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Wednesday, 28 November, 2001, 09:45 GMT
MPs seek support for whisky industry
Distillery interior
The number of distilleries has fallen over time
A group of MPs has called for a tax-freeze on alcoholic spirits to help the drinks industry and to end discrimination against Scotland.

The House of Commons Scottish Affairs Committee says that heavier tax on spirits than on beer and wine is discriminatory.

Scotland produces more than 2bn worth of whisky each year, as well as three quarters of the UK's gin and vodka.

In a parliamentary report, the committee said that despite duty freezes on spirits in the last four Budgets, taxes remain significantly higher than those on beer and wine.

A committee of MPs investigated the whisky industry

But it stopped short of backing industry calls for across-the-board cuts in alcohol duty, which it found was "not unduly onerous".

Instead, it said duties on wine and beer should be allowed to catch up with those on spirits over a number of years.

The committee, in its report called The Drinks Industry in Scotland, suggests a freeze on spirit taxes would make locally-produced drinks more competitive compared to wine.

The report stated: "High excise duties on spirits relative to other alcohols unavoidably discriminate against Scotland.

"We could find no sound economic basis for a continuation of excise discrimination against whisky, or any other spirit."

It said that a move to end the discrimination could have "several benefits", including a rise in spirit consumption relative to wine and its consequent economic benefit.

Whisky bottles
MPs want to see duty on whisky frozen

The report added: "Evidence... suggests that this could be achieved at little cost to the Exchequer. The health impact is likely to be neutral."

The MPs found whisky is Scotland's second most important export industry - after electronic office equipment - with 90% of total production sold overseas in a market worth 2.1bn in 2000.

But they also found the industry was threatened by globalisation, which favours the dominance of a few worldwide brands.

That could make it more difficult for smaller distilleries to survive.

The sale of Seagram to Diageo will mean that 80% of all whisky produced in Scotland is distilled by two companies.

Glenmorangie label
The ownership of brands is becoming concentrated

Job losses were a particular threat in far-flung areas of Scotland, where distilleries had traditionally been important employers and had contributed enormously to whisky's reputation for variety and regional character, they said.

The committee said: "We are concerned about the extent to which the peripheral areas are likely to suffer as the industry continues to cut costs."

Employment in companies belonging to the Scotch Whisky Association had fallen by almost a quarter (22.3%) between 1994 and 1999 to about 6,300, a massive reduction on the 21,950 employed in the sector in 1980.

Across Scotland, the number of malt distilleries fell from 114 in 1980 to 85 in 1999.

Since 1994, some 64% of whisky jobs in Tayside and 25% in Grampian had disappeared, the committee found.

See also:

02 May 01 | UK Politics
Whisky report makes short measure
16 Apr 01 | Scotland
Row brewing over 700% duty
07 Mar 01 | Scotland
Whisky leads mix of Budget reaction
22 Nov 00 | Scotland
Industry plea for whisky cuts
15 Nov 00 | Scotland
Whisky chiefs blast Brown
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