Air Passenger Duty: Regional Airports

Henry Smith Excerpts

Tuesday 20th October 2015 Westminster Hall

[Julian Knight]

Greater connectivity throughout the United Kingdom—in all the regions and devolved Administrations—would enhance not only tourism, but business and trade. I will come on to those points shortly.

Powers over APD are being considered for Wales, and that might have a knock-on effect for English airports such as Bristol and Liverpool. More seriously for my local airport, Birmingham, the new Manchester devolution deal might see that city gain the power to cut APD for its own airport, which could lure scheduled and package-holiday flights away from Birmingham. Clearly, if we are not to be placed at a disadvantage by rival areas, we need Birmingham airport to be able to compete fairly. However, I do not want my speech or this debate to be exercises in grievances or fiscal wishful thinking.

Despite the best efforts of this Government, we face a difficult fiscal environment. While we are still trying to clamber back from the recession and endemic overspending by Labour, any suggestions should at least be revenue neutral for the medium term.

[Henry Smith (Crawley) (Con)]

I congratulate my hon. Friend on securing the debate. In his few months in Parliament he has become a worthy campaigner on behalf of Solihull and the west midlands. Might the answer to the question of APD be a UK-wide reduction or abolition of the tax, the highest such charged in the world, apart from in Chad? A recent PricewaterhouseCoopers report suggested that the amount of economic growth that Birmingham and other places, such as London and the south-east, would generate from the abolition of the tax is greater than the amount brought into the Exchequer.

Royal Bank of Scotland

Henry Smith Excerpts

Thursday 11th June 2015 Commons Chamber

[Harriett Baldwin]

I am sorry that the hon. Gentleman’s invitation to yesterday’s dinner got lost in the post—or perhaps he was not invited. What I do not understand about his question is why he seems to argue for ongoing fiscal irresponsibility, which is what got us into this mess in the first place.

[Henry Smith (Crawley) (Con)]

I congratulate my hon. Friend on her appointment as Economic Secretary, and I congratulate the Government on further recovering our economy on behalf of taxpayers. Mention has already been made of the Governor of the Bank of England saying that, for the sake of the taxpayer, we need to get on with the sale sooner rather than later. Mark Carney also mentioned the need for stricter custodial sentences for those convicted of financial mismanagement. Although this is not my hon. Friend’s brief, will the Government consider it?

[Harriett Baldwin]

I welcome my hon. Friend’s question, and he is absolutely right that the Governor made a powerful speech yesterday, outlining the steps he and the regulators are taking to end the age of irresponsibility. The Government welcome the recommendations of the FEMA—fair and effective markets—review and hope that they will be taken forward internationally via the Bank for International Settlements and under the Governor’s leadership.

Future Government Spending

Henry Smith Excerpts

Wednesday 4th March 2015 Commons Chamber

[Mr Gauke]

I have to say that looking around this Chamber I do not feel terribly isolated.

[Henry Smith (Crawley) (Con)]

I am glad that my hon. Friend has brought this back to jobs and what that means for our constituents. In Crawley, we now see record employment levels. That is not an accident; it is a direct result of the long-term economic plan.

[Mr Gauke]

My hon. Friend is absolutely right. We have seen remarkable progress in creating jobs. As I say, that is providing greater security for millions of people up and down the country.

Oral Answers to Questions

Henry Smith Excerpts

Tuesday 9th December 2014 Commons Chamber

[Henry Smith (Crawley) (Con)]

15. What steps he has taken to support people with savings and pensioners.

[The Economic Secretary to the Treasury (Andrea Leadsom)]

This Government are determined to support savers and pensioners—unlike the last Government who gave them miserly increases in state pensions. Since 2010, we have delivered the biggest-ever increase in the individual savings account allowance and for pensioners the triple lock means that they will receive about £560 more in 2015-16 than under the last Government’s policy. We have also given pensioners the freedom to choose how and when to access their own pension.

[Henry Smith]

My hon. Friend is right that the previous Administration caused the great recession, which has meant that savers in Crawley have suffered considerably. Last week’s autumn statement proved that this Government stand up for the aspiration of passing on savings to our children.

[Andrea Leadsom]

My hon. Friend is quite right. He will be as delighted as we are that we are now allowing people to pass on their unused ISAs to their spouse or civil partner free of tax, and their defined contribution pension schemes are also to be free of tax to their successors. This was a great move, allowing people to decide what they do with the money they have saved during their lifetimes.

Oral Answers to Questions

Henry Smith Excerpts

Tuesday 4th November 2014 Commons Chamber

[Mr Gauke]

Let us be clear: a rate of 6.8% is lower than was achieved in any year under the last Labour Government. In addition, HMRC’s yield—the money that has come in as a consequence of its efforts—was £7 billion higher in 2013-14 than it was in 2010-11. The fact is that this Government have an excellent record on dealing with tax avoidance, tax evasion and the tax gap.

[Henry Smith (Crawley) (Con)]

Can the Chancellor of the Exchequer say how the Government are encouraging greater payment of tax through international agreements that we have achieved, for example, with Switzerland?

