Covid-19: Support for Aviation, Tourism and Travel Industries

Gavin Newlands Excerpts

Thursday 24th June 2021 Westminster Hall

[Gavin Newlands (Paisley and Renfrewshire North) (SNP)]

It is a pleasure to see you in the Chair, Dr Huq. I thank the hon. Member for Crawley (Henry Smith) for securing this debate and the Backbench Business Committee for granting it.

We had a similar debate in the Chamber less than two weeks ago, but the situation facing the aviation sector, and indeed much of the wider travel industry, is so stark and immediate that we could debate the issue of support every week. The hon. Gentleman, who represents Gatwick airport in much the same way as I represent Glasgow airport, has campaigned hard on this issue, and I commend him for it.

One third of the 6,000 on-campus jobs at Glasgow airport have gone, and countless more have gone in off-campus support services and supply chain companies. Perhaps the most important thing to note is that those thousands of local jobs have gone while there is a furlough scheme in place, such is the cash burden and the grave outlook for the sector. I do not want to begin to imagine how many more jobs will go in September if the furlough scheme is not extended in that industry at least.

We are looking at a calamity for thousands of families across Renfrewshire, and perhaps hundreds of thousands around the UK. That would be an economic catastrophe, both locally and nationally. I very much echo the comments that the right hon. Member for Hayes and Harlington (John McDonnell) made about fire and rehire. It needs to go now.

Amid all this doom and gloom, there is a sector trying to remain positive and plan for a brighter future. It includes Loganair, based in my constituency at Glasgow airport, which has announced that its new GreenSkies programme will include a £1 charge on every ticket to invest in schemes aimed at tackling climate change and to remove the same amount of carbon from the environment as is generated by its aircraft. It is also beginning trials in Orkney of aircraft powered by hydrogen and renewable electricity. It has committed to being fully carbon neutral by 2040. That, of course, follows Glasgow airport becoming the first to introduce electric bus fleets to its operations, and achieving carbon neutrality for emissions under its direct control in 2020.

Ambitious plans for net zero are not only the preserve of Glasgow. I am not parochial—well, not on this occasion. I spoke to Bristol airport recently, which proudly told me of the ambitious plans on contributing to making the industry and the country at large net zero. That is all excellent stuff. It is very welcome and, indeed, necessary, but the reality is that if the sector survives, much of it will be so indebted or reduced in scope and capacity that the capital required to make such investments simply will not exist. That is clearly me done with the positivity, Dr Huq.

I said to the Secretary of State this morning during Transport questions that I have lost count of the number of times I have brought up support for the aviation sector since the start of the pandemic, either before or after the Government promised to do just that. I have since had the opportunity to check and the answer is 34. I have brought this up 34 times with the Government and had the same bluff and bluster response, including that the industry has had access to various routes for loan funding. That has resulted in our airline industry having a higher debt ratio than much of its international competition, where support has been largely through non-repayable grants, which in the USA totalled over £23 billion, in Germany nearly £8 billion, in France £6.5 billion and in the Netherlands £3.2 billion.

In November, the Government finally announced limited business rates support for the sector, seven months after the Scottish Government had announced a similar scheme in Scotland. I say similar, Dr Huq, but in Scotland the scheme is uncapped and extends to airlines based there as well. Moreover, this moratorium has been extended by a full year by the Scottish Government, while the UK Government’s limited and capped version will continue for only six months. Given the situation the sector faces, this is clearly unsustainable. In his summing up, I hope the Minister will confirm that an extension is being considered. If so, will the caps and limitations be removed?

We finally have an agreed four-nations approach to border health to manage the risk of importation of new cases and variants from international travel, in the form of the traffic light system. Under the previous arrangements, the delta variant entered Scotland because the UK Government would not engage with the Scottish Government’s concerns, as my hon. Friend the Member for North Ayrshire and Arran (Patricia Gibson) has already mentioned.

The level of risk earlier in year was such that all UK Governments were advised that all direct arrivals should enter managed-isolation hotels. Scotland did so, but only red list arrivals had to do so in England. Moreover, the UK Government refused to help identify passengers in England travelling on to Scotland, so that they could also be required to enter quarantine hotels. The significant delay, perhaps for political reasons, in announcing that India would go on to the red list was far too long and we can see the direct results of that in our record case numbers in recent days.

