Scotland Bill

Alex Salmond Excerpts

Monday 29th June 2015 Commons Chamber

[Mr Kevan Jones]

It is a pleasure to serve under your chairmanship, Mr Crausby.

I do not oppose the devolution of APD to the Scottish Parliament, but as my hon. Friend the Member for Blackley and Broughton (Graham Stringer) said, it will have a dramatic effect on regional airports within the UK. The hon. Member for Dundee East (Stewart Hosie) mentioned the attractions of Edinburgh to north-east businesses that want international flights, but I have to say that they would sooner fly directly from Newcastle. As for the notion that people would fly to Edinburgh and then get on a train to travel south to our region, that would not be an alternative to flying directly to the north-east via Newcastle. Newcastle airport has been a success story for the north-east.

We hear much from this Government about rebalancing the economy. The north-east has taken the brunt when it comes to the loss of public sector jobs and it also has the highest levels of unemployment in the UK. There have also been knock-on effects from the Government’s decisions deliberately to divert funds from poorer regions such as the north-east to the Tory heartlands.

We have heard the Government’s rhetoric about growing the private sector. Newcastle airport has, I think, been a great example. A few years ago, I had the privilege of being a director of the airport, which is a great partnership between the local authorities in the region and the private sector. In 2012, the airport added value of some £640 million to the north-east economy, and under its master plan by 2030 it will generate some £1.3 billion for the north-east economy. It is currently sustaining 7,800 jobs, rising to over 10,000 by 2030.

The team at Newcastle airport now provides direct flights to Dubai and to New York, and those international flights will be put at risk if the Scottish Government go ahead with their plans. I understand that this is a devolved matter, and I understand the reasons why the Scottish Government want to reduce APD. Clearly, as my hon. Friend the Member for Blackley and Broughton said, the tax was brought in for environmental reasons that now make little sense when it comes to growing the country’s economy.

[Alex Salmond (Gordon) (SNP)]

I could be reading the amendment paper wrongly, but am I wrong to interpret the hon. Gentleman’s amendment 36, which has not been called for debate, as designed to delete the clause that would devolve air passenger duty? Several times, the hon. Gentleman said that he was not opposed to the devolution of APD, but I thought his amendment was supposed to delete the provisions that made APD a devolved matter.

[Mr Jones]

The reason for that is that I was advised to do so to get my probing amendment on the amendment paper. There is no intention to delete the provisions, and the amendment has not been selected. I would have thought that the right hon. Gentleman’s experience in the House would make him au fait with the procedures for ensuring that Members can get a subject debated.

The Scottish Government’s proposals on APD do not make economic sense. Reducing and abolishing APD will clearly grow airport traffic into airports in Scotland as well as grow jobs, yet that will be to the detriment of airports such as Newcastle’s.

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[Mr Jones]

On this very rare occasion, I agree with the hon. Gentleman. I would abolish APD altogether; it is a tax that, as the Scottish Government have recognised, stifles economic development. A PwC report says that the number of overseas visitors would grow by 7% if we abolished it altogether and that more money would come in from other taxes.

Scotland, for her own, sensible reasons, could halve and then abolish APD, leaving Newcastle at a great disadvantage. That would cost jobs; it has been anticipated that up to 1,000 jobs could be lost by 2025 if the situation remained the same, along with £400 million gross value to the economy of the north-east. One of the poorest regions in the UK cannot afford to be at such a disadvantage.

As my hon. Friend the Member for Blackley and Broughton (Graham Stringer) said, there seems to be a bit of confusion over the Government’s approach. He read out the Chancellor’s comment at the Treasury Committee sitting. The Chancellor seemed to be sanguine, giving the impression that if Scotland reduced its APD, airports such as Newcastle could happily soak up a 10% loss in traffic. I am sorry, but I have been a director of the airport and I know the management team well—I know how hard they have to work to attract every single flight and new route to Newcastle. A clear 10% loss would not be acceptable. My hon. Friend mentioned another point. The Chancellor also said that his personal view was that tax competition should be allowable. If that means putting the north-east at a disadvantage, the Government have to address that.

