Air Passenger Duty

Lord Howell of Guildford Excerpts

Monday 28th January 2013 Lords Chamber

[Lord Howell of Guildford]

My Lords, I warmly commend the noble Lord, Lord Palmer, for promoting this debate, because there can be very little doubt at all that the UK air passenger duty at its present rate and in its present form is a damaging tax measure. It is also a tax of fantastic complexity, with pages of detail from HMRC as to which flights are liable, who is a chargeable passenger, how long between connections and so on. Heaven knows how much it truly costs to administer.

The very high levels are the real problem. Six European countries, as the noble Lord, Lord Palmer, has reminded us, levy a form of APD, but the UK level is double that of the next highest, which is Germany, and very probably the highest in the world. We have probably reached the stage where the damage to our national economy well exceeds the gains to the revenue.

The present banding discriminates directly against our Caribbean island friends, to many of whom we owe a special responsibility over and above our general duty as a richer nation to maintain our traditional concern for smaller states and their welfare. It creates a plethora of mad anomalies. First, it drives long-distance passengers from the UK to start from Paris or Amsterdam rather than London. Secondly, when I visited Glasgow last year, to view its dazzling and well on-time preparations for the Commonwealth Games in 2014, I was told that many of the tens of thousands of visitors from all over the world will fly into and out of Belfast and then hop across to Glasgow rather than flying to and from Glasgow direct. The reason is that Northern Ireland is exempt from the APD. Lucky Northern Ireland, but poor old Glasgow, considering that it has made such superb efforts to be the ideal host to the Games, which I hope it will be once visitors get there.

This is Treasury obfuscation and short-termism at its worst. Some claim that the APD is all about curbing aviation carbon emissions. We all know, and the latest BP energy projections confirm, that it will be China and India’s performance with their vast increases in coal burning which will determine whether we achieve the CO₂ targets we want to see. I doubt whether APD will make a smidgeon of difference in combating global warming or climate volatility.

The only interest I have to declare in this matter is that I am chair of the Council of Commonwealth Societies and therefore very much aware of the vital need for this country to keep friends around the world, large and small. I have no hesitation in saying, after serving for two and a half years as Commonwealth Minister, that APD in its current inflated form is working against our friends, against our foreign policy goals and against the national interest. The alleged revenue loss from minor adjustments to make it less unfair will be far exceeded by the gains to the UK economy as a whole. It was meant to be a modest tax; it is now a massive tax. The damage caused by APD has increased, is increasing and ought to be curtailed.

--- Later in debate ---

[Lord Newby]

My Lords, the noble Lord, Lord Morris, anticipates me. I was just coming to the Caribbean but a number of noble Lords have called for the tax to be abolished tout court. There have been strong arguments—

[Lord Howell of Guildford]

We must have accuracy in this debate. I am aware of one calling for abolition; sensibly, none of the rest of us is calling for abolition. For the Minister to pin his arguments on the abolition plea alone really is to distort the debate and not to do justice to this House.

[Lord Newby]

My Lords, I was simply stating that I thought that several noble Lords—at least one—have called for abolition.