Finance (No. 4) Bill

Angus Brendan MacNeil Excerpts

Wednesday 18th April 2012 Commons Chamber

[The Economic Secretary to the Treasury (Miss Chloe Smith)]

To ensure that all hon. Members who wish to do so can speak in this debate, I intend to lay out extremely briefly what clause 189 and schedule 23 do and reprise at the end of the debate.

The clause and schedule make four changes to air passenger duty. First, they set APD rates for 2012-13, which took effect from 1 April this year, as announced in the autumn statement of 2011. Secondly, they extend APD for the first time to business jets and flights taken aboard other small aircraft. Thirdly, they give statutory effect to the reduced rate of APD on all direct long-haul flights from Northern Ireland, which was introduced in November. Fourthly and finally, they introduce the long-term solution of granting the Northern Ireland Assembly the power to set APD rates for all direct long-haul flights in future.

The changes provide certainty to both industry and the consumer. I commend them to the Committee and look forward to a brief debate.

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

I rise to speak to amendment 8 in my name and those of my colleagues, and I should like to press amendment 61 to a Division.

I am short of time, so I shall keep interventions to a minimum. There has been co-operation among the parties to try to give hon. Members time to speak, and I shall try to keep my part of the bargain.

In fact, I have risen to speak in favour of a Government policy—a well-thought-out policy that would do wonders for the economy. I am speaking, of course, of the devolution of air passenger duty to Northern Ireland. I like that great idea so much that I should like APD devolved to Scotland as well. We want equality of treatment and opportunity for Scotland.

In reality, I and many in Scotland, and the aviation industry, feel that APD is unfair and that it places an undue burden on business and travellers at a time when the Government should be encouraging the movement of people and goods to spur economic growth. The amendments in my name and those of my hon. Friends therefore propose to halt the rise in APD and devolve the power to Scotland, which is a recommendation not only of the Scottish Government, but of the Calman commission.

The idea of the cut in APD is simple: the UK already has the highest APD in the world, which surely cannot boost economic growth. The industry has had its say. Derek Provan, managing director of Aberdeen airport has said:

“Aberdeen, Edinburgh and Glasgow airports issued a joint letter to the Chancellor ahead of the Budget calling on the UK Government to create a level playing field for the UK aviation industry, which is subject to the highest aviation taxes in the world…The leaders of BA, EasyJet, Ryanair and Virgin Atlantic also jointly warned that the double inflation increase would hit ‘millions of hard working families in the UK.’ They said a family of four flying economy class to Australia would pay £500 in APD, whereas in 2005, they would have paid just £80. BA also recently revealed that it had plans to halve the number of new recruits in 2012 as a result of APD.”

Jim O’Sullivan, managing director of Edinburgh Airport, has said:

“APD is already costing Scotland passengers and having an impact on tourism revenues. We know from discussions with our airline partners that it is a major factor in their decision to connect further routes to Scotland. We would urge the Westminster Government to see Scotland as it does Northern Ireland and understand the need to both reduce and devolve this unfair and damaging tax.”

[Sammy Wilson]

I agree with much of what the hon. Gentleman has said about the general level of APD, but does he not recognise that this measure is the result of the climate change legislation passed in a previous Parliament which his party supported? The chickens are coming home to roost, with extra green taxes being imposed on poor consumers across the United Kingdom.

[Mr MacNeil]

It is not the taxes that are the problem but the level of the taxes, who is controlling them and what they are doing with them to stifle economic growth.

Furthermore, Amanda McMillan, chief executive of Glasgow airport, said:

“On the question of devolution of APD, Glasgow Airport has always been supportive of this proposal given the Scottish government’s more progressive approach to aviation and its greater appreciation of the role the industry plays in supporting the growth of the Scottish economy.”

[Charlie Elphicke]

Will the hon. Gentleman give way?

