brand Scotland’. She has also increased the tax discrimination of spirits in the Treasury’s warped duty system, and with 70% of UK spirits produced in Scotland, that will do further damage to a key Scottish sector.

“The disastrous 10.1% duty hike last year has now been compounded. This further tax rise means the lessons have not been learned, and the Chancellor has chosen continuity with her predecessor, not change.

“We urge all MPs who support Scotch Whisky to vote against this duty hike and tax discrimination of Scotland’s national drink.”

Ends

Chief Executive, Mark Kent

Notes to Editors

Prime Minister Keir Starmer’s commitment to “back Scotch producers to the hilt” on a visit to InchDairnie Distillery in November 2023: https://x.com/Keir_Starmer/status/1725179802938699893

Hearing from staff at @InchDairnieDist, it's clear Scotland’s whisky industry isn't getting the stability it needs from the Tories and the SNP.

Labour will put growth at the heart of our government and back Scotch producers to the hilt. pic.twitter.com/XaFutlO5wa

— Keir Starmer (@Keir_Starmer) November 16, 2023

Organisations which supported a freeze or a cut in duty on Scotch Whisky included: Prosper; Scottish Chamber of Commerce; IOD Scotland; Scotland Food and Drink; UK Hospitality Scotland; Scottish Tourism Alliance; GMB Scotland: https://www.scotch-whisky.org.uk/newsroom/key-scottish-business-organisations-call-on-chancellor-to-reduce-tax-burden-on-scotch-whisky/ | https://www.heraldscotland.com/news/24646295.call-reverse-tory-hike-critical-scottish-industry/

Former Conservative Minister Andrew Bowie MP has called previous government’s decision to increase duty by 10.1% a “misstep”: https://conservativehome.com/2024/10/29/andrew-bowie-the-conservative-government-was-wrong-to-hike-tax-on-scotch-labour-shouldnt-either/

The 10.1% duty increase on spirits in August 2023 reduced government revenue

• Spirits revenue – one of the four alcohol duty categories along with beer, wine, and cider – has fallen by £298m between August 2023 and July 2024, compared with the same period in 2022/23. August 2023 is when the 10.1% increase to alcohol duty came into effect. 
• In 2023/24, spirits revenue was £4,137m – which is £1m more than in 2022/23 when spirits raised £4,136m in revenue for HMT. However, when previous Chancellor Jeremy Hunt first announced the duty increase, in March 2023, HMT forecasted that spirits would raise £4,400m in revenue in 2023/24 – around £300m less than outturn in 2023/24.  
• Either way, HMT lost £300m in spirits revenue as a result of the 10.1% duty increase.