Cost of Living

Brian H. Donohoe Excerpts

Wednesday 27th November 2013 Commons Chamber

[Chris Leslie]

Will my hon. Friend allow me to make a little more progress on housing? The Prime Minister is also a record breaker because he is presiding over the lowest net supply of housing since records began. The Government’s own figures show that the number of dwellings added to our housing stock fell by 8% last year, which is the lowest level since such statistics were first collected. That is quite some achievement. It does not bode well for the affordability needed by many first-time buyers in this country. By the way, a record number of people are seeking help from the housing charity Shelter, which has reported an all-time high of almost 175,000 calls in the past year, up 10% on the previous year.

Government Members even like to portray the jobs market as wholly positive, but a record number of people are working part time because they cannot find full-time jobs. Nearly 1.5 million people say that they need to find full-time work, but cannot, which is the highest figure since records began.

[Mr Brian H. Donohoe (Central Ayrshire) (Lab)]

I have done some work on this subject. Is not a consequence of the number of part-time jobs advertised not just in my constituency but across the country that wages have dropped to today’s level?

[Chris Leslie]

That is precisely what baffles Government Members so much: they cannot understand the ingratitude of the British people, who somehow seem not to recognise the work that the Government are supposedly doing. The reality is that these are the pressure points—the points of stress and anxiety—faced by so many people up and down this country.

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[Sajid Javid]

I agree wholeheartedly with my hon. Friend, and I am sure he agrees that the Government were right to increase funding for apprenticeships, which are up by more than 1.5 million since the start of 2010.

[Mr Donohoe]

Will the Minister accept that a number of the jobs brought into the economy are part time? Would it be better for the Government to calculate the number of jobs in terms of hours worked by individuals, and would they find that the number of jobs has actually dropped in real terms if those hours are taken into account?

[Sajid Javid]

The hon. Gentleman tempts me and I will come to jobs shortly as there is plenty to tell. He should recognise that employment is at its highest level since records began, and that most jobs created are full time. Also, there is nothing wrong with part-time work.

Women and the Cost of Living

Brian H. Donohoe Excerpts

Tuesday 19th November 2013 Commons Chamber

[Mr Brian H. Donohoe (Central Ayrshire) (Lab)]

Perhaps the Minister will give the hon. Lady a glass a water to help her throat. May I just ask about pensions for young people today, and what will happen to them in the future? Child care today does not mean that those young people will get a pension tomorrow—in fact, quite the reverse.

[Tessa Munt]

I thank the hon. Gentleman for intervening. At least we are making sure that young people have a better chance to access a better education early on. Everybody knows that the money put into education early on can transform children’s life chances so much more dramatically. Those children will be the ones paying my pension and his, so it is important to concentrate on education.

For parents who wish to return to work and, through the Lib Dems, are given recognition and respect for choosing to do so—just as we respect parents who wish to stay at home and look after their children—the importance of good-quality child care is paramount. We know that child care is very expensive and is a problem for families. It was a problem for many years under Labour, and when I was bringing up my children under the preceding Conservative Government.

We are helping mothers with the cost of child care. We are providing 15 hours of free early education for all three and four-year-olds, which we will extend to 260,000 two-year-olds from next year. We are planning to introduce tax-free child care that, when fully implemented, will save a typical working family with two children under 12 up to £2,400 per year. In total, the coalition Government are investing about £1 billion a year in additional support for child care by 2016-17, including £750 million for the new tax-free child care scheme and £200 million in expanded support through universal credit.

The Lib Dems are wholeheartedly committed to shared parental leave, which creates more flexibility for parents, locks female talent into the labour market and will ultimately achieve a fairer balance for both men and women at home and in the work place. That Lib Dem priority for Government is one that we have delivered. Flexible working and shared parental leave is important in helping to create a fairer society, and the coalition Government have already implemented their commitment to extending flexible working to all parents with children under the age of 18. We now intend to extend the right to request flexible working to all employees.

The Lib Dems welcome the fact that in many modern families, child care is no longer the sole responsibility of the mother. Fathers and male partners play an increasingly vital role in raising children, and it is important that the Government should accommodate that by providing for shared parental leave. The system of maternity, paternity and adoption leave and pay that we inherited from the previous Government was inflexible and outdated. The coalition’s reforms will ensure that, for the first time, mothers can go on maternity leave or shared parental leave at the same time—during the first weeks after a birth—as fathers.

