I will start by talking about alcohol and whisky, and then I will move on to talk about oil and gas. Specifically on whisky, I appreciate the Minister taking the time to talk about the contribution of the Scotch whisky industry. It does, indeed, contribute to our economy; of particular note are the 40,000 jobs it provides, including the 7,000 in the rural economy, which are really important for Scotland’s rural communities.
The positive changes the UK Government previously made to spirit duty meant there was confidence in the industry again, and we have seen a real change in the industry over the last couple of years, with a dozen new distilleries opening and 14 in various stages of planning, but the changes that have been made this year will put 36p on a bottle of whisky and mean that £4 of every £5 spent on whisky goes to the UK Government’s coffers.
My hon. Friend the Member for Argyll and Bute (Brendan O'Hara), who is the chair of the all-party group on Scotch whisky, spoke about this issue on Second Reading, although not at enough length—he got only four minutes. He is really concerned about distilleries. I appreciate the Minister talking about the success story that the gin industry has been for new distilleries—it takes a long time to mature Scotch whisky but not to mature gin, so distilleries can be up and running pretty quickly. The issue is the context in which things are seen. I understand that, as the Minister said, the change will not affect those selling abroad, but given that most producers sell whisky in the domestic market, it will obviously have an effect on those who also sell abroad.
In the wider context of Brexit, where the trade deals we currently have will no longer exist and we will have to negotiate new trade deals, including with the EU, if we are to sell whisky to France, as the Minister mentioned, we will have to have a trade deal. We will have to have trade deals with all the countries we trade with under the EU’s free trade agreements.
A major concern for those of us who represent constituencies involved with whisky is the protected geographical indication. The EU has protected geographical indication status, so people are not allowed to bottle whisky somewhere else and call it Scotch whisky. We are set to lose that protection when the UK leaves the EU, and it is important that the UK Government do what they can to ensure that the Scotch whisky industry can continue to trade and protect its brand—but I do not see that coming through. If the Government had not raised duty in this Budget on spirits and on whisky in
particular, the industry would have known that it had the confidence of the UK Government and been in a much better position to take decisions.
Moving on to oil and gas, we have two new clauses on the amendment paper. New clauses 3 and 4 on behalf of the SNP are in my name, and I particularly thank my hon. Friend the Member for Aberdeen South (Callum McCaig) for his input into them. New clause 3 is about investment allowances. This Tory Government have come up with a line that we are one of the most competitive fiscal regimes for oil and gas, which is all well and good, but we also have one of the most mature fields in the world. In the North sea and on the UK continental shelf, we are also having to do things and implement technologies we have never seen before. A huge amount of innovation from our companies is having to go on in order for them to be able to achieve the UK Government’s and Sir Ian Wood’s maximising economic recovery strategy.
New clause 3 is about investment allowances and corporation tax rates on companies producing oil and gas. The UK Government have put the tax up and put it down, but they have not at any stage sat down and looked at the entire taxation regime for the oil and gas industry and said, “We are operating in a new scenario.” They have kept the level of taxes that we have had since oil and gas began to be taken out of the North sea. It is time for the UK Government to look at that tax structure and those tax regimes to see how they can incentivise companies to ensure that they are getting the best out of the North sea and securing jobs in the north-east of Scotland, and beyond, for as long-term a future as possible.
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New clause 4 is particularly about the competitiveness of UK-registered companies. I have mentioned decommissioning and the development of new fields in the UKCS around us. The new clause is similar to one that we tabled to last year’s Finance Bill. I would really like the Government to take action on this. Whenever I go to meet supply chain companies or individuals working at the coalface, as it were, in oil and gas, they tell me that this is a major issue. Decommissioning is beginning in the North sea, where some of the fields are at the end of their life and some installations are at the end of their usable life, whatever we do. This is still a relatively new thing for us, and our supply chain companies are having to innovate. We do not want any of the jobs created in decommissioning to go abroad if we can possibly help it. We would like this UK Government to look at what they can do to the tax regime to ensure that those jobs are kept in the UK as far as they possibly can be.
We are also asking about that in relation to new fields. On Second Reading, I spoke about small pools, which have fewer than 50 million barrels of oil. In this current tax system and fiscal situation, they are not particularly economically viable, and so the vast majority will not be exploited. If changes were made to the tax regime in order for these small pools to be exploited, and further encouragement given to enable companies to develop new technologies so that we can access small pools, the UK Government’s tax take would increase. If we just leave them there, there will be a problem, particularly
further down the line. A number of the small pools rely on current installations, and if the big installation in the middle is decommissioned, we lose access to all the smaller fields round about. The UK Government therefore absolutely need to be on top of that today.
Finally on oil and gas, I turn to something that made me pretty angry in the Budget debate. The Chancellor announced that he was going to make it easier for companies to transfer late-life assets—that is, installations that are near the end of their useful life—and said, “We’re going to have a commission to look into this.” That is exactly what the Chancellor announced in the Budget last year, apart from saying that we would have a commission. If the Government had done it last year, they would not need a commission this year. I know that this is a technical matter, but the Government need to get themselves in gear and make these changes so that the assets can be transferred from the big player who has other things to focus on to a new player coming into the industry who can make the most of the asset and ensure that as much oil and gas is extracted from the field as possible. I appreciate that the Government are having a commission, although I would rather that they had done it last year. We will be absolutely on board in supporting this change happening as soon as possible.
Question put and negatived.
Clause 60 accordingly disagreed to.
Clause 61 ordered to stand part of the Bill.
Clauses 62 to 63 disagreed to.
Clauses 64 and 65 ordered to stand part of the Bill.
Clauses 66 and 67 disagreed to.
Clauses 68 and 69 ordered to stand part of the Bill.
Clause 70 disagreed to.