[Mr MacNeil]

I am sorry but there is no time. [Hon. Members: “Ooh!”] If I have time later and the hon. Gentleman wishes to intervene then, he may.

The Scottish Government Transport Minister, Keith Brown, said:

“We need to be able to deal with the competitive and connectivity disadvantages that Scotland faces and if APD were devolved now we could provide the means to incentivise airlines to provide new direct international connections to Scotland, benefiting our aviation industry and our passengers and supporting the growth of the Scottish economy. The UK government needs to listen to the many voices in Scotland who clearly want to see full devolution of”

the APD powers to Scotland. The Scottish Chambers of Commerce’s chief executive, Liz Cameron, said:

“Current rates of APD seem more suited to controlling capacity constraints at Heathrow than they do with the needs of regional airports, and devolution of this tax would afford the Scottish Government the opportunity to create an air transport package for Scotland designed to improve our direct international connectivity.”

A range of voices throughout Scottish industry and aviation are clearly calling for the devolution of APD.

We have been calling for the devolution of APD to the Scottish Parliament for some time. Most recently, we called for it to be part of the Scotland Bill, but unfortunately the Government and Labour opposed the idea. Today, however, we are arguing again for the devolution of APD in a different context. We do not need to argue the viability anymore, because the Government conceded that point in agreeing to devolve APD to Northern Ireland.

[Charlie Elphicke]

We have airports in Kent. Why should we not have regionalisation of APD for all regional airports? Why should it just be special pleading for Scotland?

[Mr MacNeil]

The hon. Gentleman makes a good point. I hope he will join me in the Lobby, because if it is good enough for Scotland, surely it is good enough for Kent. We are happy enough for it to be devolved to Kent if it wants it. We are not the type of people to want a power for ourselves that we would deny to others. We are not the type of people who would give it to Northern Ireland but not to Scotland.

The amendment is straight and to the point. It would allow the Scottish Parliament to set APD rates for Scotland. By passing it, under the rules in the Scotland Act 1998, the Treasury would redirect those specific funds to the Scottish consolidated fund instead of to a UK consolidated fund. With this economic lever, we in Scotland would have the ability to set our own rates, although owing to legal reasons we could not increase them—but frankly why would we? Higher rates of such taxes and the punitive fuel duty can only increase inflation and reduce productivity.

The evidence is growing in our favour. My office has discovered that Scotland has been getting the short end of the stick on non-EU flights. According to the Department for Transport, Scotland has only four non-EU direct routes—air routes that fly in and out of Scotland to a non-EU country. Let us compare that with our Celtic and Scandinavian neighbours. Norway and Ireland are connected to key emerging economies such as Russia, and Denmark is connected not only to Russia but to China, Japan and 24 other non-EU countries. Norway has connections with about 15 non-EU destinations, and Ireland with about 10, while Scotland is trailing with four. It is remarkable, given all this, that Edinburgh is such a successful financial centre. Arguably, Scotland was comparatively better connected in the days of the Icelandic sagas than it is now, with the Westminster Government controlling APD.

The UK Government are responsible for the negotiation of air routes with other countries. In short, Governments agree to routes in international air agreements and later decide where the routes go. In that capacity, the Westminster Government have failed Scottish airports. For more than 65 years, Governments have argued for more and more routes to the south-east of the UK, with only a handful making the road north of the M25. Devolving APD would take the pressure off Heathrow, with the calls for a third runway. Given that Monday is St George’s day, this measure would be almost a St George’s day gift from the SNP to the people of the south-east of England.

[Cathy Jamieson]

Before the hon. Gentleman moves on to other things, I wonder whether he might say a bit more about the relationship with his Celtic friends, as several amendments in this group affect Wales. Would it not make sense to look at the issue when the Silk commission reports, given that it is looking at a range of fiscal issues concerning Wales?

[Mr MacNeil]

I am glad that the hon. Lady seems to support devolving air passenger duty to Wales. Perhaps that could be extended to Scotland as well.

