Whisky U-turn as Darling admits mistake

Published on Wednesday 26 November 2008 20:41

ALISTAIR Darling, the Chancellor, has been forced into a dramatic U-turn on whisky excise duty less than 48 hours after a tax rise in his Pre-Budget Report provoked a storm of protest.

The Chancellor admitted he had made a mistake increasing duty on Scotch whisky, which would have led to a 29p rise in the price of a bottle.

He had intended the change to be offset by a reduction in VAT, but yesterday admitted that bottles of Scotch whisky would have been more expensive.

"In relation to spirits what we announced on Monday didn't actually achieve that, so I'm tabling a further order today to ensure that on spirits the duty there is at a slightly lower rate, which I think will hugely benefit the spirits industry wherever it is," he said.

The duty increase on whisky will now be 4 per cent, half the original rate of 8 per cent announced in Monday's PBR.

But opposition MPs seized on the U-turn.

Angus Robertson, the SNP's Westminster leader whose Moray constituency produces more than half of Scotland's malt whisky, said the initial move had been a "reckless decision" and the whisky industry was now being treated as an afterthought.

Alistair Carmichael, the Liberal Democrats' spokesman on Scotland, said it was an embarrassing climbdown, adding it beggared belief that the Chancellor had been "so unaware the impact his proposals would have on such a crucial Scottish industry".

And while the Scotch Whisky Association welcomed the backtracking as a "quick and positive" response, one producer warned that the government was destroying the industry with continuing rises – and setting a dangerous precedent for foreign governments.

Mike Keiller, chief executive of Morrison Bowmore, said he was surprised the Chancellor made such a "basic error".

"It sets a very bad example for other governments to take and could threaten our export market," he said.

The government was landed with a fresh headache after beer and wine producers demanded a drop in their excise duty rates too.