[Mr Gauke]

I am sure that the Chancellor can explain that, but as I am already at the Dispatch Box, I will answer the question. The UK has very much led the way in the OECD base erosion and profit shifting process, ensuring that the international tax system is fit for purpose. We have made good progress on that, but there is still work to do.

Finance (No. 2) Bill

Henry Smith Excerpts

Wednesday 9th April 2014 Commons Chamber

[Jonathan Edwards]

Cardiff is the only international airport. We are talking about APD relief on long-haul flights, and it would apply primarily to Cardiff, but I imagine that the Welsh Government would have ambitions to redevelop other airports in Wales—[Interruption.] If they had the ambition, they would want to improve those airports.

As I was saying, public opinion clearly supports the devolution of the tax to Wales. Only yesterday, the Western Mail published the results of a survey that showed that 78% of respondents supported the devolution of APD. On this, as with so many other issues, the powers that be in Westminster are at odds with what the people of Wales demand. In response to that poll, the Welsh Labour Government said:

“We will continue to put forward the strong case for it”—

APD—

“to be devolved in the hope the UK Government will eventually listen to us and the overwhelming majority of the Welsh public who support this move, as reflected in this poll”.

A day after the poll, we have an opportunity in the Finance Bill to achieve that objective, but where is the Labour party?

I am glad that, since Cardiff airport has been brought into public ownership, new management has driven up passenger numbers by 9%. That is a crucial point—the national airport of Wales is publicly owned. I agree with that, as the airport is an essential part of Welsh national infrastructure, but Labour MPs from Wales are not here to ensure that something that is publicly owned by the people of Wales has the best chance of succeeding in the long term.

The devolution of APD could help to ensure the long-term future of the airport and draw passengers away from congested airports in the south-east of England—something I am sure many MPs and their constituents in and around the south-east of England would welcome. I therefore look forward, perhaps somewhat over-excitedly, to some of those MPs joining us in the Aye Lobby. I am similarly amazed that the Secretary of State for Wales is not pushing for the devolution of APD at the highest level, as it would provide us with the ability to develop the Welsh economy, which should be one of his core objectives.

The hon. Member for Vale of Glamorgan (Alun Cairns) is not in his usual place, which is slightly strange, considering that the airport is in his constituency. The livelihood of many of his constituents depends on the vitality of the airport, as well as the aircraft engineering industry that has grown around it, and they will be dismayed to learn that their MP does not support measures that could give the airport a competitive advantage. I should like to make reference in passing to the difficulties that engineering companies operating from the St Athan airbase, which is close to the international airport, face as a result of the management of that airfield by the Ministry of Defence.

The new clause effectively seeks to give Wales an essential tool to support and provide jobs locally in south Wales and the wider Welsh economy. The financial powers recommended by the Commission on Devolution in Wales are needed as soon as possible as a spur to jobs and growth in Wales. The Westminster Government, in the Wales Bill, have cherry-picked the recommendations and omitted the devolution of APD as well as other proposals. The powers included in the Bill may not be implemented until well into the second half of the decade, provided that no more roadblocks are put in place by other parties. Every month that passes without the devolution of those powers, the Welsh economy languishes even longer at the bottom of the economic league table of the nations and regions of the UK, with job and economic prospects diminished, hopes and dreams dashed, and lives stalled.

Plaid Cymru has made jobs and the economy its absolute priority, which is why we have again tabled an amendment on air passenger duty. We want to create a modern and prosperous Wales and, unlike our political opponents, we have little faith in London government of whatever colour achieving that ambition. That is why we want Wales to have the tools to get on with the job without delay. Diolch yn fawr.

[Henry Smith (Crawley) (Con)]

It is a pleasure to serve under your chairmanship, Mr Bone. I have the privilege and honour of being the Member of Parliament representing Gatwick airport, so aviation is important to my constituents. Aviation is extremely important to the whole of the United Kingdom, as an island trading nation. Many companies located in my constituency are aviation companies, such as Virgin Atlantic, easyJet and TUI Travel, or international companies that have chosen to base themselves close to a major international airport. Therefore, the issue of taxation on aviation concerns not only Wales, Scotland and England, but my constituency in particular.

I would prefer to see us abolishing air passenger duty altogether. We have one of the highest rates of air passenger duty anywhere in the world. I believe that only Chad charges more. Compared with our European competitors, the amount we charge is considerably more. One of our nearby competitors, the Netherlands, used to charge a form of APD but abolished it because of the cost to its economy. Just over a year ago a PricewaterhouseCoopers report concluded that although air passenger duty brings in about £3 billion to the Exchequer, it is estimated to cost the British economy some £16 billion.

