By Steve Bargeton, political editor

CHANCELLOR ALISTAIR DARLING was last night accused by the Scottish Government of damaging Scotland’s economy while reaping the benefit of soaring North Sea oil prices.

His “savage” 55p duty increase on a bottle of whisky could damage exports at a time when North Sea oil was contributing heavily to Treasury coffers, claimed the SNP.

The duty increase drew a furious response from the Scotch Whisky Association which said the rise, the biggest since 1991, meant the Government had “abandoned” moves towards a fairer alcohol tax policy.

Once VAT is taken into account the increase will add 59 pence to the cost of a bottle.

Beer is also going up by 4p a pint, cider by 3p a litre and wine by 14p a bottle as a result of the tax increases announced yesterday.

Distillers had argued for a continuation of the freeze on duty which has been in place for the last 10 years but instead were handed a rise of almost 9%.

The Scottish Government is to get an extra £26 million as a result of spending increases announced in the Budget—half in the coming year, and the rest over a total of three years.

On Treasury figures, around 600,000 Scottish families will gain from the increase in child benefit and 301,000 families will gain from next year’s child tax credit increase, while around three quarters of a million over-60s will gain from the increase in winter fuel payments, said the Treasury.

But the Budget found little enthusiasm in Scotland’s business world.

Scottish Chambers of Commerce called the Budget a missed opportunity, while tax experts KPMG said, “There was nothing in this Budget that will really benefit Scottish businesses,” and CBI Scotland said, “We did not expect a bonanza for business from the Chancellor’s budget and so it proved.”

The Scottish TUC called it “a decent Budget” but one that could have been bolder on child poverty, the environment and tax unfairness.

The Child Poverty Action Group in Scotland said, “This is excellent news for Scotland’s poorest children and children facing poverty across Britain.

“It keeps the 2010 target to halve child poverty in reach.”

Anti-smoking campaigners, however, said the 11p Budget rise on a packet of 20 cigarettes was not enough, and environmentalists were dismissive.

Duncan McLaren, chief executive of Friends of the Earth Scotland, said, “This budget reveals that the UK Government’s commitment to tackling climate change remains spin-deep.”

He went on, “While we welcome showroom taxes, without fuel duty rises the budget package of transport measures is all icing and no cake.”

Meanwhile, Mike Beale, Perthshire Chamber of Commerce president, voiced his Budget disappointment in relation to Scottish businesses.

He said, “Failure to cut small companies’ rate of corporation tax and no mention of any planned increases to capital gains tax will not do anything to boost the Scottish economy.

“A further disappointment came in the postponement of the 2p rise in fuel duty rather than an outright rejection.”

However, the chamber welcomed the promise of simpler taxes for small companies plus an increase of £60 million available through the small firms loans guarantee scheme. Threshold rises on the Enterprise Investment Scheme and Enterprise Management Incentive were welcomed.

But Scotland Office minister David Cairns insisted, “In a time of global economic uncertainty this Budget demonstrates that Scotland continues to benefit from being part of a UK economy that is well set to weather the difficult times that the world faces.

“This stability has delivered almost 270,000 more people in work in Scotland than a decade ago.

“The UK Government’s management of the public finances means that the Scottish Executive has a bigger budget than ever before—Alex Salmond now has twice the amount of money that Donald Dewar had.”

Last night there was no hiding the anger in the Scotch whisky industry which supports 65,000 jobs and accounts for 25% of UK and 67% of Scottish food and drink exports.

“Scottish distillers are astonished by the Chancellor’s announcement,” said Gavin Hewitt, chief executive of the Scotch Whisky Association.

“The Government’s own figures show that any duty increase on whisky is likely to reduce revenue at a time when public finances are tight.

“A tax rise is a blow to international competitiveness when the industry has been investing significantly to meet growing global demand.”

SNP treasury spokesman at Westminster, Dundee East MSP Stewart Hosie, said, “The Chancellor is damaging Scottish interests, and filling his spending black hole with Scottish oil and whisky.

“The whisky sector is one of Scotland’s key industries both in export earnings and employment terms and when the task should have been to tackle binge drinking by differentiating between products and making the tax system fairer, Alistair Darling has chosen to clobber one of Scotland’s premier products.

“What kind of signal does this send out internationally when the Scotch whisky industry cannot even trust the UK Government to treat it fairly?

“At a time when distillers face rising energy and raw material costs, a cut in excise duty would have reduced the domestic tax discrimination against the sector, and provided the trading conditions that are essential to encourage the ‘stability’ for the industry that the Chancellor was, elsewhere, so keen to be seen to champion.

“At a stroke Alistair Darling has undone the benefits of the freeze of previous years.

Tory shadow Scottish secretary David Mundell said his party would vote against the increase in tax on whisky.

“In recent times, the Scotch whisky industry has been a good news story for Scotland and indeed there are ambitious plans for future investment,” he said.

“However, instead of supporting the industry and the 65,000 jobs which depend on it, Mr. Darling has put their future at risk…

“Worse still, he has guaranteed that they will face an inflation-busting ‘whisky accelerator tax’ in each of the next four years.

“There can be no pretence that this is a public health measure addressed at binge drinking.

“If it was, the Chancellor would have followed Conservative proposals and targeted any tax rises on those drinks that are linked with anti-social behaviour amongst young people, namely alcopops, super-strength beers and ciders.”

The Scottish Lib Dem deputy leader, MP Michael Moore, said, “Scotland’s whisky industry will rightly see the increase in spirits duties as a smash and grab on the sector.”

The Campaign for Real Ale (CAMRA) hit out at the Chancellor’s decision to increase beer duty by 4p a pint with annual increases of 2% above inflation for the next four years.

The consumer group claimed that the increase would lead to at least 20p on a pint over the bar, fuelling pub closures and increasing unregulated drinking.

However, doctors gave their strong backing to increases in alcohol duty saying that “tough action” was needed to tackle the culture of binge drinking.

Dr Vivienne Nathanson, British Medical Association head of science and ethics, said, “These tax increases may be unpopular with some members of the public but we hope that they will look at the wider issue and recognise that the UK has a real problem on its hands regarding alcohol misuse.”

Director of Tullibardine Distillery, Doug Ross, who is also a member of Perthshire Chamber of Commerce, spoke of his dismay at the punitive tax increase.

He said, “This levy has been administered in direct response to the binge-drinking problem we have in the UK, but this is down to social and cultural issues, not the price of alcohol.

“This significant hike in tax on Scotch whisky places a real burden on the industry which supports a number of jobs in Scotland and is out of step with the much lower taxes on other alcoholic products.”