UK economy on the rocks? Scotch Whisky industry contributes £5 billion a year

Listen to any Government or Opposition speech and you will find consensus on one issue – that the best route to rebuild a thriving economy is by supporting UK businesses. Beyond this simple proposition however, lies a more complicated choice – with limited public resources which industries should receive support?

Some would argue for traditional giants of UK manufacturing - the ship builders and the steel industry, others the innovative digital and creative industries. But the truth is that there is an iconic British industry with a 500 year history that contributes more to the UK economy each year than any of these: Scotch Whisky.

As the MP for Argyll and Bute, a constituency hosting more than a dozen distilleries, this comes as no surprise, but in Britain many people are simply unaware of the scale of the modern Scotch Whisky industry, the jobs it supports, and the value it brings to our economy.

That is why, this afternoon I will introduce a debate in the House of Commons on the Economic Contribution of the Scotch Whisky Industry. It follows the publication of a new report, by the economic advisers 4-consulting, on the economic impact of Scotch Whisky production in the UK.  

This report shows just how much Scotch Whisky contributes prosperity and jobs in Scotland and the wider UK.  Scotch Whisky adds almost £5 billion to the UK economy every year, supports 40,300 jobs and spends £1.8bn annually on supplies from Britain, from cereals to glass to machinery.

And this economic impact is felt throughout the UK, with 90% of the industry’s operating expenditure spent on UK suppliers, including packaging from Wales, yeast from Staffordshire, glass from Yorkshire and logistics from Essex.

Despite this success, almost 80% of the price of a bottle of Scotch is still taxation and this fiscal burden is stifling growth. The UK is the third largest market for Scotch Whisky globally, yet the domestic trade has been in decline in recent years. This is a particular obstacle for the new and small-scale distillers who rely on a thriving domestic market to grow – they say that the current duty regime is damaging their prospects.

That said, there is a simple solution that could remove this constraint. Last year, the Government recognised that taxation on spirits was too high and froze it at the Budget. A small boost to the volumes of on and off trade Single Malt sold at the end of last year suggests this resulted in industry growth. In the House of Commons this afternoon I will call on George Osborne to follow that logic this time round too, and to cut duty on spirits by 2% in the Budget on 18 March.

Recent polling revealed that two out of every three of us don’t realise the scale of taxation on spirits, and that, when we do, five out of every six of us think it is deeply unfair. My debate this afternoon will shine a light on this unfair treatment of an iconic Scottish and British product and its vital contribution to our economy.