Air Transport (Northern Ireland)

Baroness Hoey Excerpts

Thursday 27th June 2013 Westminster Hall

[Mr Laurence Robertson (Tewkesbury) (Con)]

It is a pleasure to serve under your chairmanship once again, Mr Amess. I thank the Liaison Committee for nominating this important debate, and the Minister of State, Department for Transport, my right hon. Friend the Member for Chelmsford (Mr Burns), for attending. I know that he had a busy night last night, not necessarily helped by some who are in the Chamber today. I welcome him.

This debate comes on the back of the first report of 2012-13 by the Select Committee on Northern Ireland Affairs, which we published last November. I am grateful to all Committee members for the work that they carried out on this detailed inquiry, and to our officials, who are a bit thin on the ground today, although I am sure—at least, I hope—that quality will make up for the lack of quantity.

I am grateful to the many witnesses whom we interviewed during the course of our inquiry into the air transport strategy for Northern Ireland. We talked to representatives of the airports, the CBI, the airline companies, travel companies, the Consumer Council for Northern Ireland, unions, the UK Border Agency, Ministers, the Federation of Small Businesses and others.

Since the Committee was re-formed after the last general election, we have concentrated on trying our best to move towards a rebalancing of the Northern Ireland economy. We know that Northern Ireland has become somewhat over-dependent on the public sector, and we are well aware of the reasons why. There is a large deficit in the amount of Government spending in Northern Ireland relative to the amount of tax raised there. The same is true in Scotland and Wales, of course, but it is more pronounced in Northern Ireland. Wages are also lower in Northern Ireland, and there is great concern about people who perhaps do not feel that they have had the full benefits of the peace process. We as a Committee have considered security issues from time to time, of course, and we will do so again, but we are doing our best to encourage and work with the Government and make proposals about how we might rebalance the economy in Northern Ireland. It is obviously worth doing for its own sake, so that people in the Province can enjoy greater prosperity, but we also see it as a way to cement the relative peace achieved over the past 15 years or so.

Our first inquiry after the last general election was on the level of corporation tax. We recommended that the issue be devolved to the Northern Ireland Assembly so that it could set a rate that would be more competitive with the current tax rate in the Republic of Ireland. Corporation tax in the UK is 23%, but only 12.5% in the Republic. Although the Committee was certainly not unanimous on that proposal, we felt that it would help the economy in Northern Ireland move towards where we want it to be. We are debating aviation policy, not corporation tax, but I will talk about tax a little later.

I must stress the importance of air travel to Northern Ireland. It is an island off an island—a beautiful place, but nevertheless slightly remote. The only way that people there can travel reasonably quickly and efficiently either to the mainland or to the continent is by air. The sea crossing is lovely, but it is quite slow. [Interruption.] I do not know whether the Minister is thinking of extending High Speed 2 to Northern Ireland, but I am sure that it would be welcome if he did. However, as at the moment there are no plans to do so, we must stress how important air travel is to people in Northern Ireland for social, family and business reasons.

[Kate Hoey (Vauxhall) (Lab)]

Some Committee members suggested that it might be helpful for Ministers, particularly Ministers for Transport, to make the journey to Belfast from London or Southampton via the only real way other than flying, and to tell us all how long it takes, how much it costs and how it could possibly help improve business connectivity for that to be the only way by which a person can travel. It might be helpful for the Minister to make that trip so that he can experience it for himself. I had to make it once. It takes a very long time.

[Mr Robertson]

I thank the hon. Lady for her helpful intervention. I am sure that the Minister travels to Northern Ireland regularly, but it sounds like an invitation for him to do so in a different way.

When the Minister gets there, he will see that the rail links in Northern Ireland are not what we might want either, particularly between City of Derry airport and Belfast. I will come to that issue in a minute. It is a long and sometimes difficult journey. Northern Ireland Members sometimes have to leave Parliament early in the day—not in the morning, of course, but not too late in the afternoon—if they want to get back that evening, which may explain why they are sometimes unable to take part in debates such as this.

