Air Passenger Duty

Baroness Gibson of Market Rasen Excerpts

Monday 28th January 2013 Lords Chamber

[Baroness Gibson of Market Rasen]

I thank the noble Lord, Lord Palmer, for instigating this important and timely debate. I declare my interests: I am a member of both the Air League Council and the Air Cadet Council, both of which obviously have an interest in this issue.

Air passenger duty affects every passenger travelling by air from a UK airport. It is a tax that we cannot avoid; it is imposed on us. As we have heard, it is a tax which causes considerable damage to the UK economy and which needs an urgent and thorough review.

I opposed the changes to APD introduced by the Labour Government and I oppose APD under this Government, who seem to be facing in two directions at the same time. There is little point in the Prime Minister saying that he wants more business investment in this country on the one hand and raising APD higher to make it more difficult for business on the other.

As the noble Lord, Lord Palmer, said, when APD was introduced in 1994, each travelling person paid £5 for a short-haul flight and £10 for travelling elsewhere. Passengers can now pay up to £184 on some long-haul flights. What an absolute nonsense.

I am not economist, but even I can see that, at a time when we should be doing all we can to encourage more foreign investment and increasing our efforts to encourage tourists to spend more in the UK, this tax is a barrier to both business and tourism. APD is the highest aviation tax in the European Union and among the G20 countries, thereby placing the UK at a direct disadvantage to its business competitors. Why can the Government not see this? Belgium, the Netherlands, Australia and Germany have all scrapped, or are in the process of scrapping, their own air travel levy. Why not the UK?

All that I have said so far has implications for employment in the aviation industry. A Fair Tax on Flying, a campaign group which consists of 40 leading travel organisations, including airlines, airports and trade associations, estimates that the aviation industry supports 963,000 UK jobs. Of those, 352,000 are directly supported by the sector, 344,000 are supported indirectly through the sector’s supply chain and 266,000 are supported by the spending of employees in the sector and its supply chain. The loss of such things as conference business, lost routes from our airports—both short-haul and long-haul—and loss of potential tourism because of APD mean the loss of employment for UK workers.

I support the call for an urgent review of the impact of APD on the UK economy. I support those in the other place and prominent organisations such as A Fair Tax on Flying in asking for a Treasury-led review. Organisations belonging to the campaign know what they are talking about, and I beg the Government to listen to them and to individuals who have written on these matters. How many more people will have to write before notice is taken? The Treasury has never sought fully to understand the impact of APD on economic growth, which speaks volumes. It is time for this anomaly to be rectified.