I congratulate the Government on their move to reduce the burden of APD, as announced by my right hon. Friend the Chancellor of the Exchequer in his Budget a few weeks ago. It is a great step on the way to reforming and, I hope, one day abolishing this duty. It is a tax that we, as an island trading nation, can ill afford. Reducing bands C and D into band B for flights to capitals more than 4,000 miles from the UK will help many people who want to take well deserved, well earned long-haul holidays. It will also help the diaspora communities, particularly those travelling to the West Indies, India, Pakistan, Australia and New Zealand. Perhaps most importantly for us as an exporting and trading nation, it will help reduce the cost to business of trading with emerging economies such as China.

[David Rutley (Macclesfield) (Con)]

My hon. Friend is making a characteristically powerful speech. I agree that exporters are vitally important. Lord Livingston recently pointed out that mid-sized businesses in particular in the UK are underperforming, as are small businesses, compared to other European businesses. Does my hon. Friend think the changes to APD will help those small and medium-sized enterprises that want to get out and do more exporting?

[Henry Smith]

Indeed. The simplification of the upper bands of APD, as announced in the Budget, will help small and medium-sized companies in particular to export. I pay tribute to UK Trade & Investment under this Government, which has been making a fantastic effort to give SMEs the tools to maximise exports. The simplification of APD is of great help to small and medium-sized companies not only in England, but in Wales and Scotland.

My remarks are brief this evening. I congratulate the Government on a Budget that is good for business and good for individuals, with the income tax threshold being raised, corporation tax being lowered, fuel duty being frozen and the simplification of APD. I put in a bid once again for the abolition of APD in the future, but I recognise that it is only this Government who are tackling our economic problems in a fiscally responsible way. Charging APD on a Great Britain-wide basis is the most appropriate approach; I would not support the regionalisation of APD. Let us focus on getting APD ultimately abolished, but welcome the simplification that is good for individuals and for business in this country as a whole.

[Mr MacNeil]

I rise to speak in support of new clauses 6 and 7, in my name and the names of my Scottish National party colleagues, and I intend to press new clause 7 to a vote.

Unfortunately, air passenger duty has become yet another of the Westminster Government’s damaging interventions in the Scottish economy. It is a tax whose time has passed, if indeed it was ever fitting for Scotland, and it is at best only a demand management tool for Heathrow, needed because of the dithering and prevarication at Westminster about doing anything there. As London lost its advantage in sea-going transport to Rotterdam for reasons of dithering and prevarication, it seems that it is now losing its advantage at Heathrow as well, as the world No. 1 slot goes to Dubai. If Schiphol sorts out a few minor irritants for travellers, it will do to Heathrow what Rotterdam did to the docks.

Since 2007, APD has increased markedly: by between 160% and a staggering 360%. This tax—this demand management tool for Heathrow—is definitely damaging the Scottish economy. I object to it not because Westminster wants to slap it on to flyers owing to its dithering and prevarication—it should be free to tax and spend as it wants, regardless of the stupidity and myopia of its actions—but because of what it is doing to Scotland. The damage is obvious. PricewaterhouseCoopers says that its reduction would increase tax receipts in other areas, especially VAT, and create jobs. In short, Westminster is costing us jobs, certainly jobs in Scotland, through this tax.

Let us have a quick glance at tables that compare APD in the UK with that in some other countries in Europe. According to the Airport Operators Association, the next highest rate on short-haul economy flights is that of Austria, which charges a hefty €8. This sum increases markedly—by 100%—in the UK, which charges €16. On the medium-haul rate, Germany is the leader with €23, but that is trebled, and more, in the UK, where it is €89. On long-haul, Germany, again, leads with €42, but the UK is well out in front with €113—double to treble the rate in other countries. On the maximum-rate charge, France manages to pick up the crown with €47, but steaming out in front, yet again, is the UK with €226. While this demand management tool might be good enough for Heathrow, it is certainly not good for Scotland. It is a gate-keeper tax. I compare it to a high street shop that demands a fee of shoppers before they come into the shop and then wonders why sales have gone down.

There are many ways to approach this, and I think I am going to have to resort to poetry to advance my case. Given the Government’s intransigence, I wonder whether this may be the last untried key to unlocking their obstinacy. I turn to Mary Howitt’s poem of 1829—nearly 200 years ago. It is salient to this issue, because despite its being written before the Wright brothers and the first manned flight, it does make reference to a form of aviation. It is “The Spider and the Fly”:

“‘Will you walk into my parlour?’ said the Spider to the Fly,

‘’Tis the prettiest little parlour that ever you did spy’”.

Scotland, as we know, is one of the prettiest parlours; it is famed for its scenery. Indeed, the website TripAdvisor has named Lewis and Harris, the main island in the north of my constituency, as Europe’s No. 1 island to visit, and fifth in the world overall. Indeed, I would encourage anybody watching this debate or reading it later in Hansard to go to Google Earth and have a look at the scenery. Whether it is the beaches of Harris at Luskentyre, or Uig of the Lewis chessmen fame on the west side, or over at Gress and Tolsta or Port of Ness in the far north, they will see what TripAdvisor is talking about. Anybody visiting will find fine hotels in Tarbert, Harris or Stornoway, Lewis, and many bed and breakfasts, dotted throughout the islands. Stornoway is probably one of the best-connected towns in all of Scotland, with direct daily flights to Scotland’s principal cities of Aberdeen, Inverness, Glasgow and Edinburgh, and sometimes several times daily. There is more. Other islands to the south include North Uist, Benbecula, South Uist, and of course my own native Barra.