There has been some confusion. During the general election, the Prime Minister was asked by a local newspaper about unfair competition affecting Newcastle airport and—we should not forget the other airport in the north-east —Durham Tees Valley airport. He was questioned about reducing rates of APD for north-east airports to match the reduction in Scotland, as the Labour party in the region had been arguing. He said that that could be a positive suggestion.

What we need now is clear action. We have a new Minister for the northern powerhouse, the Under-Secretary of State for Communities and Local Government, the hon. Member for Stockton South (James Wharton). I understand that his constituency includes Durham Tees Valley, so whether he can persuade the Treasury to do something about the effect of the clause on the north-east economy will be an interesting test of his power. We hear a lot about the northern powerhouse. Those of us in the north-east think that it ends in Manchester.

It is important that the effect of the clause is addressed. If it is not, this unfair tax will not only cost jobs in one of the poorest regions of the UK, but stifle one of the few economic drivers in the north-east in Newcastle airport, which can grow not only business, but competition. As I said in an earlier intervention, Newcastle airport is important not only for passengers, but for cargo revenues. It enables companies in the north-east to export around the world. The direct flight to Dubai has meant that a lot of local businesses have been able to export products there directly and to grow.

I am interested to know the Government’s approach to this issue. If the clause is passed, we cannot have a lag that leaves regions such as the north-east being hit by the tax competition which the Chancellor seems to think is acceptable, but which the Prime Minister clearly wants to do something about. The ball is firmly in the Government’s court to ensure that this anomaly is put right.

[Alex Salmond]

I am grateful to the hon. Members for Blackley and Broughton (Graham Stringer) and for North Durham (Mr Jones) for the way that they have spoken about this issue. I am unconvinced by the argument that they had to table an amendment to delete the devolution of air passenger duty in order to make speeches. Speeches could be made on clause stand part. None the less, whatever the flow of logic, I am delighted that they have confirmed that they support the devolution of APD. I will be very supportive, in return, of some of the arguments that they have made.

As I have been through this issue in one guise or another over the past few years, I thought that it might be useful to remind the Committee of a little bit of history. The devolution of APD was proposed by the Calman commission. For Members who were not in the House at that time or who are not fully up on these matters, the Calman commission was the response of the Unionist parties to the SNP’s breakthrough in the 2007 election. We are still debating the devolution of APD because it disappeared from the legislative programme arising from Calman that was enacted in the last Parliament. It was proposed again by the Smith commission, which was the response of the Unionist parties, through the vow, to try to deflect the yes campaign in the final days of last year’s referendum.

Both those events, incidentally, have been overtaken by the fact that 56 Members of Parliament now adorn these Benches for the Scottish National party. No doubt, at some occasion in the not too distant future, we will be back debating the Government’s response to that latest political development. Surely history tells us—the hon. Member for Blackley and Broughton referred to this—that it would have been far better to have been more extensive and generous with devolution in the first place, and that we should not repeat the mistakes that the Government and the Unionist parties made in the past.

I had a meeting with Howard Davies a few years back when he was asked to chair the Airports Commission. I will be generous and say that it was set up to address the under-capacity and congestion at airports in the south-east of England—or perhaps it was to bash Boris’s proposal for an island airport. The point was to reconcile between Heathrow and Gatwick. We can be absolutely certain about two things in respect of the proposals that will come from the Howard Davies commission. First, we can be certain that, whatever the final adjudication, it will be some considerable time before either Heathrow or Gatwick emerges as the winner from the process. Secondly, we can be certain that, whatever emerges from the process, considerable amounts of public money, running into many billions of pounds, will be devoted, by one means or another, to expanding the capacity of those airports, which are severely congested at the moment.

The reason I mention this is that when I had my meeting, as First Minister, with Mr Davies—it might be Sir Howard Davies now, for all I know—[Interruption.] I am told that he is soon to be ennobled—other people have more information on these things than I do. Anyway, when I had my meeting with Sir Howard, I said, “Given that, whatever happens, your proposals will take some time to be enacted, would it not be a grand idea for you to propose, in the meantime, measures to relieve some of the congestion in the south of England airports? Perhaps reducing air passenger duty in Scotland, Northern Ireland and the north of England and, pro tem at least, diverting some of the business from those airports would relieve some of the extraordinary pressure on them.”

