Budget 2023: Why the 'political bubble' is out of touch amid ‘historic blow’ to embattled Scottish whisky industry

It’s been quite the start to 2023 for the whisky industry, which should be enjoying a period of prosperity with new and ghost distilleries reopening, and exports topping a whopping £6 billion for the first time.

But instead it’s choppy waters ahead, with the deposit return scheme (DRS), proposed alcohol advertising ban and now an increase in duty from a UK Government that, not so long ago, pledged to “review alcohol duty to ensure our tax system is supporting Scottish whisky”.

Well, they’re not known for U-turns, are they? While the DRS and advertising ban proposals look set to be paused, changed or ditched once we get a new first minister, the rise in duty is a reality and one that’s been met with anger by the industry.

The Scotch Whisky Association hit out at Jeremy Hunt’s announcement as part of the Spring Budget, calling it a ‘historic blow’ and saying the decision to increase duty will inevitably fuel inflation, further dent consumer confidence, and add to pressures in the hospitality industry. GMB Scotland called the hike an “unhelpful measure”, with secretary Louise Gilmour saying: “Whisky and spirits production is the jewel in the crown of Scotland’s world-class food and drinks sector, but the political bubble looks out of touch about its importance not just to the country, but to the workers, communities, and supply-chains that depend on its future growth.”

Small tasting glasses with aged Scotch whisky. Picture: Shutterstock

This rise in duty means the rate on spirits will rise to £31.64 per litre of pure alcohol, meaning that of the £15.22 average price of a bottle of Scotch whisky, £11.40 is collected in taxation through duty and VAT. The tax burden on the averaged priced bottle of Scotch whisky has risen from 70 per cent to 75 per cent.

It’s hard not to agree with the SWA, who have pointed out Scotch whisky has consistently delivered for the UK economy when given stability and certainty through duty freezes, enabling the industry to reinvest in job creation and growth across the country. With the same challenges we are all facing – energy costs, recovery from Covid – as well as whatever the DRS brings, it’s a real blow to an industry that’s a key part of Scotland and that should be supported, not constantly challenged.