But despite our advantages, with standing stones older than Stonehenge and a visitor record going back to the Greeks in 325 BC, the London Government’s attitude is, “Walk into my parlour if you like. We’re not too bothered if you do or you don’t, but if you do we’ll have our highwayman mask on and we’re out to charge you a king’s ransom”—and this is just to reach Scotland in the first place.

That is a pity, because those who do discover the beauty of Scotland and especially its islands—from Islay to Unst in Shetland—find, rather like the fly at the end of Mary Howitt’s poem, that those who go up the winding stair can ne’er come down again. Similarly, those from overseas who discover Scotland are very likely to return. The damage is huge. It is not quite cataclysmic, but it is big. We are not quite in the territory of Lord George Robertson, who killed the word “cataclysmic” stone dead after he took a flight recently to make a speech in the United States of America. I am sure he is well aware of how much APD he paid.

Moving on to more serious voices on this issue than that of Lord George Robertson, a range of industry figures have lined up against this self-defeating tax. Amanda McMillan, the respected managing director of Glasgow airport, has said:

“Aviation plays a critical role in supporting the growth of the UK economy and this role is even more profound in Scotland given the country’s location on the periphery of Europe. Travelling by air is not a luxury but an essential element of business and family life, yet we continue to have the highest levels of taxation in the EU. It was extremely disappointing, therefore, that despite repeated representations to the UK Government the Chancellor in his Autumn statement opted to further increase levels of APD. APD is already proving a significant barrier to attracting new routes and unless there is a fundamental re-think, I have no doubt that Scotland’s domestic and international connectivity will suffer. Thankfully, there is broad cross party support in Scotland for action on APD and we welcome any moves which would address the issue and stimulate further growth.”

I hope to see evidence of that broad cross-party consensus in Scotland when we press the new clause to a vote tonight—or is it similar to the hollow words of Labour in Wales?

Gordon Dewar, chief executive of Edinburgh airport, has said of the White Paper:

“We welcome this policy from the Scottish Government and we would like to see APD not only halved but abolished completely. We’ve had a successful year at Edinburgh Airport but it is clear from our discussions with our airlines that Scotland could be far better connected without the iniquitous yoke of APD. It puts our country and importantly our vital tourism industry at risk. People and airlines will go elsewhere. We reiterate our call for governments to support our economy and abolish this unfair tax.”

The managing director of Aberdeen airport, Carol Benzie, has said:

“What is becoming increasingly clear are the implications of this tax on UK businesses. Put simply APD adds to the burden of running a successful company. 65% of our passengers in Aberdeen are travelling in a professional capacity and ultimately the responsibility for paying APD in each and every one of these cases is being passed back to their employer. Firms in Aberdeen are connected globally with links in emerging and existing markets. These businesses are paying APD twice if they chose to use a hub airport in the UK, and are taking their business elsewhere in increasing numbers to avoid this tax.”

It is self-defeating.

Commenting on the Irish Government’s decision to abolish air travel tax, which came into force on 1 April, Scottish Transport Minister Keith Brown, a former veteran of the Falklands war, said:

“Scrapping Air Travel Tax in Ireland has had an immediate impact and shows what could be achieved in Scotland if we had control over Air Passenger Duty…After the Irish Government outlined its plans to abolish the tax last year, Ryanair stated that it will deliver an additional 1 million passengers to and from Ireland as a direct result of that decision, with 20 new routes into Dublin, Shannon and Cork launching this summer.”

When I spoke about this last year I warned that the UK Government had been ignoring the industry, the people and the Scottish Government for far too long and that it was no wonder that support for independence was growing. We now know that support for independence has grown far more in the past year than I could have imagined. Are the UK Government going to continue with their intransigence? A year on, what do we have? The gap in the polls has closed, tightening to 6% within the margin of error, which is almost a swing, and the head of British Airways, Willie Walsh, and Ryanair’s Michael O’Leary are supportive of Scottish independence because they see the opportunities. I am sure that Members of this place will be supportive of independence after the event, but why do they have to be so slow and so late to the party? Michael O’Leary and Willie Walsh are right on the money, as we will see on 18 September.

The Scottish Government, in their White Paper on the best-planned independence process of any country in the world, aim to reduce APD by 50% within the first term of an independent Parliament, and to abolish it completely when circumstances allow, with a proposal for a straight reduction in bands. Independence is gaining support because of such straightforward, common-sense approaches.

National Infrastructure Plan

Henry Smith Excerpts

Wednesday 4th December 2013 Commons Chamber

[Danny Alexander]

That is one of the projects that we will track under our new infrastructure tracking regime, which will make sure that any problems are surfaced for Ministers much more quickly than they have in the past. If the hon. Lady is aware of any particular causes of delay, I encourage her to let me know. I will of course make sure that Transport Ministers are aware of her concerns.