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[Mr Kevan Jones]

Does the right hon. Gentleman agree that Scotland and the north-east, for instance, are losing business not just to London but to parts of mainland Europe? At Schiphol, for instance, air passenger duty has been abolished.

[Alex Salmond]

I do agree with that, but I also think that we must consider the motivation for the introduction of what appears to be a remarkably foolish tax. Any Chancellor looking at Heathrow, for example, would see a fully congested airport and an air passenger duty with an effective collection rate of 100%, whereas any Chancellor looking at the north of England, Northern Ireland or Scotland would see airports with substantial capacity where a reduction in APD could increase business, and, given increased revenues from VAT and other taxation, would see the magic formula for a Laffer curve emerging. I was going to turn to the hon. Member for North East Somerset (Mr Rees-Mogg) at that point, but when I mentioned the Laffer curve, he was busy having a conversation, just when he could have reached a peak of excitement.I think that it would be possible to achieve that Laffer curve, reducing the tax and increasing the revenue, and it seems that my view is shared on both sides of the Committee.

[Jim Fitzpatrick (Poplar and Limehouse) (Lab)]

Does the right hon. Gentleman not recognise that, whether the Davies commission decides on Heathrow or on Gatwick, the vast majority of the investment will come from the private sector? It will not be billions of pounds of taxpayers’ money. Does he not also recognise that there has been a campaign in the aviation industry to abolish APD altogether, and that the Treasury is hooked on the tax because it is worth £2.3 billion a year?

[Alex Salmond]

I agree with the hon. Gentleman’s first point only to the extent that there are people who argue that nuclear power does not require the investment of public money. I think he will find that, as the implementation of these proposals proceeds, substantial amounts of public money will be invested in the infrastructure to make it viable and credible. According to a recent study of transport infrastructure spending per head in various parts of England, the figure for the south-east of England was over £2,000 per head, the figure for the north-east was £26 per head, and the figure for the north-west was £200 per head. I do not have the exact figures, but I think that I have the relative parameters just about right—

[Graham Stringer]

rose—

[Alex Salmond]

The hon. Gentleman can please inform me otherwise.

[Graham Stringer]

The figures that the right hon. Gentleman has given are moving in the right direction, but the distortion is actually even greater. The capital expenditure figure is over 90% in London and the south-east, compared with single-figure percentages in Yorkshire and Humberside and the north-east.

[Alex Salmond]

I am never knowingly undersold. I accept what the hon. Gentleman has said. I was trying to moderate the figures slightly, in case the Committee found them incredible. However, they do tell us where we should be turning in the context of “distortion of competition”.

I am delighted that Members from the north of England have accepted that this tax should be devolved, and I am delighted that they have accepted the economic argument behind the direction in which the Scottish Government are moving. I think that the tax should be reduced at airports in the north of England as well, because they have substantial capacity that would increase revenue for us all. I am glad that their amendment did not become the basis of this conversation, because if the Scottish Government had opposed the devolution of part of APD to Northern Ireland, no progress would have been made. We are now on the verge of having APD devolved to Scotland, and I say to Members representing north of England constituencies that they should take the attitude that this should be the example for further devolution of a sensible policy which not only benefits one part of the country but looks at the economic opportunities in all parts of the country.

Unfortunately, I arrived for this debate at the end of the VAT fiddle discussion. I hope when the Minister replies on APD that, instead of his wholly disappointing and negative attitude to the embezzlement of VAT from the Scottish police service, he will return to the style of grace and imagination with which he usually so adorns the Dispatch Box, and this time recognise the opportunity for Scotland, and indeed the north of England, of making sure that this disgraceful tax is reduced and economic activity is increased.

