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Scotch Whisky (Tax)

Volume 264: debated on Wednesday 18 October 1995

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To ask the Secretary of State for Scotland if he will discuss with the Chancellor of the Exchequer a reduction in the tax on Scotch whisky. [36034]

My right hon. Friend maintains close and regular contact with my right hon. and learned Friend the Chancellor of the Exchequer on this and other matters.

You will be as disappointed as I am with that response, Madam Speaker.

Has the Minister had the opportunity to read the Fraser of Allender report, commissioned by Allied Distillers, and the Adam Smith Institute report, "Too Much to Swallow", which clearly show that the Scotch whisky industry has been proved to be the biggest job provider among the manufacturing industries in Scotland. They also say that the obscene tax that is being paid on bottles of whisky has already cost us jobs and is likely to cost us more. Why then does not the Minister, along with his boss, have the courage to take Scotland's case to the Chancellor of the Exchequer and tell him that, on the law of diminishing returns, it would be lunacy not to reduce the cost of a bottle of whisky, in the first instance by at least 50p?

It is good to see the hon. Gentleman in such good spirits this afternoon. The hon. Gentleman will be aware that, as a Back Bencher, I joined him and other colleagues in making representations to my right hon. and learned Friend the Chancellor of the Exchequer on behalf of the Scotch whisky industry. I am well aware of both reports that he has talked about and I have spoken to the Adam Smith Institute about its report in some depth. I can assure the hon. Gentleman that the views of both reports are well known to my right hon. and learned Friend and the last time that I saw the Scottish whisky industry, it was happy with the support that the Scottish Office was giving.

I thank my hon. Friend for that helpful reply to the Opposition Front Bench. I have no doubt whatever that he and his colleagues on the Government Front Bench understand the critical importance of the scotch whisky industry to the wellbeing of the export trade and jobs in Scotland. The point that we are trying to make today is that, when he and his colleagues make their representations, they have the full support of every Scottish Member of Parliament.

I thank my hon. Friend for what he said. I am pleased to have been on two recent export missions—one to Taiwan and one to north America—both of which included representations from the whisky industry, which have been remarkably successful for exports for Scotland and for whisky.

Should not the Minister responsible for industry be careful about how he handles that question, as I saw the last Secretary of State for Scotland nodding during the question by the hon. Member for Kilmarnock and Loudoun (Mr. McKelvey)? The Minister has a reputation as a serial tax raiser, having voted for 20 Tory tartan tax rises in the course of this Parliament alone. Is there any hope of rehabilitation for the whisky industry? As whisky is overtaxed relative to other products, is it not costing employment and even Exchequer revenue? Does the Minister therefore regret voting for the latest tax rise of 26p on 23 January this year? Will he reverse his position and bring the total number of tax rises that he supports down to 19?

I am not aware of the last Secretary of State for Scotland being here, but perhaps the hon. Gentleman believes that he is here, in spirit at least. The hon. Gentleman would do better to explain to the Scottish people and the scotch whisky industry the taxation implications of a separate Scotland. We have already seen figures of the deficit between funding and expenditure in Scotland of some £8 billion, excluding North sea oil revenue. I wonder how the hon. Gentleman plans to fund that. I suspect that the whisky industry would be sitting very worried if we went independent.

I do not wish to add to the peregrinations of Scottish Office Ministers around Europe but may I suggest that, given his concerns for the scotch whisky industry, the Minister might turn his attention to Geneva where, in a short time, discussions will begin again about the equalisation of tariffs for scotch whisky compared with local spirits within Japan? Will he undertake to brief Britain's negotiators on the arguments that they should use in relation to the Scottish economy? Will he share with the House the arguments that he will suggest that they use to explain why the British Chancellor of the Exchequer discriminates against scotch whisky?

The hon. Lady is absolutely right to refer to the unacceptable taxation of scotch whisky in Japan, where the local brew, shochu, is taxed at one sixth of the rate of scotch whisky. She can rest assured that every time not only a Scottish Office Minister but any Government Minister is in contact with Japan, either by visiting Japan—my right hon. Friend is due to visit Japan in the not too distant future—he or she will make representations on behalf of the scotch whisky industry among many other industries in Scotland and the United Kingdom.