UK Budget: Why Chancellor should increase alcohol duty for sake of Scotland’s economy, as well as its health

Scotland’s relationship with alcohol has long been double-sided. On the one hand, we try to preserve and profit from our heritage as a drinks producer. On the other hand, we want to mitigate the sickness and social harm that results from excessive consumption.

The country has balanced the two remarkably well. Restrictions on promotions, licensing reforms and minimum price regulations helped cut death rates by a third between 2006 and 2019. Over the same period, the whisky industry boomed and doubled in size.

The circle has been squared by discouraging alcohol consumption at home and promoting exports abroad. Ninety-nine per cent of the whisky produced in Scotland is exported, while domestic consumers drink almost twice as much vodka, demonstrating it is possible to reap the economic benefits of alcohol production and take action on harmful drinking.

That hasn’t stopped the Scotch Whisky Association from using its standard tactic of presenting the government with a false choice between health and wealth. An increase in alcohol duty in the Budget would be bad for business, they say, though relatively little of their product stays in the UK and is liable for the tax.

In the UK, alcohol is the single leading risk factor for death, ill health and disability among 15 to 49-year-olds (Picture: Marco Di Lauro) | Getty Images

Alcohol duty escalator

The reality is that the election of a new UK Government offers an opportunity for a much-needed reset on alcohol policy. For years, the Scottish Government has been fighting with one arm tied behind its back when it comes to addressing alcohol harm. Raising alcohol taxes is the single most reliable and well-evidenced way to reduce harmful drinking. The 268 lives estimated to have been saved in the first year of minimum unit pricing in Scotland merely offset the deaths caused by Westminster’s tax policy to that point.

When last in government, Labour implemented an ‘alcohol duty escalator’, which automatically increased tax by two per cent above inflation each year. That seems to have accelerated the decline in Scottish alcohol-related mortality in the late 2000s. The new government appears to be similarly minded.

For all the progress Scotland has made, the alcohol-specific death rate spiked during the pandemic, as in many countries, though it remains well below its 2006 peak. Urgent action is needed not just to save lives, but to avoid the waste of human potential.

A deadly habit

Alcohol is the single leading risk factor for death, ill health and disability among 15 to 49-year-olds in the UK. Addressing that is not just a moral imperative, but – at a time when too many people are out of work due to sickness – supports the government’s mission of boosting economic growth too. The cost of harmful drinking to the Scottish economy is estimated at around £1.2 billion a year.

In a context where the government desperately needs to raise money, persisting with the Tories’ wasteful approach on alcohol tax, which has cost the Exchequer £15 billion over the past 12 years, would be fiscally negligent. It would fail to recognise the scale of the challenge we face in improving our health outcomes.

And it would be a nonsensical economic strategy. To back Scotland’s efforts to deal with harmful drinking, to get more people back into work, to deal with our shared fiscal challenge, the Chancellor should increase alcohol duty in the Budget next week.

Aveek Bhattacharya is research director of the Social Market Foundation, a cross-party think tank