Air Passenger Duty: Regional Airports

Debate between Caroline Spelman and David Gauke

Tuesday 20th October 2015 Westminster Hall

[The Financial Secretary to the Treasury (Mr David Gauke)]

Sir David, it is a very great pleasure to serve under your chairmanship this afternoon. I congratulate my hon. Friend the Member for Solihull (Julian Knight) on securing the debate and setting out his case so well. Indeed, I thank all right hon. and hon. Members for their contributions, including my right hon. Friend the Member for Meriden (Mrs Spelman), my hon. Friend the Member for Fylde (Mark Menzies) and the hon. Members for Central Ayrshire (Dr Whitford), for Strangford (Jim Shannon), for South Antrim (Danny Kinahan), for Kilmarnock and Loudoun (Alan Brown), for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) and for Salford and Eccles (Rebecca Long Bailey). I congratulate the hon. Member for Salford and Eccles on her appointment as shadow Exchequer Secretary—I speak as a former shadow Exchequer Secretary—and am delighted to welcome her to the Front Bench.

The Government have a long-term economic plan to rebalance growth across the regions and nations of the United Kingdom, strengthening our economy as a whole. That includes the commitment to a major transfer of power to our great cities, counties and nations so that local people can take more control of the decisions that affect them.

As part of that plan, the Government are delivering the Smith agreement for Scotland and will devolve air passenger duty to the Scottish Parliament. In accordance with the St David’s day package, the Government are also considering the case and options for devolving air passenger duty to Wales. In England, the Government are creating a northern powerhouse by pushing ahead to deliver a package of devolved powers to major northern cities and investing in transport and infrastructure. In the north-east, for example, the Government are in good discussions about the potential to devolve further powers and responsibilities to the regions.

[Mrs Spelman]

I am sure that the Minister would appreciate the sensitivity of this issue for west midlands MPs. If he is not going to mention the fact that the Government are in negotiation with the west midlands local authorities about the creation of a midlands powerhouse, we will be a bit disappointed.

[Mr Gauke]

My right hon. Friend is absolutely right, particularly in the context of a debate secured by my hon. Friend the Member for Solihull, to refer to the progress that we want to make in the west midlands, which is very much a priority area as well. I was going to touch on that. The case for the midlands engine set out today by my hon. Friend and my right hon. Friend the Member for Meriden is important.

I turn to English regional airports; I know they have expressed concerns that air passenger duty devolution will impact negatively on their business. The Government appreciate those concerns. Regional airports play an important role as local employers and enable the transport of people and products nationally and internationally. That improves connectivity, increases trade and helps to create new jobs. Consequently, the Government are undertaking a review of how to support regional airports in respect of such impacts. That is why the Prime Minister stated earlier this year:

“We are not going to accept a situation where there’s unfair tax competition…We will do what’s necessary to make sure that England’s regional airports can succeed.”

--- Later in debate ---

[Mr Gauke]

The hon. Gentleman, who is his party’s Front-Bench spokesman on transport matters, raises an important point, but I question whether APD is the correct way of achieving the objective that he seeks. In the context of APD, there are some challenges, and the gaming of the system is one risk.

Having welcomed the hon. Member for Salford and Eccles, I must point out that her shadow Treasury colleague the hon. Member for Wolverhampton South West (Rob Marris), the shadow Financial Secretary to the Treasury, told the House on 29 June:

“I would increase the rate of APD.”—[Official Report, 29 June 2015; Vol. 597, c. 1275.]

To be fair, that was before he was appointed to the shadow Front-Bench team. I do not know whether that is the Labour party’s position. I will leave that question hanging.

[Mrs Spelman]

The message that we are getting, and it is one that the Treasury often has to give, is that relieving the tax would generate a return for the Treasury through increased economic activity. That is the argument that everybody always uses for tax reduction. None the less, will the Minister be clear with us about the timetable for the review of the options to help regional airports, since it was announced in February?

[Mr Gauke]

My right hon. Friend anticipates the response that I would generally make, as Treasury Ministers are required to do fairly regularly, regarding requests for tax reductions or spending increases. I cannot add to what I have previously said about the review. We will respond in due course. This is a detailed and complex area. One thing that has emerged from the debate is the fact that there are complexities, and that unintended consequences can result from pursuing certain policies, so we wish to consider the evidence carefully. We are in the process of doing so, and we will respond in due course to the points raised in the consultation. A number of options have been set out this afternoon and, although the consultation is closed, we will want to look closely at the contributions to the debate to develop our thinking on the matter.