The background is that we have three airports in Northern Ireland: Belfast International, sometimes known as Aldergrove; Belfast City, nowadays named George Best Belfast City airport after the great footballer; and, of course, City of Derry airport. Belfast International airport has about 4 million passengers a year, Belfast City airport 2.4 million and City of Derry 400,000. When we compare that with Dublin, which has 90 million passengers a year, we see a big difference between the two, but Belfast International airport is busy and fulfils a completely different role from Belfast City airport. Both are important. City of Derry airport could probably be used more, especially this year, when Londonderry is the city of culture.

In terms of connectivity, it is extremely important that we retain capacity in the south-east of England, because many people fly from Belfast to London and then on to other cities in the world. There is some concern about the speed with which we are moving in that direction. The Committee expressed frustration about how long it is taking for the Government to decide whether we are to have, for example, a further runway at Heathrow, Boris island or something else. It is of some concern to the Committee that the Government seem to have ruled out a third runway at Heathrow before commissioning the Davies report.

--- Later in debate ---

[Kate Hoey (Vauxhall) (Lab)]

It is a pleasure to see you in the Chair, Mr Amess, and I am pleased to be able to say a few words. My colleague from the Northern Ireland Affairs Committee, the hon. Member for Belfast East (Naomi Long), wants to make a contribution, too. I thank our Chairman, the hon. Member for Tewkesbury (Mr Robertson), for putting the case so well and mentioning why our Committee felt that this is an important issue: the links between Northern Ireland and the rest of the United Kingdom, which are crucial, and particularly air passenger duty.

We need to thank the Government for listening to the Northern Ireland Affairs Committee and to the lobbying—all legitimate lobbying, I will add—that went on for a long time and getting the air passenger duty changed on the international flight from Belfast to Newark. That was crucial, because there was no doubt that people were travelling by car down to Dublin, even though it made the journey slightly longer, as it worked out cheaper due to the reduction there. The Irish Government make an issue of making it much cheaper to fly internationally, particularly to America. That is important. I hope that we have made that link with United Airlines permanent and that we see it increase. We now need a direct flight from Belfast to Canada, where there is a huge diaspora of people from Northern Ireland. That would be welcome.

In addition to what was always an important issue, we raised the other pressing, day-to-day issue in our recommendation 7 on tax policy. Air passenger duty throughout the United Kingdom is far too high. It is the highest in Europe. Some people argue that it is good, from a green point of view, and others argue that it is needed because the Government need the money. A cost-benefit analysis has not been properly done to show how much the United Kingdom would benefit economically if we reduced and, in some parts of the UK, abolished air passenger duty altogether.

Northern Ireland is a special case, just as the highlands and islands have become a special case, but whenever we ask why the highlands and islands get a reduction on their flights but Northern Ireland cannot, we come up against something about which I have made my views known clearly over time: the European Union and regulations, which make doing something about that difficult. Well, given how the EU works at the moment, that certainly will not be easy to do, but if we had a Government who committed to arguing for it, it might happen.

I feel strongly that travelling by plane from Northern Ireland to London, Manchester, Scotland or anywhere else on the mainland of Great Britain is not a luxury. People do not wake up and think, “Great, I am going to be flying from Belfast to London tomorrow. Isn’t that wonderful? I don’t mind paying APD, because it is such a nice way to travel.” The reality is that flying is the only way people can realistically travel, particularly to southern England. Flying is now very expensive for students who want to come back home between studying, and the cost to business people is very big. A growing phenomenon in the current economic situation is that more and more people—mainly young men but women, too—are flying over on a Monday morning, working in the building industry near Stansted and flying back on the Thursday night or Friday, and APD is a big addition to the cost.

