Air Passenger Duty

Debate between Henry Smith and Paul Goggins

Thursday 1st November 2012 Commons Chamber

[Paul Goggins]

My right hon. Friend was a very able Minister for tourism and he did a superb job. He is right: APD is a tax on our constituents who seek to go on holiday, but it is also a tax on those who want to come here to enjoy the wonderful countryside and the great features of our society, with the associated benefit to our economy.

The APD, as hon. Members know, is the highest in Europe. Denmark, Norway and Holland have scrapped it. Ireland, as my hon. Friend the Member for Belfast East (Naomi Long) pointed out, has all but scrapped it—it intends to do so in the near future.

As the hon. Member for Witham argued, we have to look at this in terms of the wider economy. I wish to look at it particularly from the perspective of the Manchester city region, and it is good to see the hon. Member for Altrincham and Sale West (Mr Brady) in his place. I know that he has a great commitment to Manchester airport. I also see my hon. Friend the Member for Blackley and Broughton (Graham Stringer), who is a former chairman of the airport. It now serves more than 200 destinations, has 24 million passengers a year, and employs 19,000 people on the site, with many thousands more provided in the wider economy. It is estimated to bring in around £3 billion to the UK economy as a whole.

One of my principal concerns, which I have already mentioned, is that APD is a tax on our constituents. Let us reflect on that for a second. Hard-working families already paying tax on their hard-earned incomes have to pay tax again if they want to take their children on holiday. We ought to think about that. In particular, let us consider the economic problems that APD creates. There is clear evidence that airlines are not coming to Manchester airport because of APD. In particular, AirAsia X has dropped its plans for a route from Manchester to Kuala Lumpur and routed instead to Paris Orly. The airlines will go where the profits are greatest, and with those profits will go the jobs and all the additional economic value.

[Henry Smith (Crawley) (Con)]

AirAsia X also stopped flying from Gatwick to Kuala Lumpur, and cited exactly the same reason—APD being far too high. The right hon. Gentleman makes a good point.

[Paul Goggins]

The hon. Gentleman makes it clear that this is an issue not only for Manchester but for other airports and therefore the whole economy.

I am particularly concerned about the barrier that APD might pose to Manchester’s ambitious plans for an airport city—a plan that fits squarely with yesterday’s report by Lord Heseltine, which locates the focus for economic development absolutely in the city regions, the ambition, skill and energy of which are the drivers of that development. Manchester is at the forefront of that. The plans would result in major investment in manufacturing, office development, retail, leisure and an ambitious plan for a medipark that would mean major international investment in health and biotech industries. All that would be in the area around the airport and, crucially, would be facilitated by the presence of that international airport. It could become an economic hub drawing in investment from across the world, bringing high-value investment, much-needed jobs and links to destinations throughout the world.

The vision for the airport city has the Government’s full support. They have given it enterprise zone status, which brings with it rate relief and access to superfast broadband. It is utterly contradictory, however, to have that plan in place but then to impose on every business passenger passing through Manchester airport a tax on that business. It is like saying to an investor from north America, “We’re very grateful for your business, and by the way it’s going to cost you an extra £65 every time you want to visit that investment.” It is preposterous, and it is a barrier to the kind of economic growth that we need and want.

We cannot wish APD away. As the hon. Member for Witham said, it brings nearly £3 billion into the Treasury, which of course helps to pay for our schools and hospitals, but one way or another we must think our way out of this creatively. I support—I suspect that not all hon. Members would—a further investigation into regional APD variations, because they could encourage the use of spare capacity at some of our regional airports and facilitate the kind of economic development, such as our ambitions for airport city that I have described.