[Henry Smith (Crawley) (Con)]

In the week that Gatwick is celebrating its fourth year as a successful independently operated airport, I very much welcome the £50 million investment in upgrading the important connectivity of the rail station, which will help the local economy and help Gatwick as a preferred UK gateway. Does the churlish chuntering of the Opposition just prove that they have nothing to offer the economy in terms of recovery and investment?

[Danny Alexander]

I agree wholeheartedly with my hon. Friend on both his points. On the latter, I have said enough, but the Opposition are just completely hopeless on the economy, as they have demonstrated again today.

I travel through Gatwick regularly when flying back and forth to Inverness—this is not the reason why Gatwick is in the plan—and I have to say that the airport railway station does not present a great face to the world for people arriving in this country for the first time. That is why the investment is much needed, and we welcome the fact that Sir Howard Davies has suggested making such an improvement. The £50 million we are providing will of course need to go alongside investment by the airport, but provided that that is forthcoming, we can get on with the project.

Air Passenger Duty

Henry Smith Excerpts

Wednesday 23rd October 2013 Commons Chamber

[Sammy Wilson (East Antrim) (DUP)]

I beg to move,

That this House recognises that the UK has the highest rate of air passenger duty (APD) in the world; believes that this is detrimental to attracting inward investment, encouraging exports, drawing more tourists to the UK and helping ordinary families to benefit from aviation; notes research carried out by PricewaterhouseCoopers and others stating that abolishing APD would not only pay for itself but would be a permanent economic boost to the UK economy and create tens of thousands of jobs; further believes that the abolition of this tax would be of benefit to all regions of the UK; further notes that it is the intention of the Prime Minister to review green taxes; and calls on the Government, as part of that review, to give high priority to the abolition of air passenger duty.

May I offer you my congratulations on achieving your position, Madam Deputy Speaker? This is the first time I have spoken while you have been in the Chair.

I am pleased to say that the debate has received endorsement from the very highest level. During today’s Prime Minister’s questions, the Prime Minister made it clear during his exchange with the Leader of the Opposition that it was his intention—and presumably therefore that of the Government—to “roll back…green regulations”. His office has also promised a review of green taxes.

[Henry Smith (Crawley) (Con)]

I also welcome that statement by the Prime Minister. However, air passenger duty should not be confused with green taxes. It is a tax that costs the economy more than it brings into the Exchequer, so it is important that we concentrate on that as well.

[Sammy Wilson]

I will come to that in a moment, but we must make it clear that APD started off as a green tax and that it is still regarded by many as a tax that is meant to cut down emissions from the aviation industry. Like many other taxes that started off as green taxes, it is highly damaging to the economy.

Economic Growth

Henry Smith Excerpts

Wednesday 15th May 2013 Commons Chamber

[Emily Thornberry (Islington South and Finsbury) (Lab)]

I should like to begin by belatedly congratulating the hon. Member for Eastleigh (Mike Thornton) on his election to the House. I also congratulate him on his constant optimism. For the sake of the record in Hansard, I must point out how very lonely he must be on the Liberal Democrat Benches. He is largely by himself over there.

So, here we are after three years of the coalition Government. The early growth that they inherited has been strangled, and the economy is flatlining. We have terrible rates of unemployment, particularly among the young, for whom long-term unemployment continues to increase. Many of those youngsters have no hope. Living standards are being squeezed, and it is more and more difficult for people to make ends meet. Business confidence is dying, and investment is declining as a result.

The country is crying out for a change and for the Government to do something. People were looking forward to a Queen’s Speech that would show that the Government were prepared to do something, but Her Majesty might as well have stayed at home. The measures in it do not address our economic crisis at all. I am not saying that there is nothing in it for us to welcome. Reform of the Independent Police Complaints Commission is long overdue. We have yet to see what it will involve, but I hope that the commission will be improved. I also hope that a proposal for a register of struck-off police officers will be included in the legislation. I even welcome some of the changes to the Dangerous Dogs Act 1991.

Apart from that, it is hard to see how this Queen’s Speech will help the country. We need a new plan to tackle the lack of jobs and growth, but it offers us nothing. Do the Government really believe that the draft deregulation Bill will get the economy going again? Do they believe that by snipping away at red tape they will encourage the private sector to rise up like the Incredible Hulk and get the economy working? I do not think that they really believe that. They cannot believe that that is going to save the economy. Surely they do not believe that they can just sit back and do nothing. In circumstances such as these, it is surely the responsibility of the Government to take a lead, but I am afraid that the Chancellor of the Exchequer gives every sign of being a man who has decided that he cannot afford the loss of face that would inevitably accompany a change of course. He cannot afford to expend so much political capital on doing something new, and we are all paying the price as a result.

[Henry Smith (Crawley) (Con)]

I take it that the hon. Lady is suggesting some sort of plan B, as offered by her party. Does she feel that the socialist model that has been pursued by President Hollande in France over the past year has led to success in that economy, given that it has now entered a triple-dip recession, compared with the growth in the UK economy?

