Angus Brendan MacNeil
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Finance (No. 2) Bill
Angus Brendan MacNeil Excerpts(11 years ago)
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Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
I beg to move, That the clause be read a Second time.
The Temporary Chairman (Sir Roger Gale)
With this it will be convenient to discuss the following:
New clause 4—Air passenger duty: Wales
‘Schedule (Air Passenger Duty: Wales) has effect’.
New schedule 1—‘Air Passenger Duty: Wales
‘Air Passenger Duty: Wales
Part 1
Rates of Duty from 1 April 2013
1 Section 30 of FA 1994 (air passenger duty: rates of duty) is amended as follows.
After subsection 4D insert—
“(4DA) Subsection (4DA) applies if—
(a) the passenger’s journey is a relevant Wales journey, and
(b) apart from subsection (4C), subsection (2) would not apply to the journey.
(4DB) The applicable rate in subsection (2) applies to the journey instead of the applicable rate in subsection (3), (4) or (4A) (as the case may be).
(4DC) A passenger’s journey is a “relevant Wales journey”—
(a) in the case of a journey which has only one flight, if the flight begins in Wales, and
(b) in any other case, if the first flight of the journey—
(i) begins in Wales, and
(ii) is not followed by a connected flight beginning at a place in the United Kingdom or a territory specified in Part 1 of Schedule 5A.”
The amendments made by this Part of this Schedule have effect in relation to the carriage of passengers beginning on or after 1 April 2013.
Part 2
Devolution of Wales Long Haul Rates of Duty
2 Chapter 4 of Part 1 of FA 1994 (air passenger duty) is amended as follows.
3 (1) Section 30 (rates of duty) is amended as follows.
(2) After subsection (1) insert—
“(1B) Subsection (1) does not apply to the carriage of a chargeable passenger to which section 30B below (Wales long haul rates of duty) applies.”
(3) Omit subsections (4DA) to (4DC) (as inserted by paragraph 1 above).
(4) The amendments made by this paragraph have effect in relation to the carriage of passengers beginning on or after the relevant day as defined in section 30B of FA 1994 (as inserted by paragraph 4 below).
4 After section 30A insert—
30B Wales long haul rates of duty
“(1) This section applies to the carriage of a chargeable passenger if—
(a) the carriage begins on or after the relevant day,
(b) the only flight, or the first flight, of the passenger’s journey begins at a place in Wales,
(c) the passenger’s journey does not end at a place in the United Kingdom or a territory specified in Part 1 of Schedule 5A, and
(d) if the passenger’s journey has more than one flight, the first flight is not followed by a connected flight beginning at a place in the United Kingdom or a territory specified in Part 1 of Schedule 5A.
(2) Air passenger duty is chargeable on the carriage of the chargeable passenger at the rate determined as follows.
(3) If the passenger’s journey ends at a place in a territory specified in Part 2 of Schedule 5A—
(a) if the passenger’s agreement for carriage provides for standard class travel in relation to every flight on the passenger’s journey, the rate is the rate set by an Act of the National Assembly for Wales for the purposes of this paragraph, and
(b) in any other case, the rate is the rate set by an Act of the National Assembly for Wales for the purposes of this paragraph.
(4) If the passenger’s journey ends at a place in a territory specified in Part 3 of Schedule 5A—
(a) if the passenger’s agreement for carriage provides for standard class travel in relation to every flight on the passenger’s journey, the rate is the rate set by an Act of the National Assembly for Wales with the purposes of this paragraph, and
(b) in any other case, the rate is the rate set by an Act of the National Assembly for Wales for the purposes of this paragraph.
(5) If the passenger’s journey ends at any other place—
(a) if the passenger’s agreement for carriage provides for standard class travel in relation to every flight on the passenger’s journey, the rate is the rate set by an Act of the National Assembly for Wales for the purposes of this paragraph, and
(b) in any other case, the rate is the rate set by an Act of the National Assembly for Wales for the purposes of this paragraph.
(6) The rate of £0 may be set for the purposes of any paragraph.
(7) The same rate may be set for the purposes of two or more paragraphs.
(8) Subsections (5) to (7) and (10) to (12) of section 30 apply for the purposes of this section as they apply for the purposes of that section.
(9) “The relevant day” means the day appointed as such by an order.
(10) Section 42(4) and (5) does not apply to an order under subsection (9).
(11) A Bill containing provision authorised by this section may not be passed by the National Wales Assembly except in pursuance of a recommendation which—
(a) is made by the Minister of Finance, and
(b) is signified to the Assembly by the Minister or on the Minister’s behalf.
(12) “Passed”, in relation to a Bill, means passed at the final stage (at which the Bill can be passed or rejected but not amended).
(13) Duty paid to the Commissioners in respect of the carriage of chargeable passengers to which this section applies must be paid by the Commissioners into the Consolidated Fund of Wales.”
5 (1) Section 33 (registration of aircraft operators) is amended as follows.
(2) After subsection (2A) insert—
“(2B) If the Commissioners decide to keep a register under section 33B below, an operator of a chargeable aircraft does not become liable to be registered under this section just because the aircraft is used for the carriage of chargeable passengers to which section 30B above applies.”
(3) In subsection (3)(b) after “applies” insert “or, if the Commissioners have decided to keep a register under section 33B below, that no chargeable aircraft which he operates will be used for the carriage of chargeable passengers apart from the carriage of chargeable passengers to which section 30B above applies.
