Scotch Whisky: Tax (Hansard, 14 December 1983)

§ Lord Boothby
My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

§ The Chancellor of the Duchy of Lancaster (Lord Cockfield)
Tradition, my Lords—and the needs of the Revenue.

§ Lord Boothby
My Lords, in thanking the noble Lord for that courteous but rather uninformative reply, may I ask him whether Her Majesty's Government realise that in the modern world Scotch whisky is about the only thing left that brings guaranteed and sustained comfort to mankind, and is also a much better medicine than the deluge of drugs which pour upon us every day? In these circumstances, may I ask the noble Lord what is the purpose of pursuing a policy which, by means of penal taxation on a particular commodity, deprives of this comfort all except the comparatively well-to-do and simultaneously reduces the revenue to the Exchequer, damages our export trade, and constitutes a serious threat to the economy of Scotland, where many distilleries are facing the possibility of closure?

§ Lord Cockfield
My Lords, I entirely appreciate the sentiments uttered by the noble Lord, Lord Boothby. Perhaps I may make a number of points in reply. First of all, the taxation on Scotch whisky raises approximately £1,200 million per annum, which is not an insignificant sum of money.

§ Lord Boothby
Too much!

§ Lord Cockfield
Secondly, my Lords, during the lifetime of this Government the taxation on Scotch whisky—the excise duty—has increased by 45.5 per cent., while the duty on fortified wines, with which the noble Lord makes a comparison, has increased by 76.9 per cent. The Government have, therefore, significantly shifted the burden of taxation away from whisky. Thirdly, as this is the season of goodwill, perhaps I may mention that since 1970, under four successive Governments of different political complexions, the taxation of whisky, the total tax on whisky has declined in real terms by 45 per cent.

§ Lord Shinwell
My Lords, may I ask the noble Lord whether he is aware that some time ago I asked a similar question and received an unfavourable response? I suggested that the Government might 234 consider including whisky in National Health Service prescriptions, but they rejected my proposition. As the Government will not reduce the tax on whisky—because it is excessive; I accept what the noble Lord has said—and will not include it in National Health Service prescriptions, may I ask the noble Lord whether he is aware of the suggestion that, since there is general consumption of this liquid by noble Lords in your Lordships' House, and since many of them cannot do without it because it is in the nature of a medicine—I am quite serious—the matter should be referred to the committee that deals with Peers' expenses, with a view to an assessment being made in connection with expenses?

§ Lord Cockfield
My Lords, fortunately, I have no responsibility for the committee on Lords' expenses. Nevertheless, I greatly sympathise with the noble Lord's objectives, and I entirely agree with him that, contrary to what the noble Lord, Lord Boothby, said, whisky is a drink favoured by a very wide range of people, and not entirely by those in the upper income groups.
So far as the burden of taxation is concerned, there has in fact in real terms been a significant reduction in the burden of taxation on whisky, and I would only wish we could say the same of other sectors in our economy. The Government have also taken a number of special measures to assist the whisky industry; for example, a substantial measure of duty deferment for wines and spirits has been introduced, and this has improved the cash flow, rather than the liquid flow, of the whisky industry by some £200 million. Furthermore, the Government have secured a refund worth about £100 million from the European Community on cereals used by distillers.

§ Lord Derwent
My Lords, would my noble friend think it a proper idea that old-age pensioners should be able to claim a refund of tax?

§ Lord Cockfield
My Lords, that is a most interesting suggestion, and I shall draw it, together with the other remarks which have been made by your Lordships, to the attention of my right honourable friend the Chancellor of the Exchequer.

§ Lord Tanlaw
My Lords, is the noble Lord the Minister aware, especially in view of the reply that he has given to the noble Lord, Lord Boothby, that on every standard bottle of whisky purchased over the counter 80 per cent. of the retail price, or £5.36, goes to the Exchequer? Can the Minister identify any other consumer product on sale during this festive season on which more tax is paid? Will he therefore agree that surely the time has come for Her Majesty's Government to reconsider their taxation policies, which discriminate against the Scotch whisky industry and employment in rural Scotland?

§ Lord Cockfield
My Lords, the tax structure does not discriminate against Scotch whisky as opposed to other spirits. Nevertheless, the position is—and this has been the case for very many years—that spirits are taxed more heavily than either wines or beers.

§ Lord Avebury
My Lords, can the noble Lord give any indication of the set off against the public expenditure of £1,200 million which has to be incurred in respect of road accidents, admissions to hospital of people suffering from alcoholic psychoses and cirrhosis of the liver, death from accidents in the home, industrial accidents, and other adverse consequences, not forgetting that 50 per cent. of the total number of murders are committed through the influence of alcohol?

§ Lord Cockfield
My Lords, the points raised by the noble Lord are clearly matters of interest, but they fall outside the scope of the Question on the Order Paper.

The Lord Bishop of Norwich
My Lords, will the noble Lord consider a suggestion from these Benches—I speak as a non-whisky-drinking Prelate—that, with the goodwill of the Government, we might have a tax-free day to celebrate the 100th birthday of the noble Lord, Lord Shinwell, when it falls? I might even attempt it myself on that day.

§ Lord Cockfield
My Lords, that is a most interesting suggestion.