[Emily Thornberry]

The difficulty is that, by carrying on regardless, this Government are killing the economy. I do not have time to go through my bundle of suggestions put forward by various economists, but Paul Krugman has said that the Government’s austerity plan is “fundamentally mad”. I was hoping to have time to read out more such views, but there is not time.

I would like, however, to use the few minutes that I have to give the Government some advice. They might listen—you never know! How about looking into housing? For example, £30 billion spent on infrastructure investment in housing—particularly affordable housing and social housing for rent—would represent 2% of GDP. The International Monetary Fund has said that the fiscal multiplier resulting from such investment could be between 0.9% and 1.7%, which could boost growth by 2.6% of GDP. That would be a short-term boost, but the TUC recently commissioned the National Institute of Economic and Social Research to look at the effect of such investment over the longer term. That research showed that such investment would continue, three to four years on, to have a positive effect on debt and GDP.

This is not just about the economy; it is also about fairness. We know that there is not enough housing. We know that people need jobs and training, and that our youngsters need something to do. They need hope. Investment in housing would provide all those things. This Government are building the smallest amount of housing of any Government; they have the worst peacetime record of doing that of any Government since the 1920s. Council house waiting lists continue to grow. If the Government continue at this rate, it will take until 2129 to build enough housing to meet the current need.

Of course, we know that the Government want to cut back on the benefit bill. They say it is wise to introduce a blanket cap without thinking about how some areas that have a desperate housing crisis will have much higher housing costs. My constituency provides a very good example. If a family of five is living in a three-bedroom house in the private sector in my constituency and someone is unlucky enough to become unemployed, the rent would be £400 a week. The question I wanted to ask the Chancellor earlier—unfortunately, he did not allow me to intervene—was this. If the rent is £400 a week and the cap is £500, what does such a family of five do? Does it live on £100 a week or not pay the rent instead? If the rent is not paid, does that mean the family is intentionally homeless, and if it does, does the council have to re-house the family? If the council does have to re-house them, but there is not enough social housing, where does the family go? Where would the Government suggest these people go? Perhaps they would go to Dover or to some of the marginal seats in outer London. Unfortunately, the Government have no idea of where these people should go. The tragedy of the debate so far is that there has not been enough emphasis on fairness.

--- Later in debate ---

[Henry Smith (Crawley) (Con)]

Thank you, Mr Speaker, for unexpectedly calling me in this debate. It is a great pleasure to follow the hon. Members for Luton North (Kelvin Hopkins) and for Linlithgow and East Falkirk (Michael Connarty), both fellow members of the European Scrutiny Committee. I very much enjoy the time we spend on that Committee, the worthwhile discussions and debates and the evidence that we take from witnesses. However, on this occasion I disagree with them both about our economic growth.

Listening to some of the contributions earlier this afternoon from the Opposition Benches, including the remarks of the former Paymaster General, the hon. Member for Coventry North West (Mr Robinson), one would be forgiven for thinking that this country had not been left with the highest peacetime deficit that we have ever witnessed in our history. It is remarkable that in three relatively short years not only has that deficit been paid down by a third, but we see economic growth starting to come through. Compared with our competitors—France has gone back into negative growth and back into recession and Germany has seen economic growth of only 0.1%—the latest growth figure of 0.3% is a remarkable testament to the very difficult and invidious decisions that this Government have had to make in clearing up the crisis that was left by the Labour Administration.

Fortunately, evidence of economic growth is coming through in my constituency. Today’s unemployment statistics in Crawley showed that in April unemployment fell to 3.4%, although I appreciate, as someone who has previously been unemployed, that it is 100% of a problem for each individual who makes up that statistic. That figure represents a fall on the previous month, and a fall on this time last year. Earlier this year, I was honoured to open a new production line at Vent-Axia in my constituency, which represented jobs coming back to Crawley from China—a sign of growing confidence in the British economy. I congratulate Gatwick airport on its significant infrastructure investment of £1 billion to upgrade its terminals, making that an attractive international trade destination, which is to the benefit not only of my local economy but of the UK economy.

In the brief time I have, I want to touch on the issue of the eurozone and the future of the EU, and the significant drag that that has had on this country’s economic growth. It is an example of a political project, which essentially is what the EU is, rather than largely an economic project, which is what it should always have been. The resulting eurozone crisis means that demand in the eurozone is down and therefore demand for British goods is down. Despite that, our Government’s performance in engendering economic growth is remarkably impressive. I was pleased in the last Session to serve on the Growth and Infrastructure Bill Committee, and am pleased to see in the Queen’s Speech further measures to reduce regulation and burden on business. If we give the people of this country a choice on our future membership of the EU, we can further free ourselves to ensure that economic growth and our competitiveness as a global, free-trading nation, a bridge between our historic links in the Commonwealth and our proximity to Europe, will mean that this country has a far brighter future.