(4) In subsection (7) after “section 33A” insert “or section 33B below.
6 After section 33A insert—
33B (1) The Commissioners may under this section keep a register of aircraft operators.
(2) If the Commissioners decide to keep a register under this section, the operator of a chargeable aircraft becomes liable to be registered under this section if the aircraft is used for the carriage of chargeable passengers to which section 30B above applies.
(3) A person who has become liable to be registered under this section ceases to be so liable if the Commissioners are satisfied at any time—
(a) the he no longer operates any chargeable aircraft, or
(b) that no chargeable aircraft which he operates will be used for the carriage of chargeable passengers to which section 30B above applies.
(4) A person who is not registered under this section and has not given notice under this subsection shall, if he becomes liable to be registered under this section at any time, give written notice of that fact to the Commissioners not later than the end of the prescribed period beginning with that time.
(5) Notice under subsection (4) above shall be in such form, be given in such manner and contain such information as the Commissioners may direct.”
7 In section 34 (fiscal representatives) in subsection (5)—
(a) in paragraph (a) after “33A” insert “or 33B”.
8 After section 41B insert—
41C (1) An officer of Revenue and Customs may disclose to the Secretary of State, the Treasury or the Department of Finance in Wales any information for purposes connected with the setting of rates of duty under section 30B above, including (in particular) to enable the setting of rates under that section to be taken into account (payments by Secretary of State into Consolidated Fund of Wales).
(2) Information disclosed under subsection (1) above may not be further disclosed without the consent of the Commissioners (which may be general or specific).
(3) In section 19 of the Commissioners for Revenue and Customs Act 2005 (wrongful disclosure) references to section 18(1) of that Act are to be read as including a reference to subsection (2) above.”
9 In section 44 of CRCA 2005 (payment into Consolidated Fund) after subsection (2)(cb) insert—
(cc) sums required by section 30A(15) of the Finance Act 1994 (air passenger duty: Wales long haul rates of duty) to be paid into the Consolidated Fund of Wales,”.
10 In column 2 of the Table in paragraph 1 of Schedule 41 to FA 2008 (penalties for failure to notify), in the entry relating to air passenger duty, after “33A(4) “insert “or 33B(4)”.
11 The amendments made by this Part of the Schedule have effect in relation to the carriage of passengers beginning on or after 1 April 2013.
12 The rate of duty in force under this Schedule shall not be greater than the rate which would be in force if the Schedule had not been enacted.’.
Clause 183 stand part.
Clause 184 stand part.
Mr MacNeil
I shall speak to new clause 3 and against clause 183 stand part.
Air passenger duty is fast becoming one of the most damaging interventions by the Westminster Government in the Scottish economy, which over the past 30 years has provided more tax per person per year than across the United Kingdom as a whole. The chairman of VisitScotland, Mike Cantlay, says he is “extremely fearful” of the long-term impact of air passenger duty levies on the long-haul market to Scotland, which have left the country at a competitive disadvantage compared with countries such as Ireland. He added:
“To say to a potential visitor to Scotland from Australia, for example, that before you even book you will be paying hundreds of pounds extra for the sake of coming here, because the UK has a deficit to fund, is not an easy sell. It is lunacy for our industry.”
Mr Brian H. Donohoe (Central Ayrshire) (Lab)
How many journeys would be affected by the new clause?
Mr MacNeil
I am sure that the hon. Gentleman knows the answer to that question better than I do. It will affect thousands, if not hundreds of thousands, of journeys. It is estimated that the present arrangements have cost Scotland about 2.1 million visitors since the introduction of air passenger duty a few years ago, and the effect of that on the Scottish economy is mammoth.
Mr Donohoe
May I draw the hon. Gentleman’s attention to the wording of new clause 3? Does it not in fact cover only long-haul flights? It does not cover connecting flights through Heathrow or any other airports. How many actual journeys will it therefore cover? I understand that there are only two such long-haul journeys per week to Northern Ireland, for example.
Mr MacNeil
The hon. Gentleman will understand that this covers all aspects of journeys feeding into Scotland, and he will know full well that air passenger duty is adversely affecting the Scottish economy. Does he take a contrary view?
Mr Donohoe
As the chairman of the all-party parliamentary aviation group, may I remind the hon. Gentleman that we have reported on this matter? The duty has a great effect on everyone in the United Kingdom, not just those in Scotland.
Mr MacNeil
I do not dispute that it has a great effect on everyone in the United Kingdom, but Scotland is currently in the United Kingdom and it therefore affects Scotland. I look forward to hearing the hon. Gentleman’s speech. I am sure that the points he raises will be very welcome.
Pete Wishart (Perth and North Perthshire) (SNP)
My hon. Friend referred to numbers, and I am sure that he, like me, will have noted that the hon. Member for Central Ayrshire (Mr Donohoe) is the only Scottish Labour Member who has bothered to turn up for this debate, such is their concern about the issue we are addressing.
Mr MacNeil
My hon. Friend is right—[Interruption.] Yes, there is, of course, a Scottish Labour Member on the Front Bench, but the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) is present because of duty, rather than will, which is why the hon. Member for Central Ayrshire is here.
Mr MacNeil
If the hon. Gentleman will be patient, I will make some progress before giving way to him.
Mr MacNeil
I am sure the hon. Gentleman will be patient. He is usually a patient man, and I am sure he can display some patience now.