We are working hard to help improve living standards, but we cannot get away from the fact that they started to decline under the previous Government. It was a painful symptom of their disastrous economic record, and the fact is that they left us with an annual deficit of £160 billion.

To conclude, the Lib Dems are on record as saying that economic sustainability is important and that we want

“an economic system where the current generation can enjoy the fruits of its endeavours without relying for its living standards on a legacy of debt left to the next generation.”

That means that we have to deal with the huge financial crisis with which we are faced. That is why we are committed to the changes that we are making. The Deputy Prime Minister was campaigning on the effect of the current situation on women more than a year ago, before the Labour party focused on it. He said that

“despite rising since the 1960s, female employment has stalled over the last decade. It is, however, a problem we can no longer afford. Just as working women drove up living standards in the latter half of the 20th century, all the evidence suggests that living standards in the first half of the 21st century will need to be driven by working women once again and this absence of women from our economy is costing us dearly.”

Several motions on this issue have been passed at Liberal Democrat party conferences and we are committed to improving child care and extending free child care. We will face the next election with that commitment in our manifesto.

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[Sheila Gilmore]

I will continue with what I was saying, because it is important to realise the cost of this policy to many women.

This generous gesture, which has advantaged more people on upper earnings, has been balanced by taxes and cuts elsewhere, such as the raising of VAT. Many of the cuts have affected women in particular. The cuts in tax credits have more than cancelled out the rise in the tax threshold for the lower-paid. People who have been affected by that will not be saying, “It was great that the tax threshold was raised.” They would probably rather have stayed in exactly the same position as they were in before.

[Mr Donohoe]

Surely a consequence of that is that fewer women are able to put their children in day care and get back to work.

[Sheila Gilmore]

Indeed; the work incentives that were provided by tax thresholds, particularly to single parents, cannot be underestimated.

The hon. Member for Wells (Tessa Munt) brushed aside my intervention in which I said that the gains from raising the tax threshold had been more than cancelled out for the lowest-paid, but they have been. The argument is made that raising the tax threshold allows people to keep more of their earnings, instead of tax being taken away with one hand and paid back with the other. The problem is that the policy has not been even-handed. Some people have ended up worse off as a result of it. Those who used to benefit and have lost out are predominantly women.

Oral Answers to Questions

Brian H. Donohoe Excerpts

Tuesday 5th November 2013 Commons Chamber

[Nicky Morgan]

I thank my hon. Friend for her question. The OBR does an assessment of all taxes and their impact on the economy. The policies that this Government are pursuing in recognition of the pressures on household budgets mean that filling up the average car is costing families £7 less at the moment, and by the end of this Parliament it will cost them £10 less.

[Mr Brian H. Donohoe (Central Ayrshire) (Lab)]

Does the Minister accept that the best answer to this question is to freeze energy prices? Surely that is the answer.

[Nicky Morgan]

I thank the hon. Gentleman very much indeed for his question, but the energy price freeze suggested by the Leader of the Opposition is actually an energy price con. It has been made very clear that the prices will go up beforehand and up afterwards, and the Leader of the Opposition has made it clear that if wholesale prices go up, he will have to stop the freeze. That is a price con; it is not sustainable; we are fixing the problem.

Finance (No. 2) Bill

Brian H. Donohoe Excerpts

Thursday 18th April 2013 Commons Chamber

[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.

--- Later in debate ---

[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.

amendment of the law

Brian H. Donohoe Excerpts

Monday 25th March 2013 Commons Chamber

[Mr Brian H. Donohoe (Central Ayrshire) (Lab)]

I became a Member of this House in 1992, and I have to say that this is the worst Budget I can remember—that is, since last year’s omnishambles of the pasty tax and the caravan tax. It will do nothing to reverse the decline of the economy, nothing for jobs, nothing for taxpayers and nothing for those forced on to benefits by this Government’s policies. The February unemployment figures show that any decline in unemployment during the previous three-month period is now faltering.

In my constituency, the picture is bleak. There has been an increase in unemployment, including among those aged over 50, and the number of people on jobseeker’s allowance for more than 12 months has also increased. Those in their 50s, in particular, will suffer when they retire because they will be unable to build up an occupational pension and will have to rely on the state pension.

I recently visited one of my constituency’s Work programme providers. Advisers there told me that most of the jobs they were helping people into were part time and paid the minimum wage, involving basic skills and offering limited prospects. However, the bigger problem is that the number of people who have been unable to find work after 12 months has grown by more than a third during the past year.

