Westminster Watch: Tax and Diageo-gate

So minimum pricing has finally been blown out the water in Scotland.

The nail was hammered firmly into the coffin of minimum pricing last week, as MSPs voted against the measure for a third and final time.

So, that's that. But where does this leave us?

Westminster politicians will have been watching events in Holyrood last week closely. Alcohol "issues" remain a political hot potato - in no small part to the continued demonisation of booze by the rabid Daily Mail.

But with minimum pricing seemingly ruled out, the health lobby will now be going full steam ahead in calls for duty hikes.

This is where it gets interesting. The Treasury, along with the Home Office, is currently conducting a review of alcohol taxes. One industry insider has suggested nothing too radical is expected when the changes are implemented in next March's Budget.

But let's not count our chickens.

I sense the BBPA and its pub and brewing members are getting more than a little twitchy about where Osborne might be going with this, bearing in mind the state of the public finances.

This must be in no short measure to Diageo's call for equivalence on duty, in its Treasury submission. It's a complicated argument, but the bottom line is it would mean duty on all other drinks being hiked in line with spirits.

Headache

This is where BBPA chief Brigid Simmonds has had a headache.

Diageo, a BBPA member and the world's biggest spirits producer, wields a huge amount of lobbying power when it comes to government.

Indeed the group's chief executive, Paul Walsh, accompanied David Cameron to his recent jaunt to China (as well as Tesco's executive director).

Trouble is, other BBPA members are furious with Diageo's stance on duty - and argue the drinks giant's stance is incompatible with the rest of the group. After all, duty and lobbying on the issue is such a massive part of what the BBPA is about.

Reports last week suggest Diageo will be, or have been, asked to resign or face a reduced role within the BBPA. This could take the form of being excluded from seeing briefing papers on duty.

One source told me that Diageo previously batted the ball back into the BBPA's court, effectively saying we're not resigning, it's up to you if you want us out.

And so the age-old conundrum: is it better to have someone in the tent p*ssing out, or outside the tent p*ssing in?

For the time being, both sides are keeping incredibly tight-lipped about the situation, with some senior BBPA figures even being kept in the dark.

It could be a while before the true story emerges. Conceivably, Diageo's fate within the BBPA could have already been sealed.

Either way, let's just hope George Osborne does not deal up the pub industry a nasty surprise, come next March.