The chief executive of the UK Airport Operators Association, Darren Caplan, recently said:
“Our eye-wateringly high levels of APD already mean we pay the highest passenger tax on flying in the world—and this is not disputed by anyone in Government.”
The truth is that APD rates are having a devastating effect on the UK, and especially on Scotland. Let me pass on the views of some key people in Scotland. Jim O’Sullivan, managing director of Edinburgh airport, said on the BBC news on 6 December 2011:
“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.”
Amanda McMillan, managing director 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.”
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 policy on APD.”
Phil Wilson (Sedgefield) (Lab)
Is it not true that APD was devolved to Northern Ireland because of the flights that would have left Belfast airport and gone instead to Dublin? The specific APD problem for Northern Ireland is that there is an international border between Northern Ireland and Eire.
Mr MacNeil
The hon. Gentleman is making my case. Airports are joined by air, not by land or sea. I am sure Prestwick is about as far from Belfast airport as Dublin and Shannon are, so if this is good enough for Belfast and Northern Ireland, it is good enough for Scottish airports.
Mr Reid
The hon. Gentleman forgets one point: Northern Ireland is attached by land to the Irish Republic and Scotland is attached by land to England but is not attached by land to Ireland. The difference here is that people were driving from Belfast to Dublin to catch connecting flights, whereas, obviously, people cannot drive from Glasgow to Dublin to catch connecting flights.
Mr MacNeil
That is a very strange argument for a Member who, like me, represents islands. It also could be argued that a passenger travelling from Stranraer would have a far shorter journey to Northern Ireland than a person travelling overland from Cork to Northern Ireland. The hon. Gentleman may not be aware that aircraft travel through the air, not overland or across the sea.
Mr MacNeil
The hon. Gentleman is right about that to an extent. For some flights, however, APD is paid on one of the legs going into the islands, so he is not entirely correct, and the flights that are exempt are those capable of carrying under 20 passengers with a take-off load of less than 10 tonnes. He should know the details of what he is talking about.
May I ask the UK Government a simple question? Why are they not devolving APD to Scotland? Is it because the UK Government do not want to see Scotland doing better? Is it because the UK Government care only about collecting revenues from Scotland? Or is it that they think that once one tax goes, all taxes will go—and that the often peddled myth that Scotland receives extra money from the indebted UK will be seen for the lie it is? Is there a fear of APD today, oil revenue tomorrow, so the mantra is that it is better to keep taxes together at Westminster?
The Government refuse to listen to sensible voices in Scotland. Robert Kerr, the chairman of French Duncan and the Scottish accountant of the year, said:
“More helpful would be a reduction in the rate of air passenger duty (instead, the Chancellor announced in his Budget that it would increase at the highest level of inflation for two years)”.
He continued:
“Scotland is preparing to welcome the world in 2014, when it hosts the second Year of Homecoming, the Commonwealth Games and the Ryder Cup. If we are to maximise the economic opportunities such events present, then we need more help from our governments rather than hindrance.”
I would add that when the referendum is won, Scotland will be in the world’s focus and many more people will want to travel to it. We do not want them to be penalised by the outgoing UK Government in Scotland.
APD should clearly be devolved. The UK Government have had enough time to think about the matter. Even the Calman commission, which was set up by the Tory-Labour tag team and their Liberal friends, recommended the devolution of APD. The UK Government’s response was to refuse to devolve it on the grounds that they were exploring whether to replace it with a per-plane tax. That decision has been made and the per-plane tax has been rejected, so what is the excuse now? I say that looking at the hon. Member for Argyll and Bute (Mr Reid). We look forward—if that is the right expression—to hearing the latest excuse from the Government.
Pete Wishart
My hon. Friend is correct that the Calman commission recommended the devolution of APD, but so does the jam-tomorrow Labour commission. At its conference in Inverness this weekend, Scottish Labour will be discussing the devolution of APD. I would be interested to hear whether the two Scottish Labour Members present will boycott that conference.
Mr MacNeil
I am sure that the hon. Member for Central Ayrshire will be on his feet presently to confirm his attendance in Inverness.
Mr Donohoe
That has nothing to do with this debate. The hon. Gentleman should know that his proposal, which is what we are discussing, does not constitute the devolution of APD. What he is talking about is the equivalent of what happens in Northern Ireland, which affects one flight a day. What I and the all-party aviation group are suggesting is that APD be taken away completely. If he proposed that, I would support him. Is the SNP likely to consider that?
Mr MacNeil
I am sure that the hon. Gentleman has investigated the level of APD on flights from London airports to Inverness. Doubtless, he will be flying to the happy band that is the Labour conference this weekend. [Interruption.] As my hon. Friend the Member for Perth and North Perthshire (Pete Wishart) says, he will no doubt do so with enthusiasm.
Not only does APD receive a lot of criticism in Scotland and the UK; it has attracted international derision. Two days ago, at a conference in Trinidad and Tobago, it was not only criticised by Caribbean countries as discriminating against the region, but was described as
“a clear market distortion and barrier”
to tourism worldwide by a senior UN tourism official, Carlos Vogeler, the UN World Tourism Organisation’s regional director for the Americas. He added that APD
“can actually produce a net damage to the economy, particularly in those destinations which are so dependent on air travel, such as the Caribbean”.
Surely, on a social union basis, we should treat other Commonwealth countries, such as the beautiful Bahamas, on a fairer basis. At £332 for a family of four flying economy, its air tax is higher than the £268 in tax when flying to Hawaii.