We should be arguing that Northern Ireland is a special case because it is different. We are part of the United Kingdom, but we have water around us, and we therefore need to be treated differently. There is an idea that we cannot do something about APD for Northern Ireland. The Government’s response states:

“APD makes an essential contribution towards helping the Government meet its deficit reduction plans.”

I do not want to go further than to say that, in the long run, we would end up with more money if APD were reduced, but, obviously, if we were to treat Northern Ireland differently, APD would have to be devolved. In that case, the Northern Ireland Executive would have to make up the money to fund the reduction, but the people of Northern Ireland could debate whether they feel that that is a priority. I think that there would be support for it.

The Government’s response further states that

“in order to protect the public finances and also to comply with EU State Aid rules. It would not be possible under EU law to have different rates of APD on intra-UK flights from GB to NI than on flights from UK to other EU destinations.”

I am sorry, but I am a British citizen. I am part of the United Kingdom, and I want my Government and my country to be able to decide where planes are going to fly, how much that will cost and what the tax should be, and I do not want to be restricted. I am sure my hon. Friend the Member for Poplar and Limehouse (Jim Fitzpatrick) on the Front Bench does not necessarily agree, but I do not want the EU to decide policies that should be for us to decide. That is why I support the need for a referendum, the need for a debate in the country and the need for us to decide our future relationship with the EU. I will not digress further, Mr Amess, although I am sure that you might want me to do so.

It is just not good enough for us to say that we cannot allow Northern Ireland to be treated differently and specially because of the peculiar nature of its situation, not only because it has a land border with another country, but because of the water that lies between us. It is not good enough just to say, “We cannot do this because the EU will not let us.” I believe we should reconsider, and I support the “A Fair Tax on Flying” campaign, which in some very good reports has shown how we are losing out across the United Kingdom because of the APD tax. I hope that the Government are listening.

I am surprised that the Secretary of State for Transport, in answer to a question not too long ago, said that he does not have a view on APD. He was asked,

“what assessment has the Department made of the impact of air passenger duty on aviation?”

And he answered:

“I am not sure we have taken a view on it.”

I hope that the Minister will clarify the Secretary of State’s answer, because that could be good news. The Secretary of State is my constituent when he is in London, so I know that he is quite a good egg. I hope that his answer means that we have not finally made up our mind, and I hope that my party will consider the matter very clearly, so that we can have a strong view before the next election.

There are now no direct flights to Heathrow from Belfast International, which is an important airport. They have stopped because of the merger of British Airways and BMI, and Aer Lingus then going to Belfast City airport. There is a bit of one airport playing off the other by lowering the amount of money that it charges for a short time, and after a year or two, the other airport seems to offer something more and the airlines go back. We need to ensure that both airports, while they are there, serve the needs of everyone in Northern Ireland.

I want to speak up for easyJet, which has brought an amazing amount of opportunity for people in Northern Ireland. I fly easyJet all the time, more or less. I think easyJet is a great airline. For short flights from Belfast, easyJet is absolutely brilliant and usually on time. I am not being paid by easyJet; I really do think that. I get cross when people dismiss easyJet as one of those cheap airlines, because it has brought huge opportunities for people to travel not just from Belfast to the rest of the United Kingdom but all over Europe. The more that that happens, the more that we will see people going from Belfast to Amsterdam and then to America. That will not happen unless we grasp the nettle of APD.

This debate has been a good opportunity, and I look forward to the Minister’s response.

--- Later in debate ---

[Mr Burns]

I hope that I can give some reassurance to my hon. Friend. That is a devolved matter, but what I will do, in the spirit of co-operation and friendliness, is write to him with the precise details to explain why it is and what the best way forward is for him and his Committee.

[Kate Hoey]

Can the Minister just provide clarification? It is only a devolved matter if it has been devolved. We devolved the international route, but we have not devolved the GB-Northern Ireland and Northern Ireland-GB route.

