Adam Withrington: How the spirits industry halved its Pre-Budget Report duty increase
Remember, remember the 24th of November… taxes, u-turns and plot.
It was on this day that Alistair Darling performed his famous U-turn on alcohol tax giving first scotch whisky and then all spirits a 50 per cent reduction on the pre-Budget report duty increase. It has left the pub and beer industry floundering ever since.
How did the spirits industry do it, brewers and pubcos have demanded to know? The answer is simple politics.
First, look at Scotland. It has 59 seats up for grabs in a General Election - many of them marginal.
The results of the 2005 General Election gave 41 of those seats to Labour. That is 41 seats in Labour's total majority in Parliament of 66.
Add to that the current surging popularity of the Scottish National Party and you have a recipe for serious concern.
Second, the scotch whisky industry is currently investing £500m in new distilleries and jobs in Scotland - including many in the very same marginal seats. Diageo alone has just invested £40m in a new distillery in north east Inverness.
It doesn't take a genius to imagine the kind of pressure applied to the government by scotch whisky lobby and the likes of Paul Walsh chief executive of Diageo.
This is what concerns me about the news that emerged last week about the alcohol trade associations going to the Treasury as one with arguments against the duty escalator in reference to the forthcoming Budget.
This is all well and good. They are doing what Westminster has told them to do for some time after all - speaking with one voice. But is the beer and pub industry simply being too nice? Where was this spirit [ha!] of togetherness when the spirits lobby turned around and stabbed beer in the back in November?
Supermarkets have looked after their own interests in recent years by sending in their big hitters, like Sir Terry Leahy, to influence policy. Spirits has its own Leahy in Paul Walsh. Rumours are flying around that the spirits reduction in November had nothing to do with lobbyists and everything to do private phone calls from Paul Walsh. Where is the pub and beer trade's Leahy? We need one. And fast.
