Air Passenger Duty

Guy Opperman Excerpts

Thursday 1st November 2012 Commons Chamber

[Henry Smith]

My hon. Friend has anticipated what I was about to say. The Netherlands scrapped air passenger duty after studies conducted by the Dutch Government established that it was costing the economy more than it was bringing into the Treasury. I think that it is for the same reason that only six European countries charge any form of air passenger duty, and the amounts that they charge are very modest.

[Guy Opperman (Hexham) (Con)]

My hon. Friend is making a very articulate case not only on Gatwick’s behalf but in favour of the change that we all want to see, but does he agree that air passenger duty is not just a London tax? If the Government are interested in supporting the regions of England, at the very least they should bear in mind the fact that a change in APD would make a huge difference to regions such as the north-east and the north-west.

--- Later in debate ---

[Sir Roger Gale (North Thanet) (Con)]

Most Members have made the point about the value of the aviation industry to the UK as a whole. It is of considerable value to all the UK’s major conurbations, and particularly to the south-east. Historically, Heathrow has been one of the major—if not the major—hub airports in the world. The interlining that has gone on through Heathrow over decades has been worth almost incalculable sums of money, not merely to the aviation industry but to business as a whole through the people who hold business meetings in airport meeting rooms and the people who come through London and spend money doing business in the City or as tourists. That is what is at stake and it is difficult and dangerous to ignore those facts.

At the moment, the United Kingdom is losing business. Not in 10, 15 or 20 years—it is happening now, today. Every day we lose business to Schiphol, to Frankfurt and to Charles de Gaulle. Would not the French, give or take Mr Hollande, like to create in Paris the financial centre of Europe, to replace London? It is not a pipe dream on their part; it could happen if we drive the business travellers away from the south-east of England. I am sorry that this is to some extent a south-east problem, but that happens to be where the City of London is and we cannot change that.

There are two issues: airport capacity and air passenger duty. My friend the hon. Member for Central Ayrshire (Mr Donohoe) and the hon. Member for Aberdeen South (Dame Anne Begg) both made the point that people are now travelling short haul to interline and take long-haul flights from Schiphol, Frankfurt and Charles de Gaulle. They pay APD on the short-haul flight and get a much cheaper and better deal on the long-haul flight to the far east, Brazil—a developing market—and, of course, the United States. It is happening now.

[Guy Opperman]

My hon. Friend is making an articulate case about the impact on the economy of Great Britain, but there is also an impact on overseas economies. For example, the APD banding is so arbitrary and wrong that the APD for somewhere such as the Caribbean is more than for somewhere as far away as Hawaii. Surely that shows the illogicality of this blunt tax.

[Sir Roger Gale]

If I wanted to use one word to describe the banding, it would be chaotic. That is what it is. We are losing business now.

We have an opportunity—I have a constituency interest in this—in Manston, Kent’s international airport. My hon. Friend the Economic Secretary to the Treasury is aware, I think, of the opportunity Manston presents. It has one of the longest runways in the country and also one of the widest—three runways wide—because during the war it was used for landing planes one after the other. There is no suggestion that it should ever become a fourth, fifth or sixth London airport, but it could be developed at very modest cost to take the pressure immediately—not in 10 or 15 years’ time—off Gatwick, which in turn, with released capacity, could take the pressure off Heathrow. That would create the breathing space we need while the Government work out whether to have a third runway at Heathrow, a second runway at Gatwick, a second runway at Stansted or Boris island—that is not the purpose of this debate. If we are to develop Manston and use its capacity, we must give it a chance to breathe commercially, and air passenger duty is damaging that chance.

We need a modest investment in infrastructure, and the Minister of State, Department for Transport, who has responsibility for aviation, will visit us very soon. As long as the air passenger duty element of travel from the United Kingdom is as high as it is, regional airports such as Manston, and the many others that Members across the House have represented this afternoon, will suffer. Because Manston is in the south-east, it will presumably be banded at a south-east price, which in itself is nonsense. We must take into account the nature and capacity of each individual airport. I want air passenger duty to go completely, but I believe that in the interim, as a short-term measure, we have to look seriously at banding, which has been referred to, and at some kind of variation between regional and hub airports.

The Economic Secretary to the Treasury might be new to his role, but he is very bright and he can do sums, which is why he got the job. It is very easy to say glibly that something is worth £2 billion, £5 billion or whatever to the Treasury without taking into account what my hon. Friend the Member for Windsor (Adam Afriyie) referred to as the downside. The real cost must be calculated in terms not just of aviation lost, but of lost business, tourism and all the other things that flow from being a world-class, international centre, which is what London is, always has been and must be allowed to remain.

There is a Treasury mantra—I am looking to the civil servants’ box—which says that more tax equals more money. That card was played earlier this afternoon with regard to beer duty. It is wrong. A modest amount of tax might raise a modest amount of money, but there comes a point, and my hon. Friend the Economic Secretary must recognise this, when a tax kills the goose that lays the eggs, whether they are gold, silver, bronze or straightforward eggs. We cannot go on killing this industry, and that is what is happening. Of course, another huge concern has been voiced by holiday travellers. The impact on family holidays is dramatic and costly.