[Rob Marris (Wolverhampton South West) (Lab)]

I do not share this cosy consensus. The hon. Member for Dundee East (Stewart Hosie) made it very clear in his usual honourable way—I have sparred with him many times—that if APD is devolved, the Scottish Government, if controlled by the SNP, will cut it markedly and have the goal of abolishing it. He helped the Committee by quoting the Prime Minister to the effect that there would be—these are my words, not the Prime Minister’s—a “beggar my neighbour” attitude downwards on APD. Call me old-fashioned, but I think environmental laws should be state-wide and international, and I consider APD to be an environmental law, which is why I voted for it years ago.

As ever, the SNP has been totally open with the House: it wants to see the number of airline passengers increase throughout the UK. That is an environmental step backwards. Fortunately, we have environmental laws internationally through the EU, for example on waste disposal and air quality, something on which the UK is, to coin a phrase, falling foul at present.

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[Rob Marris]

Yes, I would increase the rate of APD.

I was a Member of the House when the Climate Change Act 2008 was debated—there are several other such Members present, although we are a minority. There is in that Act a target which I think is UK-wide—I stand to be corrected on that—for an 80% cut in the UK’s CO₂ emissions by 2050. I did not vote for that because I thought it was, to coin a phrase, hot air and, sadly, in the years since that Act has been passed, I have been proved right, as we see tonight.

[Alex Salmond]

The hon. Gentleman is not correct. Climate change legislation is devolved and the Scottish Parliament has its own Act in which the targets are even more ambitious and well on the way to being met.

[Rob Marris]

I am grateful to the right hon. Gentleman for that. Can he inform the Committee how on earth Scotland and the Scotland Parliament are going to meet those figures if they are intent on increasing the number of airline passengers?

[Alex Salmond]

Because, as one of the hon. Gentleman’s hon. Friends alluded to, one direct flight is better than two indirect flights.

[Rob Marris]

The right hon. Gentleman will know that the whole history of airline travel hitherto has been that it increases exponentially. It has done so, and if allowed to do so, will continue.

So I do not share this cosy consensus. I am not part of the airline and airport love-ins. As Members will know, airlines and their passengers already get a huge subsidy because of the low price they pay for airline fuel—kerosene. Members ought to bear this in mind when debating APD: no doubt the figures are lower in Scotland, but across the UK in any given year half the population do not fly. I believe that hon. Members have a completely distorted view of this matter. I suspect that I am one of the very few Members of this House who does not fly; I have not flown for years. I suspect that every other Member has a distorted view, based on self-interest. [Interruption.] It is not me who is causing a huge amount of environmental degradation through flying. The greenhouse gases emitted by aeroplanes at high altitude are far more damaging than the same amount of greenhouse gases emitted at sea level. Air travel is the most polluting form of mass travel.

In that context, I regret that the Government are devolving air passenger duty. Yes, I would increase it. The UK Government will live to regret this measure, because we are clearly heading towards the abolition of air passenger duty in Scotland and, eventually, through a process of “beggar my neighbour” downwards, across the rest of the United Kingdom. That will be another nail in the coffin of the doomed and uneconomic HS2 railway line. People will continue to fly south from Scotland and the north of England, and vice versa, rather than using the HS2 line. It is already uneconomic and, with the abolition of air passenger duty, it will become even more so.

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[Ian Murray]

The new clause is quite clear. I do not think it would be appropriate for Members of the House of Lords to serve on the commission—[Interruption.] Will SNP Members let me finish the sentence before they start braying from the Back Benches again?

The commission would specifically be designed to have no politicians on it from either Parliament, as well as no employees of the Scottish Government or the UK Government or of any agency related to them. It should be a commission of impartial experts in the field and if the Secretary of State wants to agree to the new clause, I am happy to take on board the suggestion that “no Member of the House of Lords” should appear in it, too.

[Alex Salmond]

On a point of order, Ms Engel. I am not sure that I heard the hon. Gentleman correctly, but he seems to be redrafting his clause during his speech. Would it be in order for him to redraft his new clause to include the House of Lords during his speech? Can he be that uncertain of his arguments?

[The Second Deputy Chairman of Ways and Means (Natascha Engel)]

The right hon. Gentleman knows that that is a matter of debate, so let us continue with that debate.