Select Committee on Scottish Affairs Minutes of Evidence


Examination of Witnesses (Questions 520 - 527)

WEDNESDAY 31 JANUARY 2001

MR BILL SPEIRS AND MR IAN FULTON

  520. Studies on alcohol abuse suggest that this is a serious problem in Scotland. We are only too well aware of that fact. What concerns does the STUC have regarding the disadvantages to health connected with alcohol abuse? Would not a reduction in excise duties simply increase the alcohol-related problems in Scotland?
  (Mr Speirs) It is a serious issue which genuinely merits further research on the likely impact of a reduction in price, whether it be by duty or any other way, on the problem of abuse. Our general position is that alcohol abuse is best tackled through education and sophisticated promotion of cultural change. Increased alcohol abuse problems can be identified as varying in different parts of the country. In most instances one cannot relate it to price; clearly, it is related to something more sophisticated, including the whole cultural attitude to alcohol. One area in which the STUC has been involved for many years is working with the Scottish Council on Alcohol and what used to be called the Industrial Alcoholism Unit. (I am afraid that its current name escapes me.) We work closely with them and Scotland's Health at Work in encouraging the promotion of sensible and informed consumption of alcohol. We do not believe that the kinds of things we are talking about—growing the market as a whole and ending discriminatory taxation—would have a negative impact on the problem of alcohol abuse. The problem is related much more to cultural matters which are harder to deal with than simply varying the rate of tax. However, it must be tackled.

  521. Are you aware of any evidence or reports as to which form of alcohol does the most harm, whether it be beer, wine or spirits, or are they all equally good or bad depending on your point of view?
  (Mr Speirs) I confess that I am not up to speed on the latest research in this area. I suspect that you will find a number of different reports from different angles. I do not want to be flippant about it, but everyone knows that sometimes red wine is good for you; at other times it is discovered that it contains some impurity which causes a problem if you have a particular condition. We do not have up to date information which must be looked for elsewhere.

  522. You referred to bulk malt exports and you wanted to say a little more about it.
  (Mr Speirs) Although we work closely with the Scotch Whisky Association in a number of areas, this is an area where we differ from the industry. We take the view that the export of bulk malts for blending with grain spirits elsewhere, even though the product cannot be explicitly sold as scotch whisky, is damaging to the brand overall. In particular, we see a particular role for the niche marketing of high quality scotch malt whisky. That is one area where there is potential for growth. The export of bulk malts can only be damaging to the brand overall. If it is bottled somewhere else it is not being bottled in Scotland.

  523. Is there not a Catch 22 here? In particular, in the 1970s it was the only way by which a number of distilleries could be kept open and in production.
  (Mr Speirs) The case could have been made at that particular time that that was how they could be kept in production. However, there are lots of downsides to mergers, acquisitions, globalisation and loss of control. One of the upsides is that if there is a company with the kind of resources that are available to Diageo and the other giants in dealing with a product like scotch malt whisky it should take a sufficiently long-term view and have access to adequate resources to be able, if necessary, to stockpile rather than undermine future markets by devaluing the brand by using bulk exports.

  524. Would that be another variation on the tax system?
  (Mr Speirs) In providing incentives to companies to do that?

  525. Yes.
  (Mr Speirs) I have not thought of that; perhaps it is worth thinking about.

  526. During the course of the inquiry the committee has visited Islay, Shieldhall, Kilmulid, Dumbarton and Tenant Caledonian Brewery. We are to visit to Barsoft Drinks and Beaulieu Water to see all the production of the four types of drinks in which we are interested. We also hope to talk to the EU and World Trade Organisation. Are there any points relating to Scotland which you suggest should be raised with the EU and WTO?
  (Mr Fulton) There are a number of strategic issues here which focus on what we said earlier about mergers and acquisitions. Earlier I referred to the decision by Seagrams to sell off its spirits business to Pernod Ricard and the partnership arrangement which basically crosses a number of boundaries. It has had the ability to spend about £5.5 billion which is about one third of the whole of the Scottish Parliament's budget. I suggest that there is a major economic issue here. The same applies to Diageo; and there may be others players who so far have been excluded but are looking at what they do. Within the Scottish economy it is difficult to be able effectively to control that and the impact on future jobs if there are two players which have such a major impact. Perhaps we should look at tightening up the rules from a European perspective, because we are not alone in this market. I have no doubt that similar discussions take place in France in the context of the cognac industry and the rationalisation in that premium area. As far as concerns workers, very often these takeovers and mergers are determined by the Transfer of Undertakings (Protection of Employment) Regulations (TUPE). One of the issues that faces the unions, not only in this industry, is those matters which are not currently caught by TUPE. There is no control over pensions; they are still a grey area. One must revisit the whole of the legislation. One of the first questions that we are asked by our members is what is likely to happen to their pension arrangements if such and such goes ahead. That is a very complex, critical area, and it has a major impact on what happens. There are a number of key issues. Industry has the ability, not only in Scotland but also Europe, to alter the economy, with the potential for radical effects upon it. More parochially, there is the issue of pensions which may be more a matter for the UK Government.
  (Mr Speirs) I should like to re-emphasise the issue of equal treatment of employees in terms of the right to consultation and information, and also rights in terms of what happens at acquisition in relation to pensions. One can also have a level playing field in terms of the cost of closures. There is little doubt that one issue that comes into play—this does not apply solely to the drinks industry—is that when decisions are taken globally, or even at European level, about where to rationalise and close, the costs to the employer in the UK can be significantly less than elsewhere. Without saying that the costs should be lower or higher, there should be a level playing field. Another matter is that within the context of the WTO and EU the issue of free trade, which is an entirely different debate, must be linked to a robust competition policy.

  527. We have exhausted our questions. Would either witness like to make any final remarks?
  (Mr Speirs) Chairman, thank you very much for the opportunity to speak to the committee.

  Chairman: If subsequent to the meeting something occurs to you please send it to the clerk. We welcome any further submissions that you may make. I thank you both for your attendance this morning. Your evidence will be very helpful to the committee when it comes to compile its report.





 
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