The Gordon-Grant family have more than doubled their wealth to £2.9 billion in less than six years on the back of Scottish resources – yet politicians only advocate more tax cuts for Scotch whisky
COMPILER of the Sunday Times rich list 2019, Robert Watts, has said that billionaire Scots are faring better than those south of the border.
“More than half of our Scottish Rich List have seen their fortunes rise over the past 12 months – that’s a higher proportion than other parts of the UK,” Watts said.
So what’s the magic trick for the super-rich to keep getting richer in Scotland? Here’s a clue: it’s got nothing to do with innovation, hard work or any of the other cliches which have little to do with the reality of power and wealth in the 21st century.
The most sure-fire way to rising wealth for Scots billionaires appears to be to own very valuable chunks of Scotland, turn that resource control into commodities for sale, and reap the profits.
There are many cases of this in today’s rich list, including north sea oil tycoon sir Ian Wood and owner of Highland Spring Mahdi Al-Tajir, but perhaps the most interesting is right at the top of the list, way out in front of the rest: The Gordon-Grant family, with a family wealth of £2.9 billion.
That figure may not sound too impressive in the abstract (the world’s richest man Jeff Bezos is worth £123.7 billion, at least before his upcoming divorce is finalised) but consider the trajectory the Gordon-Grant family have been on. Last year, the Sunday Times reported that no family’s wealth in the whole of the UK had grown faster than Gordon-Grant since the rich list began, a whopping 5,000 per cent increase in 29 years. This year the rich list informs us that the family’s wealth has more than doubled in just the past six years, up from £1.4 billion in 2013 to £2.9 billion today. The increase from 2018 to 2019 is an enormous £310 million.
How did they do it? The Gordon-Grant family own William Grant & Sons, which produces Scotch whisky titles such as Glenfiddich and Hendrick’s Gin. The firm can be traced back over 100 years, when William Grant began to distill whisky in Glenfiddich in 1887.
The meteoric rise the firm has went on over the past 30 years is down to the enormous growth in export markets, especially with the rise of a new middle class in Asia, with hundreds of millions of people suddenly with enough spare cash for conspicuous consumption on Scotch whisky, a luxury product. Scotch whisky has a protected geographic indicator, meaning the name can legally only be used on bottles of whisky produced in Scotland.
Just in the past year, profits are up 14.4 per cent, with growth in North America, Asia and Europe accounting for increased sales. The only alcohol duty paid on whisky sales is on domestically sold goods, so beyond corporation tax, all exports of scotch whisky bottles is pure profit. And oh how profitable scotch whisky is, with a study by Bigger Economics in 2012 showing 60 per cent profit margins - among the largest of any industry in the UK.
That’s the sort of profit you can only get from a resource which is, in effect, exclusive to Scotland due to the Geographic protective indicator. But how much does the Scottish Parliament take in tax contributions from the Gordon-Grant family for the privilege? Nada.
Indeed Mr Gordon does not even pay income tax here, registered as he is as a resident in the tax haven of Jersey. Not that being a tax exile has stopped him from contributing to his favourite Scottish political causes, donating somewhere in the region of £100,000 to Better Together in 2014, and smaller donations to other No campaign groups in Scotland. I mean you have to do something with all that money you are saving in tax contributions, don’t you?
Biggar Economics estimated a £1 production tax on each bottle of whisky – meaning on all exported bottles too – could bring in £1 billion for Scottish public services. Given the rise in the Gordon-Grant family’s wealth in the past six years, that sum could raise twice as much today. By comparison, the Scottish government’s changes to the Scottish rate of income tax last year brought in an additional £164 million per year.
But despite all this, finding politicians in Scotland who are willing to challenge the whisky industry and the stupendous profits they are making out of Scottish resources is hard going. Indeed, via their powerful lobby group the Scotch Whisky Association, politicians, including pro-independence ones, are more likely to be found lobbying the UK Government to reduce the tax burden on alcohol duty, as was the case in September last year, when a co-ordinated campaign was successful in convincing the UK Government to not end the Alcohol Duty freeze, as Chancellor Phillip Hammond had threatened to do.
Yet these same politicians tell us they care about rising inequality and want to do something about it. But doing something about it means challenging private ownership of Scottish national resources, and at minimum making the richest pay their fair share. There’s no real battle against inequality without also battling the vested interests intimately connected to it.
Picture by Scottish Government: Scotch Whisky Association celebrates new Edinburgh HQ