[Pete Wishart (Perth and North Perthshire) (SNP)]

In the few minutes available to me, I want to confine my remarks to amendment (b). When the history books are written and we come to the chapter that describes and explains the UK’s exit from the EU, this week will go down as an important and significant week. After this week, the UK’s departure from the EU becomes almost unstoppable.

The UK, already a surly, sulky, semi-detached member of the EU, always available to offer some withering criticism to one of its few remaining allies within the EU, already halfway out of the exit door, is like some sort of staggering drunk looking for the oblivion of last orders, on its way out chanting, “We are the famous United Kingdom. No one likes us. We don’t care.” That is the reality of the UK within the EU. Its exasperated, declining number of allies in the EU do not know whether to boo, cheer or sing hasta la vista, such is the state and condition of the UK’s membership of EU.

It is clear that the UK is on its way out. It will either be out on the basis of the salami-slicing favoured by the Prime Minister—let us renegotiate a new terms of entry, which will obviously be rejected by most of its European allies—or, more likely, it will be wrenched out following the yes/no referendum plan by the Government, in a sort of in-your-face Barroso gesture from the UK electorate. What we actually have is an irresistible momentum for the UK to be taken out of the EU.

Of course, the EU was not even mentioned in the Queen’s Speech—that now appears to be an unfortunate oversight—but it is centre stage, because we are entering a new Session of Parliament, the UKIP session. It is the age of Farageism, a desperate creed characterised by an obsession with departure from the EU and with immigrants. It is an unpleasant, intolerant, neo-liberal creed with a disdain and hearty contempt for minorities. That is what will underpin this Session of Parliament, because the Government know that UKIP will win the next European election.

That is not my country and I do not want it. I want my country out of all that. My country is very different. The reason UKIP does not do well in Scotland, and the reason there is the lone panda of one Conservative Member in the Scottish Parliament, is that that agenda simply does not chime with the collectivism and the social attitudes and values of Scotland. That is why UKIP got less than 1% of the vote in the most recent Scottish parliamentary elections. I am proud that my country is so different from the one we observe south of the border. I hope that England and the rest of the United Kingdom do not go down that road, but they are entitled to have the Government they vote for, just as my nation is entitled to the Government we vote for.

There is now the real prospect of a party whose members the Prime Minister refers to as fruitcakes, loonies and closet racists having a share in the running of the United Kingdom. What will the Government do to ensure that does not happen? They have tried to name-call and disparage, but that has not really worked, given UKIP’s success in the local elections. They could try to buy UKIP off, but that would not work either. They are absolutely stuffed. My advice to the Government is that they had been doing all right and should have stuck with the hoodie-hugging and huskie-mushing new Conservatism. They simply could never out-UKIP UKIP, which is the master of European obsession and grievance. They should stick to their guns and ensure that they are different from UKIP.

It used to be said that Scottish independence would lead to Scotland being taken out of the European Union. Not many people are saying that now.

[Henry Smith]

Does the hon. Gentleman think that an independent Scotland would have to join the euro, or does he want to keep the British pound?

[Pete Wishart]

The hon. Gentleman is not on particularly steady ground when it comes to the debate on Scottish membership of the European Union. To answer his question, we will not be joining the euro but instead will follow Sweden’s example.

The Scottish people are observing two futures. In one future they remain shackled to the United Kingdom, which will become increasingly shackled to an intolerant, right-wing agenda. The hon. Member for Mid Bedfordshire (Nadine Dorries) has already said that she will have a joint UKIP-Conservative candidacy at the next election. I do not know how many more Conservative Members will adopt that stance. What we are seeing is a realignment of the right. All I have heard from the 1922 committee, which has not been very pleasant recently, with all the disagreements about Europe, is that there is a faultline running through the Government. The Scottish people have a choice: they could have that future, or they could have their own future, determined by them and based on their values.

amendment of the law

Henry Smith Excerpts

Monday 25th March 2013 Commons Chamber

[Henry Smith (Crawley) (Con)]

The Budget reaffirmed the Government’s economic strategy of focusing on reducing the deficit, restoring stability, rebalancing the economy and equipping the UK to compete globally. With over 1.25 million new private sector jobs created and the deficit reduced by a third since the general election, Great Britain is clearly on the right course.

There is one issue, however, that I would have liked my right hon. Friend the Chancellor of the Exchequer to address—tackling the severe inherited levels of air passenger duty. That was a missed opportunity to boost UK competitiveness further still, to reduce the cost of business travel to stimulate trade and investment, and to help hard-working families who want to visit their friends or family or to take a well-earned family holiday.

The previous Labour Government inherited a very modest level of APD and, over time, significantly increased the rates, particularly for long-haul travel. Since taking office, my right hon. Friend has recognised this problem by delivering a temporary one-year freeze and limiting increases to the level of inflation. While this action has been very welcome, we should be going further to undo Labour’s damage. Most countries do not charge an international air travel tax at all, but of the handful that do, the UK has by far the highest such tax—more than double that of the next highest charging country, which is Germany. Levying the world’s highest air passenger tax is not a sustainable position for an island nation seeking to increase international trade and to attract millions of new in-bound visitors.