I will give four reasons why APD should be devolved to Scotland. First, APD is making Scottish airports uncompetitive in their efforts to attract new direct international routes. It is needlessly restricting Scotland’s ability to realise the economic and business benefits that direct air connections bring.
Secondly, APD is designed for the circumstances in the south-east of England, not the rest of the UK. It is, at best, a demand-management tool for Heathrow—a stretched airport that will have no further runways until one is built in a panic in a few years’ time, as Ryanair’s Michael O’Leary predicts. Heathrow needs demand to be limited because it is at capacity and the Chancellor therefore has a coincidental fiscal cash cow. Scottish airports have the capacity for growth and this tax blocks it. Independent control over APD through devolved powers would give Scotland the ability to meet its own needs rather than Heathrow’s. My view of demand management is supported by the chief executive of the Scottish Chambers of Commerce, Liz Cameron, who 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.”
Thirdly, a Scottish aviation tax regime would incentivise the introduction of new direct international services, which is important for business connectivity and in-bound tourism. We could do that by reducing the rate of duty, or indeed exempting it, in the early years of a new service—the most challenging financial period—until a route is established.
Fourthly, the Treasury said that it is devolving “aspects” of APD in Northern Ireland, making great play of the “unique” commercial challenges it faces—that was perhaps mentioned earlier by the hon. Member for Argyll and Bute. Scotland’s aviation sector also has specific and long-running competitive disadvantages that need to be addressed, and only the devolution of APD will do that. It is unacceptable that the UK Government are still not prepared to commit to the devolution of APD to Scotland, and I warn that such intransigence angers people at first, but when they calm and look rationally at the situation, they see the need for independence, which will be voted for a year next autumn.
According to a report published in October 2012 by York Aviation,
“by 2016 Scotland’s airports will be handling around 2.1 million passengers per annum fewer than they might have been if the APD changes since 2007 had not been implemented.”
It concludes:
“Constraining the growth of Scotland’s airports via APD can ultimately only have a negative impact from this perspective. APD makes it harder for airports to attract new routes or improved levels of service. Over time this will impact on Scotland’s attractiveness as a place to invest and its competitiveness in international markets. This in turn will negatively impact on Scotland’s international economy, including key sectors such as banking and finance, oil and gas, creative industries, technology businesses and advanced manufacturing”.
By establishing the highest passenger tax on flying in the world, the UK Government have finally managed to become the best in the world at something: unfair taxation. They are blocking growth with a gatekeeper tax.
The SNP Government are building a better Scotland. Scottish GDP grew by 0.5% during the fourth quarter of 2012—[Interruption.] The hon. Member for Sedgefield (Phil Wilson), who is from north-east England, might laugh, but I am sure a successful Scotland on his border would benefit north-east England as well. Would he rather have an independent successful Norway on his border or a Scotland that at the moment is in hock to whatever decisions are made by the Tories at Westminster? “Better Together with the Tories” is the Labour mantra.
Phil Wilson
If air passenger duty is devolved to Scotland that will impact on the airports at Newcastle and Durham Tees Valley. To go further and say that independence will help north-east England is ridiculous.
Mr MacNeil
The hon. Gentleman should look to opportunities rather than scaring and fear-mongering. I imagine the opportunity that cheaper flights might afford his constituents would be welcomed, but he can answer to them on that. While Scottish GDP grew by 0.5%, that of the UK fell by 0.3% in the last quarter of 2012. Debt levels in Scotland are lower than in the UK as a whole, and just yesterday new figures revealed the largest rise in employment for 12 years, with unemployment below 200,000 for the first time since 2009. Unemployment in Scotland is 7.3% versus 7.9% in the UK.
Recent figures also show a new record that is very different from the UK Government’s record on APD. Ours is a record of the participation of young people in higher education—a rate that is considerably higher than in England thanks to a policy based on the ability to learn rather than the ability to pay. There is a different philosophy in Scotland. However, we do not measure ourselves against the rest of the UK; after independence we look to have a society and economy that in many aspects matches Norway, Switzerland, Iceland and Denmark, among many others. We know that we can do even better, but we must listen and do what industry is telling us. The message is clear: APD is too high and must be devolved so that the Scottish Government can deliver a better connected Scotland.
The UK Government have been ignoring industry, the people and the Scottish Government for far too long. That is why support for independence will grow, as more come to understand the continuing damage that Westminster does, whether by omission or commission. What is at the root of all the wrong-headedness? The fact is that the UK Government are caught in a trap with their devotion to the cult of austerity. That is seen in the bedroom tax, which will make matters worse pulling by pulling £1.6 billion from the Scottish economy, according to an article that I read, I think, in the Financial Times.
The focus is wrongly on austerity; the focus should be on growth and, as I have laid out, this tax is the enemy of growth. What matters is not debt itself, but debt to GDP ratio. There is then the issue of servicing that debt—the interest obligation, as Professor Robert Pollin said this morning on the “Today” programme when challenging the underpinning philosophy of austerity. With interest rates low, not only is the Government’s focus wrong, their understanding is wrong, and with the cost of borrowing low, the underpinning arithmetic is wrong. This tax is part of the wrong philosophy that the Government are following at Westminster and to which Labour bind us with the Better Together campaign.
