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John Healey: I do not know whether the hon. Gentleman missed it, but I have dealt with match funding. I believe that he refers to category C and CC schemes, although he was not explicit. They deal with waste, and their funding has been transferred to public spending. I have written to him and other hon. Members and made a statement in the House and he therefore knows that we have put in place for this financial year a transition scheme to help such projects continue and reach a point where they can sensibly plan for a continuing operation after this financial year if they choose to do that. That will play an important part in providing security, certainty and the ability to plan in the long term for the projects about which the hon. Gentleman is concerned.

As we have already announced, the standard rate of landfill tax will increase by £3 per tonne to £18 per tonne in 2005–06, and by at least £3 per tonne in the years thereafter, on the way to the medium to long-term target of £35 per tonne. These higher rates send a clear market signal, and announcing them in advance maximises the effect. The Government have discussed with business and others how to make the increases revenue neutral to business as a whole. I have explained that the preferred options will now be developed, and decisions on the package of measures will be announced in the 2003 pre-Budget report. On that basis, I commend the clause to the Committee.

Question put and agreed to.

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Clause 184 ordered to stand part of the Bill.

New Clause 1

Rate of Duty on Spirits

Brought up, and read the First time.

Angus Robertson (Moray): I beg to move, That the clause be read a Second time.

I am delighted to be able to move new clause 1, which is aimed at reducing the duty on spirits by 3 per cent. This measure is primarily aimed at helping to boost the Scotch whisky industry, but it would of course have a positive effect on the Irish whiskey industry, affecting colleagues from Northern Ireland, and on the constituency in Wales that produces the sole Welsh whisky, Penderyn. It would also help spirit producers elsewhere in the UK who do not produce whisky.

The new clause has been tabled after discussions with the Treasury, and I am pleased to see the Economic Secretary to the Treasury in his place this evening. A delegation from the all-party Scotch whisky group, on which I serve as vice-chairman, along with other Members from all parties in the House, lobbied the Treasury on this matter earlier this year. Members from all parties also pressed the Government to accept a 4 per cent. cut in duty. That move was supported by Labour, Conservative and Liberal Democrat Members, and, of course, by the Scottish National party. In that spirit, I hope that there will be cross-party support for this measure, as it is more modest than the proposal supported by the all-party group.

The Economic Secretary to the Treasury does not need reminding that Scotch whisky is one of the UK's top five export earners, generating more than £2 billion a year from sales in 200 markets. The industry uses around 25 per cent. of Scotland's barley, and 70 per cent. of all Scottish grain is used in grain distilleries, many of which are in my constituency in Speyside, which contains more than 50 per cent. of Scotland's malt whisky distilleries. The industry accounts for 5 per cent. of manufacturing jobs in Scotland and there is a £1 billion a year spend on the purchase of goods and services from local suppliers. Forty thousand jobs depend on the industry, including 7,000 in rural areas, many of which have fragile economies. Indeed, my constituency has the lowest weekly wage of anywhere in Scotland, although that is not something of which people are proud. Any measure that helps to boost an industry of such significant importance must, therefore, be welcomed.

Pete Wishart: I am sure that my hon. Friend will join me in welcoming the decision to reopen the Glencadam distillery in Brechin. Does he not agree that, for new businesses such as that to develop and thrive, we need a fiscal regime that encourages rather than penalises?

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Angus Robertson: I agree with my hon. Friend. That point is being made across the industry, no matter where the distilleries are located. All the key indicators that I have outlined underline the importance of the industry throughout Scotland, and illustrate the need for the Government to provide the optimal conditions for it to flourish.

Over the years, commentators have established that the taxation regime at home and abroad is one of the most significant factors in determining whether whisky sells as well as possible. In recent decades, Scotch whisky has made great strides in markets such as Spain, Italy, the United States and the far east—all areas with generally more benign tax regimes. Sadly, some of the worst taxation excesses are to be found in the UK, the state that benefits from massive revenue from the industry.

As most whisky drinkers will be aware, two thirds of the price of a bottle of whisky is tax. Since 1973, the price of a bottle, including the excise duty, has been subject to VAT, which is levied on the duty price paid. That means that the price of a bottle of Scotch whisky is increased by and subject to a tax upon a tax. On 10 occasions in 18 years of Conservative government, sadly, the Tories took the opportunity to raise the burden on the whisky industry. That discrimination has continued under the Labour Government, and the duty on whisky is one and a half times higher than on other competing beverages.