Without the ability to negotiate our own air routes, we therefore need other economic levers to attract businesses and travellers to Scotland. The current situation forces business and travellers to commute to Scotland via one of the most congested air hubs in the world. The south-east can absorb the impact of an 8% increase in air passenger duty. With the countless flights that go through London everyday, it would take a very severe drop in tourism indeed to affect travel through London. However, given that Scotland has already seen a serious decline in air routes—from BMI pulling out of Glasgow, as well as Ryanair—we have to think about the impact that the APD rise will have on us.

[Mr Reid]

I infer from what the hon. Gentleman is saying that if APD were devolved to Scotland, the SNP in the Scottish Parliament would want to cut it. Does he accept that that would mean less income for the Scottish Government, and if so, what cuts does he plan to make to services to make up for that?

[Mr MacNeil]

Perhaps I can expand the hon. Gentleman’s thinking. If we were to grow from four non-EU routes to 10 or 15, or to the 24 that Denmark has, we might see a growth in revenue. This is about raising revenue, not the precise level of taxation. We would be looking to raise revenue in Scotland and grow our economy, which is the plan for independence—indeed, it is why we want independence.

If APD is increased, Scotland will be put at a further disadvantage in attracting not only international passengers, but international business. As I said earlier, the Government have already conceded that point in devolving APD to Northern Ireland.

[Phil Wilson (Sedgefield) (Lab)]

The hon. Gentleman is being a bit disingenuous as far as Northern Ireland is concerned. The reason APD was devolved to Northern Ireland was because the airport in Northern Ireland was in serious danger of losing continental flights. Also, people were travelling to the south of the island, to Eire, to travel. The decision was made for economic reasons, to maintain the airport in Northern Ireland. It was nothing to do with the principle of devolution.

[Mr MacNeil]

It is not unusual to see Labour once again abandoning principle in its arguments. Surely we should be looking to allow Scotland to compete with other countries in the world. I hope that the hon. Gentleman would reflect on that.

[Brandon Lewis]

I appreciate the hon. Gentleman’s generosity in giving way. Does he not accept, however, that there is a simple logistical and geographical difference between Scotland, which is linked with England and its airports, and Northern Ireland, which is obviously competing with a fellow European Union member state? That alone is a big difference.

[Mr MacNeil]

As I have pointed out, our proposal would benefit the south-east of England as well as Scotland. Surely the hon. Gentleman can see that, given what Conservatives say about taxation.

[Phil Wilson]

Will the hon. Gentleman give way?

[Mr MacNeil]

I am sorry, but given the time I will take no further interventions.

Three airports support the devolution of air passenger duty, as do the chambers of commerce. They want it to be independently controlled in Scotland. They will be frustrated by what the House of Commons in London will probably do this evening, when I press amendment 61 to a vote. Frustration is a negative, but in my view this will have a positive outcome. Members who cannot yet understand the rising support for Scottish independence can surely see that those who are frustrated about APD this evening will begin to see a better way of dealing with the allied intransigence from London, on this and other matters, large and small. That will be one of the many reasons why people will vote for Scottish independence in 2014—to move the Scottish economy and Scottish connectivity forward.

I only hope that I have aided Members in understanding that this is not an SNP call: we are only a vehicle for the community of Scotland, along with the three airports and the chambers of commerce, in improving industry and creating better chances for families. The amendments in my name and those of my hon. Friends therefore seek to stop the increase in APD and to continue the pattern of devolving things to the Scottish Parliament, which is a more sensible locus for controlling air passenger duty.

[Cathy Jamieson]

I shall keep my remarks brief in order to give other Members an opportunity to speak. I have listened to the hon. Member for Na h-Eileanan an Iar (Mr MacNeil) and, as I said in an intervention, it is important that we should have an opportunity to look at this matter in the round. Given that a recent review of air passenger duty resulted in no changes being made, I hope that the Minister will take this opportunity to consider taking a further look.