I understand that the Labour party leader in Scotland, Johann Lamont, who is the boss of all Labour MPs in the Chamber, including the hon. Member for Central Ayrshire, is presenting a paper to the Labour conference in Inverness that, it is reported, includes the devolution of APD so that it is independently controlled in Scotland. My goodness! Labour is coming round to the independence agenda. Scottish National party Members are delighted with those steps. Surely Labour Members will come through the Lobby with SNP Members this evening rather than deliver a slap in the face to their leader by not attending the conference en masse, or by sitting on their hands today, now that they have lately left what has been known as the Bain principle, whereby Labour Members refuse to support anything the SNP does simply because it is done by the SNP. They could come through the Lobby with us this evening and display not only sound thinking, but their loyalty to, and support for, their leader and boss, Johann Lamont.
I extend the hand of welcome to the hon. Member for Central Ayrshire. I am sure Labour will not want to give anybody in the Committee the impression that Labour in Scotland is not a happy band.
Mr MacNeil
Mr Miliband will not be there long—do not worry about him.
Surely the SNP and Plaid Cymru will not be the only champions of economic growth and the travelling public, and particularly the less wealthy travelling public of Scotland, Wales, Northern Ireland and England. The travelling public seem to have no champions other than the SNP and Plaid Cymru for their businesses and holidays. I encourage other hon. Members to support the cut of the poll tax on our skies: businesses want it, hard-working families want it, and economic growth needs it.
Ian Paisley (North Antrim) (DUP)
When I arrived in the Chamber and listened to the speech of the hon. Member for Na h-Eileanan an Iar (Mr MacNeil), I had to check that the debate was on the Bill and not on Scottish independence.
I am opposed to airport duty tax. It is a regressive tax and it is wrong. It is a tax on business and tourism, and on our skies and travel. It is wrong not just for little Northern Ireland and little Scotland; it is wrong for every citizen of the UK. I am certainly not taking the position that we should scrap it in parts of the UK. It should be scrapped for all of the UK—the UK Government need to get that message loud and clear.
Mr MacNeil
Given what the hon. Gentleman says, I assume he will support SNP Members in the Lobby when we try to strike down clause 183.
Ian Paisley
I will come to that in a wee minute. The hon. Gentleman will have to bide his time and be patient, or, as we would say, houl yer whisht. Perhaps he knows what I mean by that.
It is important to put on the record that Northern Ireland has an international connection and an international carrier from Aldergrove airport to Newark airport, which is just outside New York. It flies every day in peak season—one flight a day in, one flight a day out. We have no other international carrier. However, the same carrier operates from Dublin, which is 90 miles down the road, to Newark. In the last number of years, the business in Northern Ireland was put under threat for one reason only: the airport authority and the carrier had to subsidise one another to the tune of £1.5 million. Had they not done so, the business would not exist, and people would be forced to travel 90 miles down the road and pay a lesser tax.
The price difference was staggering—it meant that it was possible to travel 90 miles down the road. Filling a car with petrol or diesel and driving to Dublin costs about £50—there would also be a car park charge—but the APD for that international flight from Northern Ireland was £150. The duty in the Republic of Ireland was €3. The difference would have ruined that business. It was essential on those terms that we got rid of APD for that international flight. My position is that I want the duty removed for the whole UK. That is what the debate is about. The measure is about internal flights in the UK, including, of course, our glorious and noble Scotland.
I am concerned that there is an element, or even a huge big bit, of fudge, which we should avoid. The policy, which should be set out loud and clear, should be the scrapping of APD for all of the UK.
Jonathan Edwards
I am extremely grateful for my hon. Friend’s intervention, as we had a debate in the Welsh Grand Committee on this issue, and Labour speaker after Labour speaker lined up to say that they not only were in favour of the Silk recommendations on minor taxes, but wanted them devolved immediately. They went even further, saying that the Finance Bill was the appropriate vehicle for achieving that.
Mr MacNeil
I have a certain understanding of the word “immediately”, and I am sure that my hon. Friend does, too. Does he think that that understanding of the word is shared by Labour in Wales?
Jonathan Edwards
That is the exact point. This was said to be the appropriate legislative vehicle for devolving airport duty to Northern Ireland, and if it is good enough for Northern Ireland, it is certainly good enough for Scotland and Wales.
Needless to say, the proposed powers fell far short of what Plaid Cymru was advocating as a party. We wanted a more comprehensive list of job-creating and economy-boosting powers, including VAT, corporation tax, resource taxes and capital gains tax. In the interest of compromise, however, and not second-guessing Silk, we are happy to proceed as the commission recommended—not least because the fiscal powers recommended by Paul Silk and his team in the commission’s report are desperately needed for the sake of the Welsh economy. The minor tax powers, the income tax sharing arrangement and the borrowing powers that would be triggered as a result would enable us in Wales better to deliver job-creating and economy-boosting measures and policies to help turn around the continuing dire state of the economy.
Yesterday’s unemployment figures showed a small drop in unemployment in Wales, but the number of economically inactive people went up by 7,000. The rate is still 0.4% higher than in the UK, and there are still nearly 50,000 more people unemployed in Wales than there were before the recession began, and another 50,000 more people who are under-employed. That is on top of the extra 50,000 public sector jobs we expect to be lost in the coming years on top of the 24,000 that have already been lost.
Last week’s research by Sheffield Hallam university and the Financial Times, to which my hon. Friend the Member for Na h-Eileanan an Iar (Mr MacNeil) referred, highlighted that more than £1 billion is due to be taken out of the Welsh economy over the next year by cuts to social security. This will have a devastating human cost, which is becoming all too clear.