The Chief Secretary to the Treasury, who is in his place, might be interested to hear about the effects of the Government’s policy on excise duty. The Chancellor has knocked a penny off a pint of beer, and he made a big deal of it. When I heard about that, I thought back to the days of Denis Healey, when a penny off a pint meant something. Today, it is the equivalent of 0.2% or 0.3% off the cost of a pint. In other words, someone would have to buy 200 to 300 pints to get an extra pint for their money, so it is hardly going to have a huge impact on the pub trade.

As far as I am aware, there are no wine producers in my constituency—although there are some who brew at home—but Scotch whisky is a major industry, as it is for the UK as a whole. It is worth £4 billion a year and employs more than 35,000 people across Scotland, yet the Chief Secretary and his Treasury cohorts have done nothing whatsoever to support it. When I entered Parliament in 1992, the average price of a bottle of Scotch was £10.42, of which VAT and excise duty accounted for 68%. The average price after this Budget will be £12.89, of which VAT and excise duty will account for 78%. In other words, since 1992 the price of a bottle of Scotch has increased by £2.47, but the amount of VAT and excise duty has increased by £2.95. The industry is therefore producing whisky more cheaply, yet the customer has to pay more. The beer industry complains about this issue, but imagine the uproar if it had to bear the same tax burden as the Scotch whisky industry has to bear.

The Chancellor has responded to public pressure on fuel duty, but has totally ignored air passenger duty. The aviation and tourist industries have complained—as have the travelling public, in mass numbers—about this unfair penalty on those who want to travel.

[Mr MacNeil]

It 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.

[Mr Donohoe]

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. The Government are prepared to examine other measures, but not the tax that affects not only my constituency but others throughout the United Kingdom.

The Chancellor says that he wants to boost house building, but how is the bedroom tax going to help to do that? Surely it will add to the confusion about the sort of housing stock we require. I predict that it will be worse than the poll tax for people in my constituency; indeed, I am already seeing signs of that. It will prove to be the Government’s Achilles heel, just as the poll tax was for Margaret Thatcher.

Future growth forecasts have had to be revised, and the Office for Budget Responsibility says that in 2015 most people will be worse off. All in all, the Budget offers the British people nothing other than more of the same failed policies of the last three years. The approach simply is not working, and the Government should own up to that and change tack today, for the sake of the UK economy as a whole.

Reflecting on it, this is the worst Budget I have witnessed since being elected in 1992.

Infrastructure

Brian H. Donohoe Excerpts

Tuesday 12th February 2013 Commons Chamber

[Rachel Reeves]

I wonder whether the next Government Member to intervene will congratulate the Chancellor on spending £12.8 billion less over three years than the plans he inherited from the previous Labour Government.

[Mr Brian H. Donohoe (Central Ayrshire) (Lab)]

I hope that I do not excite the shadow Minister so much that she delivers her baby early. What does she think about the fact that once again the Government have kicked into the long grass the problems of congestion in air traffic in the south-east? Money could be invested in that without the need to spend any public money. Why are they kicking that into the long grass?

[Rachel Reeves]

It is being kicked into the long grass because of weak leadership. It is desperately disappointing for businesses wanting to invest today that no decision will be made and no report published from the man charged with conducting the review until the next Parliament.

The Chancellor should take the IMF’s advice and use the March Budget to rethink the Government’s failed economic plan. We told the Government that to cut too far and too fast would hurt the economic recovery and that the country needed leadership, not warm words. That is why since the Government choked off the economic recovery we have been calling for a boost to jobs and growth by bringing forward infrastructure investment, as the last Labour Government did in the aftermath of the financial crisis.

Fuel Duty

Brian H. Donohoe Excerpts

Monday 12th November 2012 Commons Chamber

[Cathy Jamieson]

My hon. Friend makes a good point. It is regrettable that some hon. Members who only a few weeks ago called for the very thing that our motion calls for now seem to have cold feet. Given that the economic recovery is fragile, the Government should back the motion.

[Mr Brian H. Donohoe (Central Ayrshire) (Lab)]

What is the total taxation on a litre of petrol, how does it affect the general public, and should that be advertised in every forecourt in the land?

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[Sajid Javid]

My hon. Friend is absolutely right to point out that the Opposition are all over the place.

