Wales Bill

Debate between Lord Anderson of Swansea and Lord Rowe-Beddoe

Wednesday 15th October 2014 Lords Chamber

[Lord Rowe-Beddoe (CB)]

My Lords, I wish to speak to my Amendment 51A, which relates to air passenger duty devolution. I draw the attention of the Committee to the register of interests, in particular the reference to my chairmanship of Cardiff Wales Airport.

The UK Government’s stance on APD remains bafflingly inconsistent with the devo-zeitgeist, if I may call it that, that has so enraptured everyone over recent months. The decision to cherry pick parts of the Silk recommendations is a sad example of the short-sightedness that seems continually to put Wales behind. The Bill provides an opportunity to redress this state of affairs. I shall quote the relevant passage from Silk 1, so that I can put it on record. It states:

“We have also recommended the devolution of long haul rates of Air Passenger Duty, and consideration of full devolution in the future. We do this in the context of the wider consideration of regional airport developments across the United Kingdom associated with the independent commission on airport capacity, chaired by Sir Howard Davies”.

The UK Government position currently is that:

“APD devolution will distort competition”,

when applied to Cardiff and Bristol. This is unsound and I put it to your Lordships that that position is not supported by the European Commission guidance that defines the laws on support of regional airports. The European Commission in its latest guidelines on state aid to airports and airlines made it clear that airports with more than 5 million passengers per annum can and should run on their own steam, without any government support. Bristol has more than 6 million passengers. The Commission recognises that there is a case for government state aid being offered to smaller regional airports, and defines them as those that have between 1 million and 3 million passengers per annum. Cardiff currently handles just over 1 million. The Commission also states that if airports are more than 100 kilometres apart, then they have, by definition, different core catchments, and aid to one will not affect aid to the other. I can assure noble Lords that Cardiff Airport is more than 100 kilometres from Bristol Airport—I have actually used my tape measure—and each certainly has different core catchments. It is my contention that aid to one will not affect the other. It is therefore my contention that the UK Government’s current position is flawed because they could not make a legitimate case, underpinned by EC guidance, that aid to Cardiff distorted competition with Bristol.

The Welsh Government have a long-standing policy of lobbying for full devolution of air passenger duty, with a view to abolishing it. I was informed this afternoon that all four party leaders have agreed to propose again the abolition of long-haul air passenger duty. The Commission on Devolution in Wales, Silk 1, recommended that long-haul air passenger duty should be fully devolved. So where are we? This is a very important factor regarding competition. Belfast was given such devolution on the basis that it is near to Dublin. I do not think that it is 100 kilometres distant but Belfast was given it anyway by the UK Government. I bet my bottom dollar, if I may use such vulgarity in your Lordships’ House, that Edinburgh will be after this in a flash when it gets whatever it is going to get in the future.

I put it to noble Lords and the Government Front Bench that this situation is very serious for us in Wales. The Howard commission recognised the importance of regional airports. This is the one regional airport of our capital city in Wales, and has to be provided for and helped. That is the point of my amendment and I ask the Government to consider it.

[Lord Anderson of Swansea]

My Lords, I have two brief comments—one on the varying of fuel duty and the other on air passenger duty.

I hear what the noble Lord, Lord Wigley, says and the assumption is that we as a people are relatively poor in Wales in terms of prosperity when compared with much of the rest of the UK. That is certainly true and, therefore, the assumption is that he would wish to reduce fuel duty rather than increase it. If that duty were to decrease, I can imagine the Luxembourg precedent happening. Those of your Lordships who know that country will know that fuel duty is lower there than in the adjoining countries, so there are large queues at all the filling stations in Luxembourg of people who come across the border. One can imagine similar occurrences over the border in Cheshire, Herefordshire and elsewhere, the sorts of problems that would arise as a result, and the complaints that would be made if there were to be a reduction in fuel duty.

I hear what the noble Lord, Lord Rowe-Beddoe, said about air passenger duty and different core catchment areas. I come from Swansea and I should have thought that Bristol and Cardiff are, frankly, within the core catchment areas. I can see nodding from the direction of Newport. This is not like the precedent in Northern Ireland, where there is no immediate competitor. Bristol and Cardiff are very close and, in my judgment, the passenger catchment areas are similar. There is therefore a substantial difference in this situation and there could be real problems in seeking to provide greater competitiveness for Cardiff, which could only be at the expense of Bristol.

[Lord Rowe-Beddoe]

It is not my idea of a catchment area but the European Commission’s, and the figure of 100 kilometres between two regional airports is in the Commission’s guidance. I again submit that Cardiff and certainly Swansea are not within the Bristol catchment area, as defined by the European Commission.

[Lord Anderson of Swansea]

That may be the definition of the European Commission but I speak on a matter of reality and look at it from the perspective of those who travel from those airports.

[Lord Rowe-Beddoe]

With respect, the journey from Swansea to Bristol is considerably longer than the journey from Swansea to Cardiff.