The private sector is already on its knees in Wales due to the depression caused by the disastrous economic policies pursued by both Labour and Conservative Westminster Governments, which have destroyed the productive economies within the British state. It will deteriorate further as money is sucked out of local economies through further austerity. We are yet to see any realistic plan of how jobs and growth will come about in these depressed areas or any effort to counterbalance the austerity cuts, despite the high rhetoric of geographical rebalancing.
There are three important reasons why the Welsh Government should be empowered with fiscal powers as advocated by the Silk commission and as proposed in my new clause. First, it would make the Welsh Government more accountable. Secondly, it would incentivise the Welsh Government to concentrate on developing the economy to raise the necessary revenue to invest in public services. Lastly, an independent fiscal stream would enable the Welsh Government to access the borrowing powers they have agreed with the UK Government.
Labour’s proposals for substantial cuts in Welsh capital spending in the last Budget that it presented before losing office were supported in the Conservative-Liberal Democrat comprehensive spending review in October 2010, which cut the Welsh capital budget by 42%. Announcements in subsequent UK Budgets or autumn statements have meant that the final cut is about 39%. Although that is admittedly a smaller reduction than the one planned by Labour, it represents a huge hit for economic activity in Wales. The devolution of minor taxes and the triggering of borrowing powers would go some way towards filling the gap, enabling the Welsh Government to invest in infrastructure projects and generate economic momentum.
Jonathan Edwards
My right hon. Friend makes an excellent point, to which I shall return. Fifty million pounds of Welsh taxpayers’ money has been spent on buying an airport, and no Labour Member from Wales is present this evening to vote for a proposal that would enable the Welsh Government to make the most of that asset. It is a disgrace, and I hope that the Welsh media are listening to the debate and will report on it fully.
Mr MacNeil
Is the hon. Gentleman actually informing the House that Labour at Westminster does not want to give powers to Labour in Wales because it wants to leave those powers with the Tories in Westminster? Is that the situation with which we are dealing? Does Labour prefer to put power in the hands of the Tories rather than in the hands of Labour? Does Labour trust the Tories more than Labour trusts Labour? This is bizarre.
Jonathan Edwards
I believe that that is indeed the case.
Admittedly the revenue gathered from the minor taxes, although not insignificant, is relatively small in comparison with the revenue that would be available through the income tax-sharing arrangement recommended by the Silk commission. That would make the Welsh Government responsible for 10p in every pound of income tax raised in Wales. It would enable the Welsh Government to increase their borrowing capacity substantially, and would strengthen the accountability test. My intention is to return to that at a later stage of the Bill’s progress. It would also undoubtedly incentivise the Welsh Government to grow the economy in Wales and provide responsibility for its expenditure. It is also clear that fair funding and the proper resolution of the blatant inadequacies of the Barnett formula, whereby we estimate that Wales loses out on an average of £500 million a year, are desperately needed, but that resolution must not be used to block the partial devolution of income tax or the minor taxes.
Mr Reid
It is important to set out first of all what the debate is not about. It is not about whether air passenger duty is a sensible tax; it is about whether we should be devolving air passenger duty on long-haul flights to Scotland and Wales. I must admit that I was disappointed by the lack of preparedness of the hon. Member for Na h-Eileanan an Iar (Mr MacNeil) for the debate, as he was not able to answer a simple question from the hon. Member for Central Ayrshire (Mr Donohoe). It must be remembered that the SNP has the whole Scottish civil service machine to back it up. I am extremely surprised that the hon. Gentleman did not come armed with an impact assessment produced by the Scottish Government to show the benefits of devolving the tax to Scotland. He had no impact assessment whatever.
Mr Reid
I am waiting for somebody to advance the case for that. The Scotland Act 2012 contains provisions whereby, if the Scottish Government make the case to the UK Government for any tax to be devolved, that tax can be devolved. I am waiting for the Scottish Government to make the case.
Mr MacNeil
The hon. Gentleman is a politician, a Member of Parliament elected to Westminster. Is he unable to advance the case himself to devolve APD to Scotland? That is a shocking state of affairs.
Mr Reid
What we are debating today is a proposal from the SNP and Plaid Cymru to devolve certain aspects of APD relating to long-haul flights from Scotland and Wales. I was expecting an analysis to be presented, but hon. Members could not even tell us the number of flights that would be affected. When the hon. Member for Na h-Eileanan an Iar moves amendments in future, he should present detailed analysis of the benefits and everything else that would be affected.
To compare the situation of Scotland with that of Northern Ireland is not accurate. As I said in an earlier intervention, the justification for devolving air passenger duty to Northern Ireland was the land border with the Irish Republic, which means that people from Northern Ireland would be attracted to travel to airports in the Irish Republic for long-haul flights to take advantage of the lower taxation. That situation clearly does not apply in the case of Scotland and Wales. People would not save money by travelling from Scotland to the Irish Republic in order to take a long-haul flight.
Mr MacNeil
Will the hon. Gentleman conduct a little thought experiment? Imagine that the Irish Republic had the same level of air passenger duty as the United Kingdom. What would the net effect be? It would be fewer people flying, which would dampen our economic growth. The point of having APD devolved is to enable economic growth. I hope the hon. Gentleman can grasp that fundamental point. I also hope that if the Liberal Democrats have a policy of devolution of APD, it is to devolve it to Scotland. If they do not have a policy, I would be very pleased to provide the SNP’s policy, which they can adopt free of charge.