If we had found a way to halt all the rises that Labour had planned, we would have done so, but if we had gone ahead with its plans, fuel duty would have continued to rise. Fuel would be 10p per litre more expensive by now, costing the average Ford Focus driver £159 extra by April 2013. Let us put to bed once and for all the idea that Labour is the party fighting to support people on the cost of living.

[Mr Donohoe]

As the Minister was in his place earlier he will have heard me ask what is the amount of tax on a litre of petrol. Does he agree that, for the first time, a Government should allow that figure to be displayed on the forecourts of all our petrol stations?

[Sajid Javid]

I can tell the hon. Gentleman that because of the policies of the Government he supported, there were 12 rises in fuel duty, so it is a lot higher today than it would have been otherwise.

This Government are taking action. Since the coalition came together, our economic plans have won international credibility. We have cut the deficit by a quarter. Because of this, we have secured record low interest rates and opened up Britain for business once again.

Air Passenger Duty

Brian H. Donohoe Excerpts

Thursday 1st November 2012 Commons Chamber

[Mr Brian H. Donohoe (Central Ayrshire) (Lab)]

I congratulate the hon. Members for Witham (Priti Patel) and for Crawley (Henry Smith) on securing this debate. As a co-sponsor of the motion, as well as a seasoned and regular air traveller, I apologise to the House: because of the inclement weather coming in from the Atlantic, I shall try to rush back to Scotland this evening rather than waiting, or having my constituents wait until tomorrow afternoon before they see me.

I do not know whether I was targeted, but as chairman of the all-party aviation group I certainly received my fair share of correspondence on the petition connected with this debate. Indeed, I do not believe I have ever been contacted by as many constituents on any subject in my time in this place, and I have been here for some 20 years. As has been mentioned, the all-party group instigated an inquiry, not only into this tax but into the whole question of aviation and its future in the UK. It was clear from that work—a fairly major inquiry, with some 50 submissions and two oral evidence sessions—that we are likely to damage the whole UK economy unless we get this tax right. That was clear to me and the all-party group, with all conclusions supported by all parties in the House that were part of the inquiry, which is a first when it comes to the future of air traffic.

A report is available, and if hon. Members ping me an e-mail, I will send them a copy, if they have not already read it. The report has been sent to the Prime Minister and a fairly sizeable number of Treasury civil servants have asked for a copy, as a consequence of which I presume that the Minister is aware that the report is in existence. If he has not done so already, I would ask him to look at it, because we still await a response from Treasury officials and the Minister. There is overwhelming support from all sections of the House; indeed, we have already heard—as I am sure we will hear again this afternoon as we approach 5 o’clock—about the disadvantages of air passenger duty, as well as the evidence for those disadvantages. The vast majority of submissions received stated that the UK was being placed at a significant competitive disadvantage as a result of the tax. That applied to 43 of the 51 submissions, which I suggest is overwhelming.

But—and it is a big “but”—it is impossible to draw a comprehensive picture of the national economic impact of air passenger duty without Treasury support in looking at the issue far more closely. I am looking for that support from the Government this afternoon, and I also hope to see their response to the report sooner rather than later. The report also mentioned reports from the British Chambers of Commerce and from Oxera. They were good reports with credible data sources, but they were selective. We need a comprehensive assessment of the effects of the tax, and that is a task for the Treasury to undertake.

There are examples of air passenger duty leading to direct commercial loss. We have already heard my right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins) talk about Manchester airport, and say that AirAsia X cited ever-increasing taxes as its primary reason for abandoning its flights to UK destinations. I have been given other examples as well. It is a matter of public record that Continental Airlines, now part of United Airlines, would have abandoned flights from Belfast to the United States had the level of APD not been reduced in October 2011.

If only some thought could be given to the idea of regional variation, as my hon. Friend the Member for Linlithgow and East Falkirk (Michael Connarty) said. That would have the greatest effect on the regions in question. Only yesterday, Aberdeen, Glasgow and Edinburgh airports called for immediate action on the levy. They estimate that, by 2016, £210 million less will be spent each year in Scotland because of the tax. Glasgow airport’s managing director, Amanda McMillan, has said that APD

“will continue to damage Scottish aviation by making routes unviable and decimating Scotland’s links to the rest of the world.”

As my hon. Friend the Member for Ayr, Carrick and Cumnock (Sandra Osborne) said, the problem is also affecting my own airport at Prestwick.

[Mr MacNeil]

Given the quote from the managing director of Glasgow airport that the hon. Gentleman has just read out, does he support the Calman commission’s recommendation that air passenger duty should be devolved to Scotland?

