The Scotch whisky industry has applauded a decision by George Osborne to agree to a “historic” cut in duty for whisky, after he trimmed 2% off the hefty duties paid on each bottle.

The chancellor has come under heavy pressure from the Scotch Whisky Association and Scottish Tories to cut the duty of 78% on an average bottle, only the fourth duty cut on whisky in a century. That campaign intensified last week after the SWA said domestic whisky sales fell 5% last year.

The 2% duty cut is equivalent to around 16p off the cost of a typical bottle of whisky costing £12.90, the SWA said. The UK government estimated it was worth 19p on a bottle.

Alongside his £1.3bn package for Scotland’s beleaguered North Sea oil sector, Osborne’s cut could also boost Liberal Democrat election campaigns in the Scottish Highlands, where key seats are under direct threat from a resurgent Scottish National party.

His deputy, Danny Alexander, is under intense pressure from the SNP in his seat of Inverness, Nairn, Badenoch & Strathspey, which includes distilleries on the fringe of prime whisky production territories on Speyside.

In the nearby Lib Dem-held seat of Gordon, it is understood that Sir Malcolm Bruce, who is standing down, and his successor, Christine Jardine, have lobbied the Treasury to cut duty to protect Speyside distilleries in the constituency, which is being contested by former Scottish National party leader Alex Salmond.



The Scottish Tories claimed the duty cut could boost tax revenues by £1.1bn, through increased sales, investment and employment in the sector, whose exports are worth £5bn a year.

David Frost, the chief executive of the SWA, said the industry would be “raising a glass” to Osborne and his Treasury colleagues: “This is a historic decision and only the fourth time whisky duty has been cut in a century.

“The chancellor’s announcement will be toasted across the whisky industry and by consumers who are getting a fairer deal on tax when they have a drink of Scotch. The move is a major boost to our industry as we look to grow again in the UK, and equally sends out an important signal on fair taxation to our export markets.”

Capping off an extensive lobbying campaign that has annoyed health campaigners, the SWA had asked for a 2% cut last week as it disclosed that sales in the UK last year fell 5% to 83m bottles. Domestic sales have fallen 10% since 2009 – a fall that mirrors the recession.

Ruth Davidson, the Scottish Tory leader, said: “This is a significant announcement for the whisky industry in Scotland and will be a great boost to jobs and investment in the drinks sector.

“I’ve been campaigning for over a year, to reduce the tax on one of Scotland’s most famous exports and I’m pleased to see the industry recognised in this way today.

“Last year a similar tax break worked well on beer, but this goes even further and will bring about significant benefits to a thriving Scottish drinks industry.”