Select Committee on Scottish Affairs First Report


14. Summary of Conclusions and Recommendations

155. The following is a list of our principal conclusions and recommendations.

(a)Competitive pressure has led to a growing concentration of production facilities in a few large plants, with detrimental effects on employment in peripheral areas. There has been a substantial fall in the number of distilleries in production in recent years. Figures show that the number of malt distilleries in production fell from114 in 1980 to 85 in 1999, a reduction of 25.4 per cent. We are concerned about the extent to which the peripheral areas are likely to suffer as the industry continues to cut costs. (Paragraph 17).
(b)We are aware that much of the loss of employment in the manufacturing side is due to the global competitive pressures that bear on spirits producers. However, we question whether the loss of managerial jobs from Scotland is necessary for survival, and point to the example provided by Scottish and Newcastle plc. (Paragraph 23).
(c)We recommend that the Government should give full consideration to the public interest, including the prospect for employment and regional economic development, during the consideration of proposed mergers. Explicit reference to the weight given to such issues should be made when outcomes are announced. (Paragraph 24).
(d)A number of malt distilleries have closed in recent years. The small company sector is under some pressure. However, small whisky producers probably have more opportunities to develop than similar sized operations in other drinks sectors. (Paragraph 28).
(e)The approach adopted by Diageo following closure of its Strathleven plant in Dumbarton may have lessons for other communities that have been affected by closure. (Paragraph 30).
(f)The example of Scottish and Newcastle appears to suggest that there is no reason why Scotland could not support the headquarters of global drinks companies, the reverse of the situation in the whisky industry where the ownership of the large companies has largely been lost to Scotland. We were disappointed that we did not see more evidence of big Scottish companies acting in this fashion. (Paragraph 35).
(g)We would caution against any improper, pragmatic or idiosyncratic discrimination between markets in the various parts of the UK. (Paragraph 41).
(h)We recommend that the Treasury should continue on a long-term basis, its policy of freezing the tax on spirits until it is comparable with that levied on alcohol consumed in other forms. This would end discrimination against one of Scotland's major indigenous industries, and one of the UK's leading exports. (Paragraph 62).
(i)We believe that the UK Government should continue to argue in favour of the reform of the existing EU minimum rates system, which, it acknowledges, discriminates against spirits. The system, unsatisfactory from the start, is now well past its sell by date. There is no more basis for the discrimination against spirits at the EU level than in UK taxation. We believe that similar criteria should apply. (Paragraph 70).
(j)We think it reasonable that the Government should be expected to undertake a comprehensive study on the revenue implications of the wide margin between excise duties in the UK and those apparent in most other EU countries operating in a Single Market. (Paragraph 79).
(k)We believe that spirits producers should be allowed the defence of due diligence when consignments (and therefore revenue) are lost, if incontrovertible proof of the exporter concerned acting responsibly, appropriately and in good faith can be demonstrated; and that appropriate steps should be taken to see that this happens. (Paragraph 91).
(l)We recommend that the Government commits itself to close monitoring of conditions and to ensuring that Inward Processing Relief levels are set appropriately. (Paragraph 95).
(m)We fully support the Government's efforts to overcome the trade barriers facing spirits producers in some foreign markets. (Paragraph 100).
(n)Future growth in Scotland's soft drinks industry will probably depend on growth in Scotland's indigenous companies, and only one of these currently has sufficient scale and reputation advantages to take this forward. (Paragraph 105).
(o)We would ask the Scottish Executive to consider transposing into law the full terms of Directive 96/70/EC, which is concerned with the exploitation and marketing of mineral waters, including harmonising the definition of the term "spring water". (Paragraph 111).
(p)We recommend that the Government recognises that there is a direct association between the various stages of whisky production, and, when operation of the Climate Change Levy scheme is reviewed, acts to ensure that the rebate scheme treats all spirits production equally and thereby corrects the inherent anomaly. (Paragraph 118).
(q)We believe the insensitive application of the Climate Change Levy rebate scheme, for which only food and drink producers using animal, vegetable or dairy ingredients in the manufacturing process are eligible, has the effect of needlessly discriminating against bottled mineral water producers. Given Scotland's position as the UK's major producer, it works to the detriment of Scottish companies. We recommend that the Government attends to this discrepancy when the CCL scheme is reviewed. (Paragraph 120).
(r)We believe that the Water Framework Directive contains some useful elements, particularly when viewed in a European, if not a world-wide environmental context. SEPA must continue to monitor the state of river levels and flows in the light of the significance of the water extraction industry in Scotland. (Paragraph 127).
(s)We would support the Scottish Executive, following its consultation process, in the introduction of a scheme for the registration of water usage. We firmly believe that the resultant increase in information would enhance its ability to protect the Scottish environment against potential future damage arising from climate change. (Paragraph 129).
(t)We find it curious that Scottish Enterprise Network's policy framework does not attempt to make greater use of whisky, both to promote the sale of other high quality Scottish food and drink products in international markets, and as a means of increasing tourism to Scotland. (Paragraph 141).
(u)We urge SEN to consider how it might take greater advantage of the unique position of whisky to increase international sales of other quality Scottish goods, and to increase tourism to Scotland. (Paragraph 143).
(v)With alcohol consumption patterns changing and growing, particularly amongst the young, we believe that more funding should be made available from both the industry and Government to enable increased availability of measures aimed at preventing and curing misuse. (Paragraph 148).
(w)Some of the problems we have identified relate to devolved matters and fall within the responsibility of the Scottish Executive. But we would urge the Scottish Executive fully to recognise the current trends in alcohol misuse and to take appropriate action. (Paragraph 151).
(x)We recommend that a fuller indication of the composition of soft drinks should be made available to consumers. Parents and consumers should know on an easy to understand basis, such as the number of spoonfuls per container, the exact sugar content of soft drinks. This information should be placed on the container. Consideration should also be given to a specific dental health warning. In addition, we support the EU proposals that labels for soft drinks should say so specifically when caffeine has been used. (Paragraph 154).

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2001
Prepared 28 November 2001