Select Committee on Scottish Affairs Minutes of Evidence

Memorandum from Scottish and Newcastle plc


  1.  Scottish & Newcastle is the largest drinks company in Scotland and the largest brewer in the UK. Across the world we employ over 60,000 people in brewing, pubs and our leisure outlets such as Center Parcs.

  2.  Edinburgh has been our home for 250 years and we recently vacated our old headquarters at Holyrood to make way for the Scottish Parliament. Later this year we plan to take up our new permanent headquarters in the building vacated by United Distillers.

  3.  In Scotland, we directly employ over 4,700 people. As well as our Corporate Head Office, Edinburgh hosts the HQ of our beer division, Scottish Courage, our International Division, and our brewery at Fountainbridge. We have a major depot at Bellshill and the headquarters of our wine and spirits distributor, Waverley Vintners, is in Perth.

  4.  We own over 330 pubs in Scotland, including 130 tenancies, and directly employ over 3,000 people in them.


  5.  The major issue facing the company is the high rates of duty. In Britain consumers pay 33p per pint on beer duty. In France they pay 4p.

  6.  The main consequence of the huge difference in duty is the increasing levels of beer imports from France. Over 1.4 million pints per day are now flooding into Britain and Customs and Excise estimate that two-thirds of these imports will be illegally sold to anyone who wants them. It is clear that organised criminals are behind this illegal trade. Vans crossing the English Channel with beer for illegal re-sale regularly head for all the major conurbations in Scotland.

  7.  It is important for jobs in breweries, distribution and pubs that this illegal trade is stopped. A study by the Oxford Economic Forecasting Unit, using the Treasury's economic model shows that a decrease in duty of around 6p would actually be beneficial to the Treasury in the second year. This is due to the effects of increased sales of beer, more food sales, more employment and lower rates of inflation.

  8.  Scottish & Newcastle hopes that the Chancellor will tackle the root cause of these problems by reducing duty at the next Budget as a first move towards co-ordinating tax rates between the UK and the rest of Europe.


  9.  Scottish & Newcastle condemns those who drive while they are drunk. We welcome the Government's initiative to improve further the UK's excellent record on drink driving and supports measures to focus on the hard core of these who regularly drive with blood alcohol (BAC) level well above the current limit and are responsible for the vast majority of drink drive accidents. In particular we support the extension of rehabilitation courses and the clarification of police powers including on random breath tests. Scottish & Newcastle actively support the BLRA's "Wheelwatch" campaigns and Portman Group educational programmes.

  10.  We do not believe, however, that a reduction in the BAC level would make a useful contribution to road safety. Evidence from around the world shows that strict enforcement regimes and penalties are the best way to reduce incidences of drink-driving. A reduction of the BAC level would not have a significant effect on road accident figures, but it would target the general population instead of the hard core and impose strains upon limited police resources and public support for drink/drive legislation.

  11.  Without improving road safety, the reduction would have serious, unwanted side effects. Many pubs, particularly those in rural districts, are dependent on the car, as public transport and taxis are not realistically available—for those small businesses, the outlook would be bleak if the limit were lowered.


  12.  The 1968 Gaming Act governs amusement machines in pubs and restricts the number, siting, prizes and advertising of machines, as well as the level of jackpot prizes and the maximum stake for a single play on a machine. There is a glaring discrepancy between the freedom of other forms of gaming, such as the National Lottery, and the strict regulations on amusement machines.

  13.  We therefore call on the Government to allow the maximum cash payout by gaming machines to be increased to at least £25, to automatically allow four machines in a pub on the granting of a liquor licence and to remove the outdated restrictions on advertising. In support of these issues, we agree that there may well be a need to legislate to restrict use of these machines to those aged 18 and over.


  14.  Government legislation and proposals are likely to add substantially to our company's costs. These extra costs are often associated with many worthy Government objectives, but they have a direct impact on the future of this company.

  15.  The proposed climate change levy was supposed to be cost neutral, (balancing extra fuel costs with lower national insurance) but that is not how it will turn out for Scottish & Newcastle. Our 330 pubs in Scotland are heavy fuel users, but because many of our employees are part-time, they often pay little or no national insurance, so we are unable to take advantage of any reduction.

  16.  Fuel duty increases were also introduced with the principal of reducing greenhouse gases, but the cost to our business is huge. We already pay £20 million a year for fuel of which 80 per cent is tax. We therefore have already done all we can to use our vehicles as efficiently as possible, but the fact is that each of our several thousand customers right across Scotland have to be visited. The Chancellor has announced the end of the automatic "fuel escalator", but there is no commitment to abandon the practice of above-inflation duty rises.

  17.  We are also subject to extra costs for dealing with packaging, waste, effluent treatment, water. We estimate that these costs will run into millions, perhaps tens of millions of pounds.


  18.  All the above issues are within the remit of Westminster. The Holyrood parliament is responsible for two issues on which we would like to comment.

  19.  Liquor licensing laws in Scotland are better than in England, but they are still too bureaucratic, wasting the time of industry, police and licensing boards. The 1976 Scottish licensing act was a great step forward, but there is now wide support for further liberalising many aspects of the Act.

  20.  Scottish & Newcastle are proud of our training and development record. Across the UK we have over 15,000 employees who have achieved National or Scottish Vocational Qualifications. We also are strong supporters of the Modern Apprentice scheme, but unfortunately in Scotland we cannot recruit 16 and 17 year olds onto these courses, whereas in England and Wales we are allowed to recruit these bright trainees as long as we abide by strict guidelines. We hope that the Scottish Executive will investigate the success of the scheme south of the border and open up similar opportunities in Scotland.

Scottish and Newcastle plc

February 2000

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