Mr Reid
As the hon. Gentleman perfectly well knows, the SNP policy is clearly for independence, not for devolving particular taxes. He may put forward a good case for not having APD at all, but that is not what we are debating today. There are perfectly good arguments for abolishing APD or for a lesser rate of APD outside London and a higher rate of APD for the likes of Heathrow. The Heathrow tax was mentioned. Good arguments could be advanced but that is not the debate today. The debate today is on the specific proposal to devolve APD on long-haul flights from Scotland and Wales. I am disappointed that with all the back-up that the SNP has from the full Scottish civil service machine, it was not able to present a proper impact analysis today.
As I was saying, the Scotland Act contains provisions that allow the Scottish Government to request that extra taxes be devolved, so there is a system for doing that. I suggest that the way forward for the SNP is to request that the UK Government, under that Act, consider that. We could then have a proper, detailed debate with all the facts and figures at our disposal.
Mr MacNeil
One of the quotes I gave earlier mentioned the fear of the loss to Scotland of 2.1 million passengers before 2016. Would that information not at least encourage the hon. Gentleman, if he is going to develop a policy, to develop one in favour of the devolution of APD?
Mr MacNeil
Is the hon. Gentleman saying that there is a competitive disadvantage from APD only where there is a land border with another country or member state? Is that the position of the UK Government?
Sajid Javid
The hon. Gentleman knows the answer, but I shall provide it anyway. As he knows and as we heard from my hon. Friend the Member for Argyll and Bute, passengers who might go to Belfast have the opportunity to travel to Dublin by car. Clearly, that opportunity does not exist in Scotland.
We are working closely with the Northern Ireland Executive to consider options for rebalancing the Northern Ireland economy, and we are carefully considering the recommendations of the Silk commission in Wales. Any devolution of APD, however, must take into account the broad range of views on this subject. In response to the 2011 consultation on APD, a substantial number of stakeholders raised concerns about devolution complicating the APD system and creating distortions in the markets for flights. This concern was reinforced in a recent report by HMRC suggesting that the devolution of APD could lead to market distortion as a result of passenger redistributions between UK airports, without substantially increasing demand for aviation overall.
In considering whether to devolve APD, hon. Members will surely agree that we must assess the risk of replicating the same problems that Northern Ireland faced from lower aviation taxes in the Republic of Ireland. There is clearly a concern about an immediate cut in APD rates for direct long-haul flights from Wales. The Government therefore believe that the devolution of APD is a subject that requires continued and careful evaluation, if we are to be confident about its potential effects across the country as a whole. In undertaking this evaluation, we should take note of recent data showing that passenger numbers are growing at Scottish airports. Between 2010 and 2011, numbers grew by 5.5% and continued to grow last year as well. In fact, Glasgow airport achieved growth of 4% in 2012, Aberdeen airport recently achieved 24 months of consecutive growth and Edinburgh airport will provide more choice to passengers in 2013 than ever before.
Sajid Javid
I do not have the numbers to hand for Cardiff airport, but I am sure that the hon. Gentleman knows the answer. If he wants me to find out for him, however, I shall write to him with the numbers, if they are available.
Talking about Wales, we are considering the Silk commission’s recommendations, as I have said, but we must also take note of the concerns of Bristol airport, which has expressed deep concerns to me that devolution to Wales would have a significantly detrimental impact on its business. In presenting his amendments, the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) referred to the report by the CBI in Wales. However, I have an extract from—I believe—the same report he referred to, which says that
“high mobility between Wales and the UK…is a reason for the rate to remain consistent between the countries.”
Our analysis needs to be based on a full examination of the evidence. We will not be rushed or pushed into making premature judgments. On that basis, I ask hon. Members not to press their new clauses.
Briefly, the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) raised the issue of APD rates to the Caribbean. As she rightly said, I recently met a delegation of hon. Members to discuss that important topic. I am the first to accept the valuable contribution that British people of Caribbean heritage make to our country. I have promised to reflect on the important points raised by that delegation and many others that have brought up the same issue.
We have a plan to cut the deficit and we have already cut it by a third. Our country’s credibility comes from delivering that plan. APD revenues make an important contribution to the public finances and this year’s inflation-rate increase is necessary. The extension of APD to business jets makes the tax fairer overall. I therefore urge that both clauses in this group stand part of the Bill and ask hon. Members kindly to consider withdrawing their proposed new clauses.
Mr MacNeil
I can tell the Minister straight away that we will not be withdrawing our new clauses; we will be pressing them to a vote.
This has been an enjoyable debate. I certainly enjoyed the contribution from the hon. Member for Central Ayrshire (Mr Donohoe), who is not in his place at the moment. [Interruption.] I am told he is on a plane to Inverness. I wonder. I have found an exchange in Hansard between him and me from March this year, when I pointed out to him in an intervention that the UK’s tax
“is reputed to be the world’s most onerous tax on air travel, and I am sure the hon. Gentleman will agree that it is damaging Scottish airports terribly.”
From everything that he said today, we might be under the impression that a certain answer was given, but no. The answer he gave was:
“I do agree with the hon. Gentleman on this occasion; it is not very often I can say that. The Government are doing absolutely nothing for air passengers, the aviation industry and those who work in it. They continue with this tax, while our competitors throughout the world are laughing at us.”—[Official Report, 25 March 2013; Vol. 560, c. 1332.]
