Air Passenger Duty

Baroness Primarolo Excerpts

Wednesday 23rd October 2013 Commons Chamber

[Mr Gauke]

Is the implication of the hon. Gentleman’s question that he managed to identify the position of Labour Front Benchers, because I could not particularly?

My hon. Friend the Member for Brigg and Goole (Andrew Percy) delivered a thoughtful speech in which he set out the evolution of his own thinking and made the case for regional airports. The hon. Member for Mitcham and Morden (Siobhain McDonagh) raised a point on behalf of her constituents who originally come from the Caribbean. Such a point was also made in interventions, so let me reiterate that APD must adhere to international rules on aviation tax—a point that she acknowledged—specifically the Chicago convention. The capital city convention in APD ensures that the duty complies with the rules. She asked why we could not reform the bands. We could move to having two bands, and we did examine that as part of the 2011 consultation, but no banding structure can be entirely free of anomalies, and a revenue-neutral move to two bands would require an increase in APD for about 90% of passengers, including those flying to Europe and the United States. We were not attracted to that approach.

The hon. Member for Paisley and Renfrewshire North (Jim Sheridan) raised a point about Scotland, following on from the contribution by the hon. Member for Na h-Eileanan an Iar. He rightly said that there would be an implication if the tax were devolved to Scotland and then abolished, because the cost of that would have to be found from the block grant. We have not estimated what that would be, but such a decision would have consequences to comply with EU state aid rules. It is also worth pointing out that we would need to take into account any market distortions that would be created and that the cost would have to take into account any lost revenue for neighbouring English airports, for example. That is not an insignificant point.

The hon. Member for South Down (Ms Ritchie) spoke about domestic flights. It is worth pointing out that several European countries put VAT on domestic flights, whereas the UK does not—the rate is 19% in Germany, 21% in the Netherlands and 27% in Hungary. My hon. Friend the Member for Mid Norfolk (George Freeman) made the point that we would like to get rid of most taxes, but we are not in a position to do so. He also highlighted the fact that rates have increased with inflation. The hon. Member for Strangford (Jim Shannon) argued that there would be a net gain for the Exchequer if APD were abolished, but we do not agree—I shall set out the reasons why in a moment.

The hon. Member for North Antrim (Ian Paisley) spoke against the tax and also hoped that we could all unite behind the motion. I am terribly sorry to say that I have to disappoint him on both fronts. The hon. Member for South Antrim (Dr McCrea) summed up the debate, arguing that we should perhaps follow the example of the Republic of Ireland, which is not always an argument that I hear from him.

As I have made clear, APD makes a crucial contribution to tackling our fiscal challenges. The tax raises nearly £3 billion in annual revenue. Contrary to the claims of the PricewaterhouseCoopers report, which has been cited frequently, scrapping APD would not be costless; it would result in a significant loss to the Exchequer. Unless we were to give up on our fiscal goals—my hon. Friends have been absolutely right to highlight the need for us to maintain discipline on reducing the deficit—the lost revenue would therefore need to be found elsewhere, either by increasing other taxes or by further reducing our public spending. In the course of the debate, I have heard few realistic proposals as to how that could be done. Not only would scrapping APD create substantial costs to the Exchequer, but the benefits of such a step would be small compared with those of the policies that the Government have already put in place.

We are not persuaded by the case that has been put before us. We cannot take risks with the public finances, so we will not be supporting the motion.

Question put.

The House proceeded to a Division.

[Madam Deputy Speaker (Dawn Primarolo)]

I ask the Serjeant at Arms to investigate the delay in the No Lobby.

The House having divided: Ayes 13, Noes 284.

--- Later in debate ---

[Mrs Anne Main (St Albans) (Con)]

On a point of order, Madam Deputy Speaker. May I ask through the Chair whether any application has been made for a statement on the recent developments concerning the Arctic 30? I am sure that many of us will be pleased to hear tonight that the charges against them have been downgraded from piracy to hooliganism. Some are related to, or friends of, Members, and one is a constituent of the Prime Minister, as my right hon. Friend has said. Is there any chance of them now being granted bail, and what does the development mean in terms of the possibility of their being repatriated home to this country?

[Madam Deputy Speaker (Dawn Primarolo)]

As the hon. Lady will know, that is not strictly a point of order. The matter of statements is something the Government themselves determine and I have no knowledge of that, but she has had the opportunity to raise her point in the Chamber and, importantly, to get her views on record. I am sure that those on the Treasury Bench have taken note of what she said.

[Jim Shannon (Strangford) (DUP)]

Further to that point of order, Madam Deputy Speaker—

[Madam Deputy Speaker]

Order. There is not a point of order, Mr Shannon. Having just ruled that what we heard was not a point of order, I can hardly allow you to speak further to what is a non-point of order.