Earlier this month, the Chancellor said that the mission of this Government is “to restore our public finances to health, to make our economy more productive, to make businesses more competitive so they can create jobs”.
The Budget in eight weeks’ time provides an opportunity to put these sentiments into action, but he will be acutely aware that his options are limited.
That is why it is vital that he learns the lessons of what has worked in the past. And to find an example of a tax cut which has benefitted consumers and industry while also raising revenue for the Treasury, he has only to look back 12 months to his treatment of Scotch Whisky at the 2015 Budget.
Last year the Scotch Whisky industry asked for a punitive, ineffective taxation policy to be thrown out. We argued that after years of exponential duty increases, the industry – a hugely important industry for the UK – should be given a break.
Specifically a break in duty. We argued that this wasn’t a handout, but that it would enable the industry to invest, to secure jobs and to become more competitive.
At the same time it would give a boost to ordinary people, who shell out almost £10 of tax every time they buy a single bottle.
We now have the figures that show the sense of our argument. Since George Osborne listened and, in last year’s Budget, introduced only the fourth duty cut for Scotch Whisky in a century – revenue to the Treasury from whisky sales has actually increased.
That’s right – since cutting duty, freeing industry from an onerous tax regime, spirits tax revenue to the Treasury has increased by £96 million compared to 2014, with Scotch Whisky representing a significant proportion of that total. When this year’s Budget comes around that figure will be more than £100 million.
In one move the Chancellor safeguarded industry, eased the pressure on ordinary drinkers and boosted Treasury coffers.
It was simple, it was effective and it should be repeated this year.
There are few industries in the world that can boast both the heritage of Scotch and its long-term commitment to investment, supporting jobs in Scotland and across its extensive UK supply chain.
Our distillers, given the chance, can be trusted to deliver a future as long and successful as our past. Last year, George Osborne recognised and championed this. But tax levels remain at 76% on every bottle.
Now that we know the policy works, let’s have more of the same this year.
David Frost is the Chief Executive of the Scotch Whisky Association