I just wish the hon. Gentleman was here now, to come through the Lobby with us and put some meaning into his words.
The hon. Member for North Antrim (Ian Paisley) made a very good speech when, as I see it, he described air passenger duty as a win-win situation. I welcome the fact that air passenger duty was devolved to Northern Ireland and I wish those in Northern Ireland well. I hope it succeeds and I hope the economy there grows from strength to strength. The devolution of air passenger duty to Northern Ireland will benefit us all, whether we live in Scotland, England, the Republic of Ireland or Wales. We have nothing to fear, only fear itself. In years to come, when the Northern Ireland economy—hopefully —develops with that, we will see the wisdom of devolving that power and the folly of not devolving it to other parts.
My hon. Friend the Member for Carmarthen East and Dinefwr (Jonathan Edwards) made a very strong speech—a star speech, in fact. He mentioned the Silk commission and Labour’s immediate need to devolve APD—it was the other week, but of course there is no sign of Welsh Labour in this place today. The word “immediate” has a different meaning for Labour Welsh Members from its meaning for the rest of the English-speaking world. The hon. Gentleman certainly gave us a scary update of the economic situation in Wales, where people face the double whammy of Labour in Cardiff and the Tories in London, with their wee pals in Westminster, the Liberals, giving them a hand. He reminded my colleagues just how fortunate we are to have the SNP Government in Scotland, led by luminaries such as Michael Russell, Kenny MacAskill, Nicola Sturgeon, Alex Neil, John Swinney and, of course, Alex Salmond, the First Minister.
The hon. Gentleman reminded us that the Westminster branch of the Labour party does not want to give powers to the Labour Cardiff branch. Clearly, the Labour brothers in Wales are as happy a band as those in Scotland. We wonder whether they will send an ambassador to Inverness this weekend—I doubt it. They are probably having a punch-up, one with the other, in Cardiff.
Talking of punch-ups, that brings me to the hon. Member for Argyll and Bute (Mr Reid), who offered himself to the Chamber as a punch bag and was taken up on that offer. My hon. Friend the Member for Moray (Angus Robertson) repeatedly asked him what his policy was and he repeatedly failed to answer the question. He was even offered the policy free by the SNP, but he would not adopt it, just in case, such was the level of uncertainty. He is a nice fellow but his politics are sadly lacking. The arms are open—if he wants to cross the Floor and join the SNP, he will be welcome. It is his politics he has to change.
The hon. Gentleman said that the SNP had not made the case. Hang about. Any daft case the Conservatives make and the Liberals happily wander through the Lobbies, be it on tuition fees, the bedroom tax—whatever it is, it is yes, yes, yes from the Liberals. He seems to be unable to make the case himself for APD to be devolved to Scotland—that was sadly lacking. Will he vote tonight for clause 183? Will he come through with us on clause 183? Will he vote against the increase or will he vote for it?
Mr MacNeil
The hon. Gentleman has not said whether he is voting with us in the Lobby or voting for an increase in APD. On the fourth time of asking, he is still unable to tell us what the Liberal Democrat position in Scotland is on devolution of APD.
The hon. Member for Sedgefield (Phil Wilson) made me pause and think for a while. He wants to bring in differences in the UK, which I welcome, but sadly he carped at the SNP. I think he took the wrong approach there. I would be happy to see economic growth in the north-east of England. I would not feel diminished in any way if the economy of the north-east of England were to improve, and he should not feel diminished either by Scotland advancing. I suggested to the hon. Member for North Antrim earlier that it is a win-win situation. The view of the hon. Member for Sedgefield is that it is a lose-lose situation. I am pleased to say that that view was not shared by the hon. Member for Vauxhall (Kate Hoey), who could see the benefit of devolving APD to Scotland and Northern Ireland.
The hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) certainly understands the need to devolve APD, but then argued against it. She said the proposal was piecemeal, but did not want to make a start on it anywhere. Cannot she see that with or without independence more growth in Scotland benefits us all, as more growth in the Republic of Ireland and France surely benefits us all? We should be moving with a big heart to ensure that that can happen everywhere and not be stifling growth. The hon. Lady is a sensible woman and in her heart of hearts she knows the wisdom of the proposal. Of course she strayed a little far and upset my hon. Friend the Member for Carmarthen East and Dinefwr, but I am sure that she will reflect that she possibly went too far.
Labour unfortunately is employing again the Bain principle: no matter what the SNP does, no matter how sensible or wise, Labour will not vote for it. If Labour has one other principle, it is the Kilbrandon principle, which it established in 1970, whereby it prefers a Tory Government to independence for Scotland. We have seen that time after time, particularly through the damaging 1980s.
The Minister mentioned inflation, but the Government have decided increase the duty at the highest level possible. I am glad that he is looking at what is happening to our friends in the Commonwealth and in the Caribbean in particular. Disappointingly, he was unable to say whether the duty caused a competitive disadvantage to the UK compared with other countries that we do not share a land border with. I hope that the finest minds in the Treasury can go and research that and perhaps in years to come we will have an answer. For Wales there were no figures.
The upshot of this is that the UK Government are continuing to hamper Scotland. At first, it was a policy of omission, but we can now see that they are clearly hampering Scotland by commission. That is why we must vote for independence in the autumn of 2014.
Question put, That the clause be read a Second time.