[Mr Donohoe]

The hon. Gentleman might well be shocked by this—indeed, I expect him to fall off his seat—but I do actually support that proposal. I would suggest, however, that any such duty should not be frittered away, as many of the tax receipts obtained by the Scottish Government are. I would suggest that, if it were devolved, it should be hypothecated so that the money could be put into the airports, rather than into some of the other high-falutin’ schemes that happen north of the border at present—[Interruption.] I do not know what the hon. Gentleman is saying from a sedentary position, but I will give way to him again if he wants to intervene.

[Mr MacNeil]

Surely the idea behind devolving APD would be to cut it to make Scotland more competitive.

--- Later in debate ---

[Mr Donohoe]

In order not to prolong the debate, and to give the hon. Gentleman time to speak later, I will not respond to his intervention.

The report suggests that, as a result of air passenger duty, 2 million fewer passengers will fly from Scotland from 2016 onwards. That is a fair number of passengers, given the number of people who fly. There are other reasons to believe that the problem is more serious in the regions than it is in the south-east of England, but I will not go into them in depth now. Our report recommended that the Treasury and the industry come together to undertake a comprehensive study. I would echo today’s calls that, until such an assessment is made, APD should be frozen.

I shall briefly mention VAT and fuel duty. If either were to be imposed on aviation fuel, the airlines—and not just those based in the UK—would go abroad for their fuel in order not to have to face that problem. Buying it here would simply no longer be an earner. I put it to the Minister that any suggestion of such an imposition should be studied in much greater detail. Indeed, fuel is not taxed for other forms of transport in the UK. There are a number of unconvincing arguments. One is that whereas the UK does not levy VAT on domestic flights, international air travel is generally VAT-exempt in many other countries. There are all sorts of other things that have to be brought into the picture. The aviation sector has no competitive advantage over other forms of public transport.

Let me look at the question of tax and tax avoidance. There is a good deal of evidence coming to the fore to suggest that families, instead of travelling out of the UK long haul, are travelling to other hub airports in mainland Europe and even further afield. As a consequence, the Treasury will lose the business and “Air UK” will lose the business.

[Mr David Hamilton]

Is my hon. Friend aware that travel agents throughout Scotland—and, I suspect, in the north-east, where the regional airports are based—are now actively encouraging people to go via Europe because it will save them quite a bit of money? For a family like mine, going to America otherwise means paying £1,000 extra.

[Mr Donohoe]

I am very grateful to my hon. Friend, but he is eating into my time and I have to be careful in that what happens in that respect has already been mentioned. I am told that up to £380 extra per person might need to be spent in those circumstances.

In conclusion, as we know from the length of the Davies commission, the Government appear to be in no rush to address the competitiveness problems of the UK aviation industry, which are impacting on the whole of our economy. The abolition or reduction of APD has the potential to make the UK more internationally competitive. As a minimum, I urge the Minister’s Department to undertake research to find out what the impact of APD has been on the aviation industry and what it means for that industry.

Beer Duty Escalator

Brian H. Donohoe Excerpts

Thursday 1st November 2012 Commons Chamber

[Andrew Griffiths (Burton) (Con)]

I beg to move,

That this House welcomes the essential contribution of brewing and pubs to the UK’s economy in providing one million jobs; notes the 42 per cent increase in beer duty since 2008 and HM Treasury forecasts that have shown that there will be no additional revenue generated from beer duty despite planned increases over the next two years; is therefore concerned about the effectiveness of this policy in tackling the Budget deficit, its impact on valued community pubs and the continued affordability of beer in pubs; and therefore urges the Government to support the UK’s beer and pub sector by conducting a thorough review of the economic and social impact of the beer duty escalator to report back before the 2013 Budget.

I begin by thanking the Backbench Business Committee for giving us the opportunity to debate this important issue on the Floor of the House. I know from the number of e-mails and telephone calls that I have received that publicans, brewers and people in pubs up and down the country are tuning into the Parliament channel to listen to the debate, such is their level of interest. I commend the Backbench Business Committee for giving us this opportunity.

Colleagues will know that the debate is a result of the fact that 104,000 people have signed a petition demanding the scrapping of the beer duty escalator and calling for the issue to be debated on the Floor of the House. I congratulate everybody who took the time and opportunity to familiarise themselves with these issues and sign in support of their pubs and breweries. Of course, 104,000 signatures do not appear overnight. I pay particular tribute to the work of the British Beer and Pub Association; CAMRA, the Campaign for Real Ale; SIBA, the Society of Independent Brewers; and brewers such as Hobgoblin, which has done so much to raise the profile of Britain’s brewers.

