Whisky Industry (Hansard, 10 February 2004)

§ 1. Mr. Brian H. Donohoe (Cunninghame, South) (Lab)
What progress is being made on introducing strip stamps in the Scotch whisky industry. [152887]

§ The Secretary of State for Scotland (Mr. Alistair Darling)
I met representatives of the Scotch Whisky Association last week to discuss this issue, and general consultation with the spirits industry is, of course, continuing. My hon. Friend the Economic Secretary to the Treasury is due to meet the association on 23 February to discuss the issue further.

§ Mr. Donohoe
I thank my right hon. Friend for that answer, and I am pleased that he is taking such a close interest in this important subject. The Scotch whisky industry has been looking for some time at alternatives to the stamp duty and strip stamps. If it comes up with a successful solution, will he make representations to the Chancellor, so that we can ditch that proposal once and for all and allow the Scotch whisky industry to get on with its main business, which is, of course, to sell whisky both here at home and abroad?

§ Mr. Darling
My hon. Friend is right: the industry is of huge importance to Scotland—and, of course, to the whole of the United Kingdom. As my right hon. Friend the Chancellor made clear at the time of the pre-Budget report, his concern is about the growing amount of fraud. Customs and Excise and the Scotch Whisky Association put different monetary values on that fraud, but both agree that there is a problem, and it needs to be sorted out. The Chancellor has said that unless something else is done, he intends to go ahead with the strip stamps. However, he has made it clear that it is up to the industry to talk to Customs and Excise with a view to finding some other way to deal with what is undoubtedly a growing problem. I am sure that the whole House would agree that, faced with a growing amount of fraud, it is necessary to take action, but of course, that action must be consistent with ensuring that 1250 we do everything we can to help the industry, which is why we have frozen whisky duty for the past six Budgets.

§ Angus Robertson (Moray) (SNP)
Why should the Scotch whisky industry have to foot the bill to crack down on crooks? Surely Customs and Excise should be doing that more effectively. Why is a proposal being made for new systems, new overheads, new costs and new regulations, all to be borne by the Scotch whisky industry, when every bottle of whisky is already clearly marked with a lot number, which would help in the fight, which everyone supports, against fraud?

§ Mr. Darling
Bottles may be marked, but there is still a problem with fraud, as representatives of the industry admitted when I met them last week. Whisky is going missing when it is shipped out of warehouses. We have made it clear—I have just done so again—that the industry and the Government need to talk together to consider alternatives. As for the hon. Gentleman's first point, it has always been the case in the Scotch whisky industry—and, indeed, in many other industries—that responsibility for security rests jointly with the industry and Customs and Excise. The Scotch whisky industry already has considerable security measures in force to ensure that whisky is kept safe and accounted for, and the vast bulk of it is—but there is a problem with fraud, and the industry and Customs and Excise need to work together to find out how we can sort it out.

§ Mr. John McFall (Dumbarton) (Lab/Co-op)
The Economic Secretary will visit Scotland on 23 February at my invitation, in my capacity as the chairman of the all-party Scotch whisky group, and he will start at Allied Distillers in my constituency. I recognise that fraud is a problem, and I am trying to persuade the industry and the Government to take a consensual approach to achieve a satisfactory outcome, but will the Secretary of State ensure that he makes his colleagues aware that this is a £2 billion manufacturing industry, and any solution that is reached should not damage its competitiveness and productivity?

§ Mr. Darling
My hon. Friend can rest assured that the Government, and the Chancellor in particular, are well aware of the importance of that industry. Indeed, it is not possible to live in Scotland without being aware of its importance. Of course my hon. Friend is right to suggest that it is in the interests of the industry as well as the general taxpayer—who, after all, will have to foot the loss unless something is done about it—that both the Government and the industry work together to ensure that the problem is dealt with. What is encouraging so far is that the industry is showing a willingness to talk to the Government and discuss with Customs and Excise measures that might help, but as my right hon. Friend the Chancellor has said, the Government cannot ignore a situation in which a very large amount of money is being lost in fraud, and we have to do everything we possibly can to stop that happening.

§ Mr. Peter Duncan (Galloway and Upper Nithsdale) (Con)
The Secretary of State asks the industry to engage with Customs and Excise. Is he aware that one major distiller in Scotland has offered to audit-trail 1251 random purchases from the high street to trace fraud? Why has it not received a single phone call from Customs and Excise about that? How can he condone such complacency, when one in 50 jobs in Scotland are at risk?

§ Mr. Darling
When I met the industry and the people from the Scotch Whisky Association last week—the association represents the whole industry in Scotland—they said that they had been working on several measures, including audit measures, which they had been discussing with Customs and Excise. It is not true to say that Customs and Excise has not been engaging with the association—the association readily agrees that that is happening. If the hon. Gentleman thinks that something specific could be done that he would care to let me know about, I shall make sure that Customs and Excise sees it. However, it is important for all of us in the House to recognise that there is a significant revenue loss at the moment—the exact monetary value might be a matter of dispute—that is rising and needs to be dealt with. The question is: what is the best way of dealing with that revenue loss?