Air Passenger Duty

Jim Shannon Excerpts

Wednesday 23rd October 2013 Commons Chamber

[Jim Shannon (Strangford) (DUP)]

I congratulate the Economic Secretary, who is not in her place, and the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) on their appointments to their new positions.

I am sure that every Member has been contacted about the issue of air passenger duty. A gentleman who is not from my constituency visits my office because he has no representation. His constituency Member is a Sinn Fein MP who does not contribute at Westminster, but who is part of a team who have drawn £600,000 in expenses from here. The gentleman, therefore, has to ask another MP, who happens to be me, to represent him at Westminster. Every time he books a flight he calls in to see me and asks when the Government are going to change their tactics and do the right thing on APD to the UK mainland.

It is clear that APD is hurting the individual in Northern Ireland, who is somewhat restricted in travelling to the mainland. I believe that we, along with some parts of Scotland, are feeling the pinch of the decision to keep this tax more than others. The Northern Ireland Assembly and my hon. Friend the Member for East Antrim (Sammy Wilson) in particular, who was wearing his other hat as the Finance Minister at the time, abolished APD for long-haul flights out of Northern Ireland in order to secure business, ensure investment opportunities and secure existing flight routes. Clearly, my hon. Friend took some good steps.

There are many opportunities to base businesses in Northern Ireland, but what can be viewed as isolation from the UK is highlighted by the high cost of flights to and from the UK mainland. It is my belief that a reduction or abolition of APD would encourage more businesses to look at the potential for business expansion in many areas of Belfast and, indeed, my own constituency of Strangford, which has a highly educated and skilled work force in most areas and great links to the rest of the UK and Europe. We are asking for this issue to be considered again today not just for the benefit of our constituencies in Northern Ireland, but for the benefit of all constituencies across the whole of the United Kingdom.

When this debate was announced, I was, as always, bombarded with constructive e-mails and briefings from many different companies that have made their case well. British Airways says in its briefing:

“Abolishing APD would pay for itself by increasing revenues from other taxes such as Income Tax, VAT, and Corporation Tax. This benefit would amount to almost £0.5bn in the first year…APD is among the most distortive major taxes in the UK economy—more distortive than VAT, Income Tax, or Corporation Tax, and second only to Fuel Duty.”

That sticks in the craw of many of our constituents.

No matter how the Government try to play it or how deeply entrenched they sit in their revenue-raising mode, the fact is that our APD is much too high compared with those other countries that have it. In fact, the United Kingdom has the second highest air taxes and charges in the world, according to the World Economic Forum’s “The Travel & Tourism Competitiveness Report 2013”, which is right up to date. Only Chad in central Africa is ranked above the UK—imagine being second to Chad—in the list of 140 countries based on their ticket taxes and airport charges. The report states that

“the United Kingdom continues to receive one of the poorest assessments for price competitiveness…in large part because it has the 2nd highest tax rate on tickets and airport charges worldwide.”

We are the silver medallists behind Chad.

European nations are cutting or abolishing their air passenger taxes. Of the 27 European Union nations, just six levy an air passenger tax, with Ireland agreeing to scrap its tax completely in 2014, having dropped it from €10 to €3 in 2011. The German Government froze air passenger tax in 2011 following the publication of a study undertaken on behalf of the German Federal Ministry of Finance that found that the introduction of the tax at the beginning of 2011 had resulted in an estimated 2 million passengers changing their travelling behaviour, including an estimated 750,000 people who opted to fly from a non-German airport to avoid the tax. That demonstrates the very point that we have been trying to make throughout this debate: if we do away with air passenger duty, we will reap the benefits from those who choose to use airports in the United Kingdom as a result. The evidence from Germany and elsewhere proves that. In 2006-07, Denmark phased out its air passenger tax.

We all know that money does not grow on trees. We are realists. If it did grow on trees, I would be very well off because I have 3,000 trees. Unfortunately, it is not like that. No money grows on my trees or on anybody else’s trees. Although we do not need to follow every step that the rest of Europe takes, it is clear that there is a good financial reason why other countries are taking those steps. Our reasoning should follow the same lines.

The BA briefing statement said that the abolition of APD could result in an immediate increase in UK GDP, as my hon. Friend the Member for East Antrim has said. The increase in GDP would be about £16 billion and there would be about 60,000 additional jobs. That would be a win-win for the Government and a net gain for the Exchequer.

As time has beaten me, I plead with the Government to look at the big picture and to consider the big changes that would come from the abolition of APD.

--- Later in debate ---

[Madam Deputy Speaker (Dawn Primarolo)]

As the hon. Lady will know, that is not strictly a point of order. The matter of statements is something the Government themselves determine and I have no knowledge of that, but she has had the opportunity to raise her point in the Chamber and, importantly, to get her views on record. I am sure that those on the Treasury Bench have taken note of what she said.

[Jim Shannon (Strangford) (DUP)]

Further to that point of order, Madam Deputy Speaker—

[Madam Deputy Speaker]

Order. There is not a point of order, Mr Shannon. Having just ruled that what we heard was not a point of order, I can hardly allow you to speak further to what is a non-point of order.