Whisky distillers 'furious' over duty freeze reversal
- Published
Whisky distillers have warned that the chancellor's decision to reverse a planned freeze in alcohol duty will hurt businesses already struggling with soaring costs.
The warning came after Jeremy Hunt announced on Monday that the duty would rise in line with retail price index inflation from February.
As things stand, that would represent an increase of more than 12%.
The Scotch Whisky Association said many distillers were "furious" at the move.
It claimed the decision could add £1.35 to the average price of a standard bottle of whisky, and urged the government to reinstate the planned duty freeze.
In his recent mini-budget, former Chancellor Kwasi Kwarteng scrapped planned increases in the tax paid on beer, wine, spirits and cider, arguing it was wrong to raise duty "at this difficult time".
The SWA's director of strategy, Graeme Littlejohn, told BBC Radio's Good Morning Scotland programme that the policy change would "dampen" the industry's ability to invest in the UK and create new jobs.
Mr Littlejohn said many of Scotland's 141 operating distilleries were "furious" about the reversal.
He said: "Predominantly they are SMEs (small and medium enterprises), and they are trying to scale up in the UK market before exporting.
"This is really going to damage their business plans, this is really going to hamper them from becoming the great exporters of the future.
"They are already facing significant costs to their business. Distilling is a very energy-intensive industry.
"They are also seeing huge supply chain issues right now, so this is going to add further pressure on to the industry as a whole, but especially those small and medium enterprises."
'Retrograde step'
Mr Littlejohn also argued that the change in policy might backfire on the chancellor.
He added: "The fear now is that with these tax rises coming down the line that the industry is actually going to deliver less revenue for the exchequer as people start to purchase less Scotch whisky and go out into the economy less than they would have done before.
"I think it is quite a retrograde step from the chancellor yesterday and one that is not going to achieve the goal that he wants."
Other sectors have also expressed their disappointment at the U-turn on alcohol duty.
Emma McClarkin, chief executive of the British Beer and Pub Association, described it as "a huge blow to brewers and pubs".
She added: "The freeze would have delivered a £300m saving to our industry at a time when we desperately need any relief we can get, to help to keep a lid on spiralling costs and keep the price of a pint affordable for pub-goers this winter."
The government has stressed that its long-running review into alcohol duty will continue as planned, despite the policy reversal.