Any system, traffic lights or otherwise, needs to be dynamic, requiring rapid decision making on emerging risks that are identified by the Joint Biosecurity Centre. The Scottish Government are keen to stick to a four-nations approach, but if Scottish Ministers feel they need to, they will make the decisions that are right to protect Scotland. Fundamentally, we absolutely understand the importance of international travel to the tourism and hospitality sector, not least for jobs in my constituency.

In terms of the wider tourism and hospitality sector, which is equally important to the Scottish economy, UKHospitality is clear: while the Scottish Government are providing firms with breathing space on business rates, the UK Government are just kicking the can down the road. The Scottish Government’s extension of 100% hospitality rates relief is for a year, which is far longer than the three months offered in England, with a discount for a further six months.

In fact, retail, tourism, hospitality, aviation and newspaper businesses in Scotland will pay no rates during 2021-22 at all. Kate Nicholls, the chief executive at UKHospitality, told the Treasury Committee earlier this month:

“In Scotland, Wales and Northern Ireland, 100% business rates holidays have been given to hospitality for a full year. It gives those businesses breathing space to avoid having to make the tough decision between paying taxes and paying people. In England we do not have that luxury. We will have to pay our taxes from day one.”

One of the cogs of the Scottish tourism sector is the coach industry, which is worth an estimated £400 million and supports around 4,000 jobs. Around 80% of the coach industry’s income is derived from tourism. The Scottish Government have a coach operators fund to support the sector, but the UK Government have no such scheme.

In written evidence to the Transport Committee, Kevin Mayne of Maynes Coaches said that the help and understanding of the Scottish Government towards coaching has been well received by the industry. Moreover, the then Cabinet Secretary for Rural Economy and Tourism, Fergus Ewing, told the Scottish Parliament in January that Westminster “declined” his calls to provide support for the coach industry across the UK. He said:

“That is why we are going ahead with the Scottish scheme to compensate coach operators, which are an essential and quality part of the tourism offering in Scotland.”—[Scottish Parliament Official Report, 21 January 2021; c. 32.]

Mr Mayne provided the following in evidence:

“Mr Ewing’s description of coaching as ‘essential’ contrasts with controversial comments made by Transport Minister Baroness Vere at the Confederation of Passenger Transport UK Bus and Coach Conference on 12 January.

She told delegates that the UK government regards home-to-school and rail replacement services as essential, but that other coaching activity is seen as ‘non-essential.’ That created a ‘very difficult’ situation for them when deciding whether to offer a UK-wide support package for coaches.”

Will the Minister commit to comprehensive support for the English coaching sector?

It is regrettable that the Conservatives remain committed to imposing a September cliff-edge on the tourism sector by ending the 5% VAT rate. In particular, extending the relief is critical for those who operate on a seasonal basis, a significant amount of whom are in Scotland, especially given that summer lasts for about a week. Kate Nicholls of UKHospitality said in the same Treasury Committee meeting:

“The single biggest thing that the Government have done to help the sector through this crisis, which has helped to support and sustain jobs through the crisis, has been to introduce a lower rate of VAT for tourism services”.

Can the Minister confirm that an extension is being actively considered?

I will conclude by bringing my remarks back to where I started: aviation. I said earlier that I had raised the issue 34 times—it is now 35 times. This morning, I asked the Secretary of State directly if he was going to introduce an aviation, travel and tourism recovery package to support the sector and its workers, such as those protesting on College Green yesterday. He could not jump out of the way quick enough, even though he was sat before the Dispatch Box at the time. Instead, the Minister, whom I very much respect, had to take the hit and repeat all the various stats about support. Although that support is welcome as far as it goes, we will see the demise of the sector if it is not improved. I ask the Minister again: are the Government actively considering an aviation, travel and tourism recovery package or, at the very least, some further support for the sector?

As I have said previously in this place, the UK started the pandemic with the world’s third-largest aviation sector. With about one third of the workforce already gone, it will certainly not be the third largest coming out of the pandemic, and there is a real risk that we will never regain such a lofty position without some dynamic and urgent action from this Government, who still seem unable to understand the importance of aviation to connectivity and the wider economy. Their time is running out.