Air Passenger Duty

David Simpson Excerpts

Wednesday 23rd October 2013 Commons Chamber

[Sammy Wilson]

I do not know whether it is about demand management at Heathrow, but I do know that there has been an impact not only on the pattern of where and how people fly but, much more importantly, on economic growth in the United Kingdom and on the connectivity that many of the regions need if they are to develop markets elsewhere in the world.

Let us look at the facts. Since air passenger duty was introduced, it has increased by 160% for short-haul flights and by 225% for long-haul flights. The tax brings £2.8 billion into the Exchequer, and that is expected to rise to £3.8 billion by 2016-17. If we make a comparison with other EU countries, we can see where the problem lies. Many EU countries do not have any APD, while some introduced it but abandoned it because of its impact. The countries that have retained it have done so at a lower level than here in the United Kingdom. I shall not bore the House with all the percentages, but others might want to cite them to demonstrate the impact on airports in their areas.

I do not want to be parochial, although other Northern Ireland Members may wish to spell this out in much greater detail, but it would be remiss of me not to point out that air passenger duty has a significant impact on the economy in places such as Northern Ireland. We cannot transfer between air and train travel, so the only option for people who wish to travel to places outside Northern Ireland, whether in Great Britain or elsewhere, is to travel by aeroplane, and hence to pay the duty. The Irish Government abolished air passenger duty in the Republic, with which we share a land boundary, because they recognised the importance of air connectivity to the general well-being and growth of the economy, the promotion of jobs, the attraction of inward investment, and a range of other economic benefits.

[David Simpson (Upper Bann) (DUP)]

Is not a typical example of the benefits of zero air passenger duty provided by the Dutch Government who, having abolished it in 2010, discovered that £1.3 billion had been lost to infrastructure and the economy since its introduction?

[Sammy Wilson]

The Dutch Government were not the only Government to change their mind in that regard.

It would be churlish of me not to accept the role played by Ministers—especially the Exchequer Secretary to the Treasury, who is in the Chamber, and the former Minister of State for Northern Ireland, the right hon. Member for East Devon (Mr Swire)—who listened to what was said by Northern Ireland Members about long-haul flights and, in particular, one long-haul flight to north America that connects us to a major investment market. We have managed to attract a great deal of inward investment from that place, but the main fear expressed by the Northern Ireland Executive was that the loss of that route—which was likely to go because of the air passenger duty issue—would lead to the loss of an important economic lever in the investment package of the Minister of Enterprise, Trade and Investment.

Notwithstanding what has been said about this not being a listening Government, on that issue the Government did listen and act. As a result, we have retained the long-haul flight to north America, which is still paying dividends in terms of connectivity and investment. The industry Minister has announced a number of investments from north America in the last few months, and I have no doubt that part of that success is due to the ease with which managers from New York and Boston, for example, could fly into Northern Ireland for meetings with the firms that they had set up there.