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Sir Robert Smith: In an industry where there is such a long time lag, it is a pity that the Budget decisions are made only on a yearly basis. Earlier, we discussed the need to give industry long-term indications of the Government's intentions. Would it not be helpful to see a forward plan for the tax basis for spirits?
Like previous Governments, we recognise that the benefit of taxing categories of alcoholic drinks rather than alcohol itself is that it allows tailored responses to inevitably changing circumstances. If we were to tax rigidly on the basis of alcohol content alone, we might lose that valuable flexibility. Nevertheless, we are committed to delivering a fairer balance in the burden of taxation falling between different alcoholic drinks and different types of drink producer, and we have consistently done so, as I said, Budget by Budget, since 1997.
The hon. Member for Moray describes the UK duty regime for spirits as discriminatory. On the contrary, we have one of the least discriminatory regimes of any country. [Interruption.] I hear the question, "What about those on the continent?" asked from a sedentary position. No EU member state applies a system of unitary taxation and all member states apply a higher rate of duty to spirits than to beer and wine. It is also a fact that the UK has the lowest differential between spirits and beer of any EU member state. In Germany, spirits duty is more than six and a half times beer duty. In France, the factor is five and a half times and, in Spain, spirits duty is more than three and a half times that of beer. To answer the question asked by the hon. Member for Galloway and Upper Nithsdale (Mr. Duncan), those are all significant spirits producing nations.
Mr. Baron: I thank the Minister for being so generous. The fact that there is a greater inequality on the continent surely does not lessen the fact that the inequality that we have here is basically wrong, and one cannot get away from that. I put it to him that most economists, including some of the Government's economists, are of the clear view that, if the Government were to lower the duty, they could boost revenue. To what extent are the Government examining that case, with a view to taking that action?
John Healey: Perhaps the hon. Gentleman should have been a little more patient because I am about to deal with that very point, which a number of hon. Members made, perhaps before he rejoined the debate.
We recognise the enormous contribution that the spirits industry makes to the UK economy and, indeed, to the Scottish economy, and its importance to our balance of trade. I also recognise its particular importance to the constituency of the hon. Member for Moray. However, I have to tell him that we have taken consistent steps since coming to power to deliver a fairer balance in taxation between alcoholic drinks, including six successive freezes in spirits duties. In deciding spirits duties, my right hon. Friend the Chancellor has to weigh up a range of factors, including the different circumstances of all sectors of the alcoholic drinks industry, as well as our spending priorities.
The fact remains that duty freezes and, even more so, cuts, cost revenue. The estimated cost of this year's freeze in spirits duty is £30 million. New clause 1 would cost an additional £30 million in the first full year of its implementation. The hon. Member for Moray shakes his head, but I have to tell him that there is no free way to cut alcohol and spirits duty. May I tell him, the hon. Member for Galloway and Upper Nithsdale, especially if he is about to jump to his feet, and the hon. Member for Eddisbury (Mr. O'Brien), who asked about modelling, that we publish the demand elasticity models on which excise duty costings are based?
The key improvements to the new model involve splitting beer into on and off-trade sales to achieve a better understanding of the dynamics in the beer sector and using better data, specifically following the completion of the European single market, to take better account of cross-border shopping as a factor in overall demand. As I said, that will be published shortly as an economic service working paper.
The point made by the hon. Member for Argyll and Bute about corporation tax treatment was raised by at least two other hon. Members on Second Reading last week. As my right hon. Friend the Paymaster General indicated in her response then, we are aware of the concerns of the Scotch Whisky Association, which it raised directly with me in our meeting before the Budget. We are discussing the issues with its representatives, and the measure was not designed to achieve such outcomes.
I am grateful to the hon. Member for Moray for giving us the opportunity to have this debate. To hear him speak, however, one would have expected universal disappointment from the spirits industry and universal condemnation of this year's Budget freeze, which is not the case. Let me quote Hugh Morrison, chief executive, no less, of the Scotch Whisky Association:
Mr. Salmond: I want to make a slightly unexpected contribution in support of my hon. Friend the Member for Moray (Angus Robertson)it is unexpected because I was hoping to speak on the next clause on oil taxation, which is equally important to the Scottish economy, but a combination of guillotine procedures from the Government and some long-winded speeches earlier made that impossible. I therefore want to add my voice to my hon. Friend's excellent arguments in relation to the whisky industry.
I sat through these debates all afternoon, and I am one of very few Members who are present who did so. I sat through amendment after amendment, but there were never more than eight Conservative Members in the House speaking to amendments, which they said
When we debate this new clause, howeverand the new clause on the oil industry, had we been able to reach itwe are debating matters that touch the livelihoods and jobs of thousands of people in Scotland and elsewhere. Perhaps the attendance that we have now in the House is related to the fact that we have finally reached a new clause about which most hon. Members feel confident that they know something. That does not excuse the Government, however, for not allocating time to allow significant, substantial amendments affecting employment to be properly and adequately debated.
It is unfortunate that the Chancellor was not able to join us today. I understand that he was closeted away with the Prime Minister discussing other things. It is unfortunate too that the Secretary of State for Scotland was not able to join usno doubt she was away making speeches stabbing the Chancellor in the back. Both right hon. Members should be concerned about the fate of the whisky industry, and both should be concerned about kick-starting exploration and jobs in the North sea. Given the amount of revenue that this and previous Treasuries have accumulated from the whisky and oil industries, one would think that the Government might allow sufficient time for a proper debate and make the relevant concessions that will keep those vital Scottish industries on the road.
The level of interest, time and concern that the Treasury Bench has devoted to such vital matters will not go unnoticed by people in Scotland. I thought that the Economic Secretary did a substantial and useful job on the concession on oil pipeline taxation. I hope that the next time we debate vital industries in Scotland, he allows us the time to do that and ensures that the personnel are available so that we have a substantial discussion. I also hope that the Government give those vital industries the priority to which they are entitled.