Air Passenger Duty

Lord Fowler Excerpts

Monday 28th January 2013 Lords Chamber

[Lord Fowler]

My Lords, I congratulate the noble Lord, Lord Palmer, on promoting this debate and on his excellent speech. I make one point, on the impact that air passenger duty has on jobs. All parties are agreed that it is a national priority to bring more people into employment, but we seem to be set on a policy with APD that destroys jobs, not creates them. I declare an interest as a non-executive director of ABTA, but also a past interest as Secretary of State for Employment. When I did that job, tourism was in the brief. My noble friend Lord Lee, who has just spoken, was my excellent Tourism Minister. The reason that tourism was in the Department of Employment was that it had one of the greatest potentials for creating jobs—and still does, particularly for young people.

Inbound tourism creates jobs, but so too, and this is often forgotten, does outbound tourism—the travel companies in the high street, the big internet companies and the aviation industry that is the transport carrier. We would be mad to turn our back on this source of employment. Yet that is precisely what we are doing. By piling more cost on the traveller, we deter people from coming to this country and at the same time price out many people who want to take a holiday abroad. We also hit the aviation industry and business itself. We seem to forget that we are in a competitive international market. There is an increasing demand for travel, which will come from countries such as China, Brazil and India, but it would be all too easy to price ourselves out of the market and lose jobs as a result.

Britain currently has the highest air taxation of all European Union and G20 countries. Britain’s aviation tax is now so high that the Treasury will collect more than twice as much in passenger taxes in 2012 than the total of all other European countries combined. What is interesting is that in 2009 the Netherlands followed Belgium by abandoning its equivalent to APD because, although it raised the equivalent of £266 million in one year, the Dutch calculated that the loss to the wider economy from the tax was more than £950 million. So I entirely agree with all those in this debate who have argued for an independent economic assessment of APD. My view is also that this needs to be done quickly, before more damage is done and more jobs are lost.