Mr. Peter Duncan (Galloway and Upper Nithsdale): Before the hon. Gentleman launches into his usual discourse in anti-Conservative propaganda, he will note that his new clause only returns the situation towards that left by the previous Conservative Government.

Angus Robertson: I have sought to table a new clause that will attract maximum support across the House. I would like to see far more considerable cuts in duty, but this is a good first measure, and it is supported by Conservative Members, Scottish Labour party Members in the all-party group and Liberal Democrats. I hope that this modest proposal will receive the support of all hon. Members who have been lobbying the Treasury and that they will support it in the Lobby tonight.

Mr. Roy Beggs (East Antrim): I note how enthusiastic the hon. Gentleman has been in his observations in the promotion of Scotch whisky. Is he prepared to accept that in North Antrim, a neighbouring constituency of mine, the Bushmills distillery also produces high quality and exportable brands of what I would claim to be the best whiskies in the world, and that we too would benefit from a sensible fiscal regime that would help to promote the industry?

Angus Robertson: I am grateful to the hon. Gentleman for his intervention. I mentioned in my opening remarks that this measure would also benefit the industry in Northern Ireland, and I am delighted to see that the cross-party consensus is growing. I hope that that will be shown in support for the new clause—from Government Members as well—later this evening.

It is the discrimination against this key industry that the industry and the people who work in it baulk at. There has been some recent narrowing of tax

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discrimination against spirits, but the discrimination remains. It was continued in this year's Budget by a Chancellor who represents a Scottish constituency.

Like the Scotch Whisky Association, the Scottish National party has been in favour of a 4 per cent. cut in whisky duty, and experts believe that such a measure would be revenue neutral, creating a high demand for whisky, thereby maintaining duty and taxation income for the Treasury.

Most distilleries are based in rural areas, such as my constituency of Moray, and they are often the life-blood of the community. A duty cut for Scotch would have helped end the competitive disadvantage that discriminates against Scotland's farmers and rural communities. That can equally be said for Northern Ireland and Wales, and arguably also for spirit producers in England.

Mr. Alistair Carmichael (Orkney and Shetland): I agree with the substance of the hon. Gentleman's remarks, but does he agree that the vast bulk of whisky distilleries in Scotland are in remote areas where manufacturing industry is difficult to maintain, and that the discrimination is not just against the industry but against some of the most vulnerable and fragile economies in the United Kingdom?

Angus Robertson: I agree with the hon. Gentleman and I am delighted also to have support from the Liberal Democrats on this measure. Undoubtedly, a reduction in duty would not harm the Treasury. It would boost rural and urban communities throughout the UK. I urge all hon. Members, many of whom have been lobbying the Treasury for a more generous cut in duty, to go through the Lobby with us tonight, although I hope that the Minister will announce that the Government are to accede to a 3 per cent. cut in duty, which would be welcomed by Scotch whisky producers and others.

Mr. Peter Duncan: I am delighted to have an opportunity to contribute to the debate on new clause 1—and to reach new clause 1, given the somewhat spurious point of order that was raised by the hon. Member for North Tayside (Pete Wishart) earlier. I am delighted that the official Opposition have done what they could to progress matters in the context of the Government's appalling knife on the Bill. The official Opposition have done their utmost to debate as much as was humanly possible.

There is no need to remind the Committee of the significance of the Scotch whisky industry to the people of Scotland. The hon. Member for Moray (Angus Robertson) has given some statistics. I can add a couple of others. One in 54 jobs north of the border is dependent on the Scotch whisky industry. More than 11,000 people are directly employed in it. It also provides jobs indirectly, crucially in some remote and vulnerable communities, and attracts tourism, so there is a significant cause around which, I hope, a significant number of Members of Parliament from Scotland will unite tonight.

I have drawn attention to the fact that the tax system on spirits originated early in the previous century. The comments by a Chancellor in the 1920s sum up where many of the problems originated. When he was asked to

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justify his decision to increase tax on spirits but not on wines, he said, "nobody drinks wine," which probably gives some background to why the imbalance has arisen, how it has been amplified over time and why we should do something to redress it.

The rates applied to typical pub servings of whisky, wine and beer show the imbalance: the rate is 27.38p for Scotch whisky, 19.3p for wine and 16.65p for beer. The industry in Scotland can no longer tolerate that imbalance. Something must be done to start to redress it; it is obviously having an effect.

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