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Senior industry figures toast positive reception from Treasury over proposed 2% duty cut

Published:  11 February, 2015

Senior representatives from the drinks industry met with Treasury officials yesterday to present evidence in support of the proposed 2% duty cut on alcohol, describing the discussions as "constructive".

Senior representatives from the drinks industry met with Treasury secretary Priti Patel MP yesterday to present evidence in support of the proposed 2% duty cut on alcohol, and described the discussions as "constructive".

Denis O'Flynn, chairman of the WSTA and managing director of Pernod Ricard UK, told the reception was "very positive".

"Priti Patel was genuinely interested in the sector and understands it - that's helpful," O'Flynn said. But he pointed out that, as a politician six weeks ahead of the Budget, she "had her guard up and conceded nothing" about whether the Treasury would cut duty for wines and spirits.

"She is receptive. We've given her as much information as we can and we've been very active in getting the campaign going and getting MPs animated about it. There is no doubt it has been effective. Whether they'll be able to deliver the duty cut is something that's within the gift of the politicians," he added.

"We're beginning to be a very significant industry," O'Flynn said in terms of the economic contribution made by the sector. This year's Drop the duty campaign has been "far more focused" than last year's, and politicians are listening, he said, especially those in vulnerable seats. O'Flynn said the WSTA membership has been "far more engaged" at getting the message out there.

"It's pretty clear we have to go for [the duty cut]," O'Flynn said. "The challenge will be keeping the momentum up over the next three to four weeks," he added.

O'Flynn said the discussion broadened into looking at how the government might be able to encourage investment in the fledgling English wine industry, pubs and spirits. The trade must also consider the upcoming General Election, he said, and what the administration's priorities would be moving forwards. O'Flynn said looking at issues such as reforming bank lending to the wine and spirits sector - start-up businesses face many hurdles as their first production appears five or 10 years after the initial investment is required - would help. He added that the distilling and vineyard industries could help regenerate ailing rural areas, maintaining employment and attracting young people as well as boosting communities and rural pubs.

David Frost, chief executive of the Scotch Whisky Association, who attended a separate meeting with the minister said: "We had a warm and constructive discussion with the Exchequer Secretary to the Treasury. The Minister clearly understands Scotch whisky's economic importance and we welcome her interest in the industry.

"In the UK, Scotch whisky is under sustained pressure from taxation. 80% of the price of an average bottle of Scotch whisky is taxation and we hope the government will take on board our concerns about the negative impact of this onerous tax burden.

"In last year's Budget, the Chancellor highlighted Scotch Whisky as a 'huge British success story'. We hope this year too he will show his support for this world-class manufacturing industry, which adds £5bn to the UK economy and £4bn net to the UK trade performance every year.

"We hope the government will back us by cutting duty by 2% for Scotch whisky this year. This would be fair to consumers, send a powerful signal to export markets, support public finances, and most of all promote investment and jobs."