Isle of Islay Economic Situation (Hansard, 16 March 1983)

Lord Belhaven and Stenton
My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

§ The Minister of State, Scottish Office (The Earl of Mansfield)
My Lords, Her Majesty's Government are aware that the current economic recession has caused difficulties for the industries indigenous to Islay. However, our policies have achieved a substantial reduction in inflation which will help industry generally and we have increased support both for agriculture and for the Highlands and Islands Development Board. The board has extensive powers to assist a very wide range of economic and social development, and will continue to encourage and support potentially viable developments on Islay.

Lord Belhaven and Stenton
My Lords, I thank my noble friend for that reply and for the not very encouraging nature of it, apart from the Highlands and Islands Development Board, which, I know, does a good job. I regret that I cannot congratulate him or, through him, his right honourable friend on increasing the whisky tax yesterday. May I ask two supplementary questions: First, have the Government any firm plans to introduce new industry to those areas which are affected by the destructive attitude of the Treasury to the whisky industry? Secondly, have the Government any plans for a free port in the Highlands and Islands area?

§ The Earl of Mansfield
My Lords, dealing with my noble friend's first point, I have to remind him that so far as increases on spirits are concerned duty levels over the past three years have been relatively low. Whisky duty is now 28 per cent. lower, in real terms, than in 1975, and the real price of whisky is nearly 50 per cent. lower than it was in 1962,
My noble friend then asked me about the activities of the Highlands and Islands Development Board. The House will know that that is the Government's main development agency for that part of the world. In the past six years it has been very active so far as Islay is concerned. It has spent a total of over £2 million of the taxpayers' money in assisting developments which have cost nearly £5 million. Finally, my noble friend asked me about free ports in Scotland. That was mentioned by my right honourable friend the Chancellor of the Exchequer in his speech yesterday. As the House will know, one or more are to be set up in the United Kingdom.

§ Lord Lloyd of Kilgerran
My Lords, in the absence of my noble friend Lord Mackie of Benshie, may I ask 724 the Minister whether the Government have in mind any special arrangements for giving travel concessions to those on this island who are made unemployed as a result of this recession?

§ The Earl of Mansfield
My Lords, I think that the House debated that aspect of the unemployed last Friday. We have a number of subsidies so far as shipping services and charges to Islay are concerned. I do not think that the Government have plans for going beyond that.

§ Lord Glenkinglas
My Lords, will my noble friend remember that there are many areas in Scotland, and not only Islay, which depend very largely on the whisky industry, and they are all in rather difficult rural areas? Will he also bear in mind that the only hope of developing many of the Highland areas is the low price of petrol, which is a fact which one of his noble colleagues did not seem to know about last week, but it is true. The distances in these areas are enormous and this budget has hit both whisky and petrol.

§ The Earl of Mansfield
My Lords, I bear in mind the points that my noble friend makes. His points relate to the Government's general economic policy regarding rural areas. Perhaps one should consider what this Government have done for agriculture and, moreover, for the Highlands and Islands in the amount of money which has been devoted to the Highlands and Islands Development Board. The allocation has gone up from £12.8 million in 1978–79 to £30.4 million in 1983–84. One can see just how much the Government are doing in this direction.

§ Lord Kirkhill
My Lords, is the noble Earl the Minister able to say what is the real price of whisky today if 1962 were to be taken as the base year for calculation?

§ The Earl of Mansfield
My Lords, I cannot because my mind is not clever enough to do the percentage sum. But I will do it and write to the noble Lord.

§ Lord Stodart of Leaston
My Lords, in confirming what my noble friend Lord Glenkinglas has said about the difficulties facing distilleries on the mainland, may I ask whether, if it is correct that the cause of the difficulties is owing to lack of demand for whisky, my noble friend is able to say how demand can conceivably be stimulated by putting up the price? Considering that his right honourable friend was flexible enough to exclude pipe tobacco from his tobacco allowance, would it not have been possible to exclude whisky from the duty on spirits?

§ The Earl of Mansfield
My Lords, the real reason that the whisky industry finds itself in the difficulties that it is in is the result of the world-wide recession. Some 80 per cent. of whisky which is produced in Scotland goes for the export market. Therefore, while I agree that the level of duty has some effect upon demand, it is really the recession which has caused the present troubles in the industry.

§ Lord Cledwyn of Penrhos
My Lords, is the noble Earl able to confirm whether Islay is within the scope 725 of the integrated development programme for Scotland? Can he say when this programme is to begin operating? When it begins operating, can he indicate what help that will give to Islay?

§ The Earl of Mansfield
My Lords, the integrated development programme is for the Outer Isles, which I am afraid does not include Islay which is not very far from the mainland. Secondly, the plan is already in operation. It will last for five years; but, as I have said, I am afraid that Islay is outside its scope.

§ Lord Ferrier
My Lords, does my noble friend imply that the addition of 25p to the cost of a bottle of whisky is not inflationary?

§ The Earl of Mansfield
Taken in isolation, my Lords, of course any increase in the price of anything is inflationary. But I would hazard a guess that the Chancellor has to balance his books, and what in this case he has taken with one hand he has given away with another.

§ Lord Shinwell
My Lords, I declare my interest before I ask my question. My interest is that whisky is the only sensible drink to consume. I advise everybody to take advantage of it. But how can we take advantage of it when we have an explanation by somebody associated with Scotland—that is, the Minister himself—who provides such a shocking Answer? Is not the answer to those on all sides of the House who have complained about this onerous tax that the Chancellor should reconsider the situation and provide justice for Scotland?

§ The Earl of Mansfield
My Lords, I totally agree with the noble Lord, Lord Shinwell. Whisky is the drink for me, especially when compared with foreign muck. Nevertheless, the Chancellor has a different road to follow when it comes to raising revenue and I do not believe that the consumers of gin and other such spirits would like to bear the cost of the duty which is raised on whisky if it was ameliorated in that particular direction.

§ Lord Derwent
; My Lords, I hesitate to speak on a Scottish matter, but can my noble friend tell me whether I can help our Scottish friends by drinking more whisky?

§ The Earl of Mansfield
Yes, of course, my Lords; and if my noble friend cares to drink malt whisky, that will provide even more help and it will do him more good.

§ Lord John-Mackie
My Lords, will the noble Earl draw the Chancellor's attention to the whisky advertisement in the press today for White Horse whisky where the horse is shown with a large tear in its eye?