There is significant public concern about APD. Hon. Members have received hundreds of e-mails from constituents, and over 200,000 people have contacted their Member of Parliament to say that APD rates are too high. However, public concern has not, until now, been supported by detailed and credible evidence. Four airlines, including Virgin Atlantic, which is headquartered in my constituency, and EasyJet, the majority of whose services go from London Gatwick airport, commissioned an independent report by PriceWaterhouseCoopers that provides that missing analysis. It makes interesting reading with regard to the nature of APD and its role in the UK economy. It finds that APD is the highest tax of its type in the world by a considerable margin; that it is a highly distortive tax that is at least as damaging to the economy—and probably more so on a pound for pound basis—than corporation tax, and second only to fuel duty among major UK taxes; and that UK businesses in aggregate pay about £500 million in APD each year.

The report’s main analysis relates to the impact on the economy and tax revenues if APD were to be abolished. The report’s modelling suggests that by abolishing APD the UK could boost its gross domestic product by 0.45% in the first year, with continuing benefits through to 2020. Abolishing APD would also increase investment by 6% and exports, including earnings from foreign tourism, by 5% between 2013 and 2015. Abolishing APD would pay for itself, with increased business growth leading to higher tax receipts from other sources, outweighing the lost APD revenue, and it would lead to the creation of up to 60,000 jobs between now and 2020. The report acknowledges that it is uncommon but not unprecedented for tax cuts to pay for themselves.

Even though this has been a step too far for this Budget, I hope that I have made the case that abolishing APD would have been a significant contributor to the UK economy and the Exchequer and to boosting growth in what was otherwise an excellent Budget for hard-working families and businesses in my constituency and throughout the country.

--- Later in debate ---

[Sarah Champion (Rotherham) (Lab)]

Last Wednesday was my first Budget since entering the House and I had high expectations. [Laughter.] I know that shows my naivety. We all know how much our constituents are suffering financially as the economy continues to flatline, so I was expecting a Budget that would jump-start growth. I was hugely disappointed, and I believe that my disappointment was shared by the country.

We face the biggest housing crisis in a generation, but the Government’s housing and economic policies are making it worse. House building is crucial to this country, both to bring economic recovery and to get families on the housing ladder.

[Henry Smith]

Will the hon. Lady give way?

[Sarah Champion]

No, I am sorry.

Initially, I broadly welcomed the Government’s schemes to encourage people to buy new builds and to assist people with mortgage deposits. With the demise of building societies, banks have a virtual monopoly on mortgages. The percentage that is required for a deposit has been rising steadily, especially for first-time buyers. That has created an environment in which people who are more than able to pay for a mortgage cannot get one because the tens of thousands of pounds that they need for a deposit are unachievable.

However, I then started to consider the broader picture and the details of the schemes. First, it has been revealed that the Government’s mortgage scheme will not exclude people who are buying a second home. What about a third or a fourth home? How does that help people who are starting out? Not only are the Government pressing ahead with tax cuts for millionaires, it now seems that the mortgage scheme will help people, no matter how high their income, to buy a subsidised second home worth up to £600,000. Secondly, what interest rate will be charged, or will it be an interest-free loan? Thirdly, is it right that the taxpayer will effectively be underwriting the banks? The state will be facilitating banks to make profits on these mortgages.

My main question is, where are all the new homes for people to buy? The Government’s schemes mean that more people will be trying to buy the same number of houses. That will just push up the cost of a house unless more homes are built. The Government announced an extra £225 million for affordable house building, but according to the OBR only £125 million will be spent before 2015. That figure is dwarfed by the £4 billion cut in the funding for affordable housing that the Chancellor made in his first Budget. That stopped a very successful affordable housing scheme in Rotherham that was run by Transform South Yorkshire.

House building is at its lowest rate since the 1920s and the situation is getting worse. Housing starts fell by 11% in 2012 to below 100,000. The impact of that is that the Government have put 80,000 construction workers out of work and construction output has fallen by 8.2%.

Labour has proposed some practical measures to address that problem. We called on the Chancellor to use the money raised from the 4G mobile auction to build thousands of affordable homes to stimulate the economy and tackle the housing crisis. To improve the housing stock, we recommended that VAT on home repairs, maintenance and improvements should be cut to just 5%. To help young people who want to get on to the property ladder, the CBI’s proposal of a housing individual savings account should be considered. We also advocate giving first-time buyers a stamp duty holiday on properties worth up to £250,000. Finally, I support Labour’s recommendation to bring forward long-term infrastructure investment in schools, roads and transport to get construction workers back to work and to strengthen our economy.

Those measures would boost growth, get builders back to work building the homes that we need, and create apprenticeships for young people. I urge the Government to look more closely at the details of their schemes and to find ways to build more affordable homes and genuinely help first-time buyers. We need action now to get Britain building and to kick-start our economy.