[Mr Burns]

I am a bit confused because I thought that my hon. Friend the Member for Tewkesbury was talking about rail links between airports in Northern Ireland.

[Kate Hoey]

That is devolved.

[Mr Burns]

Yes, it is.

[Kate Hoey]

Sorry.

[Mr Burns]

That is all right.

[Kate Hoey]

Obviously, I was not listening.

[Mr Burns]

That is fine; the hon. Lady is fine. I just thought for one ghastly moment that I had walked into a huge hole, so I am relieved that it was not me—not guilty, guv.

I welcome the fact that there is broad agreement—indeed, unanimity—on the importance of maintaining the UK’s position as a leading global aviation hub. The Government believe it to be vital to the Northern Ireland and wider UK economy. It is important to remember that the UK continues to have excellent aviation connectivity, both on a point-to-point basis and through the London hub. The five airports serving London offer at least weekly direct services to more than 360 destinations worldwide, which is more than Paris, Frankfurt or Amsterdam Schiphol. We have the third largest aviation network in the world after the United States and China.

Northern Ireland is increasingly well connected both to the rest of the UK and to the wider world. In 2012, Northern Ireland airports operated services to 23 domestic UK destinations on 36 routes, to 17 EU-27 destinations on 19 routes, to three other European destinations and, as we have heard from a number of hon. Members, to one north American destination.

[Kate Hoey]

I will try to restrict my interventions, but I thought that as the Minister had mentioned the increase, it might be worth pointing out, as I have been a user of it and you are our Chairman, Mr Amess, that the new easyJet route from Southend to Belfast is very popular.

[Mr Burns]

I am particularly grateful to the hon. Lady for mentioning that. She is absolutely right to do so. I am grateful not only because I am a Member from God’s own county, where Southend airport is, but because only in the last few weeks I have had the pleasure of visiting Southend airport and being able to find out for myself the increasing and expanding services that Southend airport is providing both to Northern Ireland and to other destinations in Europe. I think that it has the accolade of being called London’s fifth airport. No doubt, Mr Amess, you will correct me if I am wrong.

The Government believe that Northern Ireland is well placed to continue to grow the direct network as well as to enjoy vital connections through the UK and continental hubs. The Government recognise that, like elsewhere, the airports in Northern Ireland make a vital contribution to its economy. However, unlike in other parts of the UK, aviation plays a unique role in connecting Northern Ireland with the rest of the country. As such, aviation connectivity with the rest of the UK is extremely important to our national cohesion and will remain so.

We all know that the provision of commercial air services is subject to market forces. Ultimately, airlines operate in a competitive, commercial environment and it is for them to determine the routes that they operate and from which airports. It has been suggested that some form of intervention is necessary to protect air services between Northern Ireland and London from commercial market pressures. The hon. Member for Belfast East mentioned that. But air links to Northern Ireland remain commercially viable. Northern Ireland is well connected by air to London, with more than 18,000 flights a year between the two Belfast airports and the five main London airports. Those flights handled just over 1.9 million passengers in 2012. Over a third were between Belfast and Heathrow. That said, the Government fully support the efforts of the Northern Ireland Executive to develop the route network of Northern Ireland further.

Northern Ireland is also unique within the United Kingdom in that it shares a land border with another EU member state, as was mentioned by the hon. Members for Belfast East and for Vauxhall (Kate Hoey) and by the shadow Minister, the hon. Member for Poplar and Limehouse (Jim Fitzpatrick). Although that brings many benefits, the Government are highly conscious of the greater competition that it creates when securing air services, especially long-haul services. As such, in the recent Northern Ireland economic pact, we confirmed that the Government and Executive will work together to consider with the US authorities and other interested stakeholders the feasibility of establishing US pre-clearance facilities at Belfast International airport. It is complex work, with practical and legal issues that need to be addressed, but given that such facilities are currently available at Dublin and Shannon airports, we hope that progress can be made quickly. I think that all hon. Members present today, and those beyond the Chamber, fully appreciate the importance of establishing such a service, if the discussions and negotiations between our countries can come to successful fruition.

