Air Passenger Duty

David Simpson Excerpts

Tuesday 10th July 2018 Westminster Hall

[Gavin Robinson]

The hon. Lady is entirely right. She indicates how APD acts as an economic barrier and a detriment. It curtails growth and success and stands in the way of business from the north of England to the south of England to other parts of the United Kingdom. It stands in the way of leisure pursuits and increases the costs on hard-working taxpayers and their money, whether it is for business or pleasure. She is entirely right. It is a barrier.

[David Simpson (Upper Bann) (DUP)]

My hon. Friend knows that the UK has the highest flight taxes anywhere in the world. We surely need to look at that. Hopefully we are going to be in a post-Brexit situation, so we need to make sure we can attract businesses and more people into the country. Cutting the tax is one way we can do it.

[Gavin Robinson]

The Minister does not need to be encouraged on the merits of leaving the European Union or indeed on the benefits, flexibility and freedoms that it will give us as a country to chart our own course and to set preferential tax rates that are beneficial and encourage growth, which I think must be a key factor for the Treasury.

I have mentioned the confidence and supply agreement and the call for evidence that was published. I understand that there has been extensive engagement, particularly from Northern Ireland industry, the airlines and all of those affected by this arbitrary tax. The consultation closed on 5 June and we look forward not only to the thoughtful engagement of the Treasury, but to its purposeful response. The issues that it took evidence on are the same issues that have applied to this debate for years. When the Treasury says that it wants to explore the economic impact of APD, it is exploring the same reports that were presented to it in 2011, 2013 and 2015—exactly the same reports carried out using exactly the same modelling—which indicate that scrapping air passenger duty would be a net gain to the UK Treasury. I do not say that superficially, but whenever we stand before a Treasury Minister or try to argue with the Treasury and say, “We want to have this cut for a boost,” they look at you and say, “This will cost us money. If we take from this pot, how will we supplement it in another way?” The call for evidence will show, as every economic forecast has shown, that there is a net economic benefit to the reduction of air passenger duty.

--- Later in debate ---

[Jim Shannon]

I thank the hon. Lady for her intervention and her wise words. The Minister has heard what she said, and I agree with her, as others do. We need to have a strategy and policy that move us forward together, so that we can all take advantage of what happens, rather than efforts that are divisive—perhaps the wrong word—or different ways of trying to achieve the same goal. I therefore wholeheartedly support the A Fair Tax on Flying campaign and its call for at least a 50% reduction in air passenger duty. I urge all Members to support the AFTOF campaign.

My mother often urged me not to be penny wise and pound foolish. Many people would say that that is the Ulster Scot in her, and in me—every pound is a prisoner, and we were told to look after it and to look after it well. There is nothing wrong with that: thriftiness is good—my children comment on that to me, but that is by the way, and I hope that they learn the lessons that my mother taught me, and that I have tried to teach them. The point is this: we need to focus on the immediate penny, but sometimes we forget the value of the pound. That was what my mum was telling me. We need to look at how we spend better to grow our economy.

From the Minister’s response to various comments, I know that he is sympathetic to our point of view. It has been outlined to me that up to £175,000 can be generated through trade from a high-growth market per average flight added. That is a massive amount of money per flight added, and gives us an idea of our potential to grow.

[David Simpson]

I am sure my hon. Friend will be as surprised as I was to hear that within five years it is reckoned that Dublin airport will be a strong competitor of Gatwick. At one point that was unimaginable, and it is simply because of APD.

[Jim Shannon]

My hon. Friend is absolutely right. Those are all the arguments and the evidential base from places around us. We should be looking at how such places advance and how we can do so alongside them or do even better.

New daily flights to the eight largest high-growing economies could generate as much as £1 billion in additional trade per year for the economy—that figure multiplied up from the one flight to all the flights together. The economic value of new connections to five Chinese destinations, which I mentioned earlier, will add £16 million to GDP and 530 new jobs. That alone gives an idea of the advantage to be gained there.

I do not want to make a pun, but I urge the Government to consider a pilot scheme—for a methodology whereby we can move things forward. Research by PwC shows that more tax revenue would be raised from other taxes than would be lost from abolition of the APD, with a net £570 million in extra tax receipts in the first fiscal year. Positive benefits through to 2022 could add up to as much as £2 billion in tax receipts additional to the total in the status quo. These are not just enormous figures; they represent our potential growth and what we can do. APD abolition could boost UK GDP by almost 0.46% in the first year, with ongoing benefits up to 2022. The increased economic output associated with abolition could lead to the creation of 61,000 jobs by 2022, which is not very far away. At my age, the years seem to go by quicker, but the fact of the matter is that we would quickly see the advantages.

I join the calls to sincerely urge the Government to reduce APD by at least 50%, to ensure that the United Kingdom of Great Britain and Northern Ireland, better together, is more connected to the world, including emerging markets, so that there is increased choice for holidaymakers and to demonstrate that a truly global Britain is open for business. After Brexit, we should be even more open than we are now.