[Mr Brian H. Donohoe (Central Ayrshire) (Lab)]

I must declare an interest as secretary of the all-party Scotch whisky and spirits group. This issue affects Scotch whisky as well as beer. The whole whisky industry employs some 34,000 people in this country, and they are being affected too. Will the hon. Gentleman include them in his plea to the Government to look again at the escalator?

[Andrew Griffiths]

I completely understand the hon. Gentleman’s wanting to defend an important industry in his constituency, but I gently point out to him that the Scotch whisky industry had a 10-year freeze on duty under the previous Government, that 95% of Scotch whisky is exported, and that spirits have now become the drink of choice for young people across the country. I am making the case on behalf of the brewing industry, which has been so badly served.

--- Later in debate ---

[Andrew Griffiths]

My hon. Friend has put his finger on the nub of the problem. I want to remind the House that when the then Chancellor, the right hon. Member for Edinburgh South West (Mr Darling), introduced the beer duty escalator he said that,

“as incomes have risen, alcohol has become increasingly more affordable…In order to ensure that alcohol duties keep pace with rising incomes, alcohol duty rates will increase by 2 per cent above the rate of inflation”.

[Mr Donohoe]

Will the hon. Gentleman give way?

[Andrew Griffiths]

If I could finish my point, I will then give way. The reality is that since the introduction of the beer duty escalator in 2008, beer duty has increased by a crippling 42%.

--- Later in debate ---

[Andrew Griffiths]

The hon. Gentleman makes a valid point. We should consider the impact that the beer duty escalator has had on our brewers.

[Mr Donohoe]

Will the hon. Gentleman give way?

[Andrew Griffiths]

I would like to make a little progress, if I may.

Since the introduction of the beer duty escalator, beer sales have reduced by 16%. To put that in perspective, it is the equivalent of the loss of 1.5 billion pints as a result of the beer duty escalator. To put it another way, it is the equivalent of one major brewery in our country closing every year since the introduction of the beer duty escalator.

[Mr Donohoe]

Will the hon. Gentleman give way?

[Andrew Griffiths]

The hon. Gentleman is quite exercised, so I will give way to him.

[Mr Donohoe]

I am very grateful to the hon. Gentleman for giving way. Will he reconsider his previous answer to me? Scotch whisky is the heaviest taxed of all the spirits, beers, ciders and wines in this country. [Interruption.] It is the heaviest taxed.

[Madam Deputy Speaker (Dawn Primarolo)]

Order. The hon. Gentleman will sit down. We are not discussing duty on whisky, as much as some Members would like to discuss it. We will keep to the debate, which is about beer duty and pubs.

Public Service Pensions Bill

Brian H. Donohoe Excerpts

Monday 29th October 2012 Commons Chamber

[Mr David Anderson (Blaydon) (Lab)]

rose—

[Mr Brian H. Donohoe (Central Ayrshire) (Lab)]

rose—

[John Healey (Wentworth and Dearne) (Lab)]

rose—

--- Later in debate ---

[Danny Alexander]

I did not mention Lord Hutton’s interim report, but I am happy to do so now for the benefit of the House. The right hon. Gentleman will know that Lord Hutton produced an interim report in October 2010 that said that there was a case for rebalancing member contributions. We followed that advice and came forward with our proposals as part of the general programme to repair the public finances and clear up the mess that the Labour party left.

[Mr Donohoe]

The Chief Secretary is a Scottish Member, so I presume that he is aware of negotiations north of the border. If the Scottish Executive make different decisions, how will they fund them? Will the Treasury fund them?

[Danny Alexander]

The hon. Gentleman makes a good point. I will deal with this subject in detail later in my speech, but I shall turn to it briefly. In respect of the pension schemes that are devolved to the Scottish Government, the Northern Ireland Government—their Finance Minister, the hon. Member for East Antrim (Sammy Wilson), is in the Chamber—and the Welsh Government, those Administrations are free to negotiate within the parameters in the Bill and the cost ceiling that has been set out. I understand that such negotiations are ongoing. Should Scottish, Welsh or Northern Irish Ministers wish to offer more financially generous terms, they are entirely within their rights to do so, but the additional costs will have to be met from their budgets. They have complete freedom to do that and I know that they will want to consider it.