I think that every hon. Member has mentioned air passenger duty in the debate. As hon. Members have been gracious enough to mention in their comments, the Government have already taken action to ensure that the Northern Ireland aviation sector remains competitive. In November 2011, my right hon. Friend the Chancellor of the Exchequer reduced APD for passengers travelling on direct long-haul routes departing from airports in Northern Ireland. That move secured the continuation of the only current direct long-haul service operating from Northern Ireland. The Government have now gone further, as some hon. Members mentioned, and, reflecting the wishes of the Northern Ireland Executive, have devolved to Northern Ireland the power to set APD rates for long-haul flights departing Northern Ireland. The zero-APD rate for direct long-haul flights departing Northern Ireland, which took effect from 1 January 2013, puts Northern Ireland in a highly competitive position.

I listened carefully to my hon. Friend and the hon. Members for Vauxhall and for Poplar and Limehouse, and to the hon. Member for Belfast East in particular, when they spoke about the ways in which they would like to move forward. As the hon. Member for Belfast East correctly anticipated, I will be consistent and my comments will reflect what I said to her in my correspondence: APD is a matter for my right hon. Friend the Chancellor and it would be sensible for her to convey her views to the Treasury, so that it is aware of what she believes should happen. I will not detain hon. Members by going into detail on all the reasons for APD and why it is where it is at the moment, because that is well known. They can rest assured that we are aware of the views on and the reasons for APD and that the Treasury regularly monitors the situation carefully.

[Kate Hoey]

I know that the Minister has to stick to Government policies overall, but he is the Minister for Transport, so does he have a view that he could quietly tell us here? There are very few people here. What does he personally think?

[Mr Burns]

The hon. Lady is extremely charming and in many ways intellectually seductive. She too has been a Minister. There may be only four close honourable friends of mine sitting in the Chamber, but unfortunately the walls have ears. I have always found that it is extremely wise when one is a member of a governing Administration to be bound by collective responsibility, which I happen to believe in as well; one fully understands the merits of the cases that the Government put forward as their policy and one fully supports them. I hope that explains to the hon. Lady that what my right hon. Friend the Chancellor had to do was due to the unsatisfactory, if not catastrophic, economic situation we inherited in May 2010. We have had to take some tough and difficult decisions. He is right, because it is right that we address the problems of the debt and the deficit.

I shall move on to the probably more neutral subject of aviation policy frameworks. Overall, the Government want aviation to continue across the country. To that end, we continue to deliver: we have delivered the Civil Aviation Act 2012, to bring the regulatory framework up to date, and we are implementing the recommendations of the south-east task force. We have also acted to ensure that the Northern Ireland aviation sector remains competitive. We plan to create an economic climate that enables people to travel and to use aviation to conduct business and visit friends and family as easily and cost-effectively as possible. Many people in Northern Ireland are concerned, as those in the rest of the country are, about capacity, particularly capacity in London and south-east England. Although it is across the Irish sea from Northern Ireland, capacity there does, as hon. Members have said, have a knock-on effect on those who wish to fly long-haul from Belfast and other parts of Northern Ireland to the rest of the world. They will frequently travel to London to meet their connections and then travel on or, as hon. Members have said, in some cases they go to Dublin.

The Government believe that maintaining the UK’s status as a leading global aviation hub is fundamental to our long-term international competitiveness. To make decisions, we need our evidence on the way forward to be as up to date as possible. Dealing with airport capacity, increasing the size of existing airports or creating new airports is highly controversial and arouses strong emotions. It is essential that we get it right, which is why I welcome the comments from the hon. Member for Poplar and Limehouse on his party’s attitude to how we are moving forward, but I exclude from that welcome the comments he made about Boris island; I must be totally independent, so I do not want to comment on any option and compromise that independence.