Finance (No. 2) Bill

Debate between Catherine McKinnell and Angus Brendan MacNeil

Wednesday 9th April 2014 Commons Chamber

[Mr MacNeil]

Is aviation not about more than competition? It is also about growth. When Governments get their head around that, we will surely see a sea change in their approach to APD. They should focus on growth, not just competition.

[Catherine McKinnell]

The hon. Gentleman makes an important point, and I entirely agree that the Government should be absolutely focused on economic growth. The debate about APD is part of that discussion, and the regional air connectivity fund must also be part of the conversation. The Government need to provide clarity on those issues in this Finance Bill and in the future.

As I said, Labour remains to be convinced of the merits of devolving air passenger duty. The Calman commission proposed that it be considered, and the Labour Government committed to keep it under review.

Air Passenger Duty

Debate between Catherine McKinnell and Angus Brendan MacNeil

Wednesday 23rd October 2013 Commons Chamber

[Catherine McKinnell]

I thank the hon. Gentleman for his kind wishes. The companies commissioned the report, but it is for the Government to set out their position and their own findings. I would like to focus on the Government’s statistical analysis and assessment of APD. I know the value added to the north-east economy by Newcastle airport. I know how critical certainty and stability on issues such as APD are for the airport and the businesses that rely on it, and for the export-led recovery that the hon. Member for East Antrim referred to on a number of occasions. Newcastle airport alone supports 7,800 jobs across the north-east region, with 3,200 on site, and more than £250 million of UK exports were shipped through the airport in the last year—facts that speak for themselves. It is therefore little wonder that the Government’s dither and lack of direction has caused significant frustration for passengers, the travel and tourism sector, and the industry as a whole.

What have we heard so far from the Government on APD? The Conservative 2010 election manifesto pledged to:

“Reform Air Passenger Duty to encourage a switch to fuller and cleaner planes”.

The Liberal Democrats went further, suggesting that they would ensure that pollution was “properly taxed” by replacing the per-passenger APD with a per-plane duty and that air freight would be taxed for the first time. They also said that they would introduce an additional, higher rate of PPD on domestic flights if realistic, alternative and less-polluting travel was available.

[Mr MacNeil]

The hon. Lady makes a good point about the views of the Liberal Democrats. The Liberal Democrats held a multitude of views in opposition and hold another multitude of views now they find themselves in government, so her words do not surprise me at all.

[Catherine McKinnell]

The hon. Gentleman anticipates my next comment. It is important not to take a Liberal Democrat election manifesto at face value, but one might reasonably have expected to see some action from Ministers given that the coalition agreement promised that the Government would:

“reform the taxation of air travel by switching from a per-passenger to a per-plane duty.”

and

“ensure that a proportion of any increased revenues over time will be used to help fund increases in the personal allowance.”

The Chancellor then announced in the 2010 Budget that major changes to APD, including switching to a per-plane duty, would be subjected to public consultation, but nothing happened, and almost one year later, at Budget 2011, he announced that the Government would consult on simplifying the structure of APD. In between, the fair tax on flying campaign was launched not only to raise concerns about this issue, but to elicit a modicum of action or at least certainty or clarity from the Government. Budget 2011, however, saw the Chancellor U-turn on the coalition agreement pledge made less than 12 months earlier to switch to a per-plane duty, informing the House:

“we had hoped that we could replace the per passenger tax with a per plane tax. We have tried every possible option, but have reluctantly had to accept that all are currently illegal under international law. So we will work with others to try to get that law changed.”

Will the Minister update the House on how that work on changing the law is going?

At Budget 2011, the Chancellor went on to state:

“In the meantime, we are consulting today on how to improve the existing and rather arbitrary bands that appear to believe that the Caribbean is further away than California. We will also seek to bring private jets, which pay no duty at all, into the scope of taxation.”—[Official Report, 23 March 2011; Vol. 525, c. 963.]

The APD rate rise due in April 2011 was deferred to April 2012.