Memorandum from Scottish and Newcastle
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
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 availablefor
those small businesses, the outlook would be bleak if the limit
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
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
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
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