Air Passenger Duty and Developing Economies

Lord Newby Excerpts

Wednesday 18th May 2011 Lords Chamber

[Lord Newby]

My Lords, I apologise for speaking in the gap. I was incompetent in that I did not get my name on to the speakers list in time.

I am speaking tonight because I used to be an adviser to the Caribbean Banana Exporters Association and I now run an organisation which runs education programmes linked to cricket for eastern Caribbean countries.

Why does what happens in the Caribbean matter so much to us? After all, it comprises extremely small countries, many of them smaller than a London borough. It seems that there are three reasons, which have already been touched on in the debate. The first is the history. In these countries, the institutions, the language, the trade patterns and the law are essentially British. In considerable measure we have made these countries what they are today, and that is why they deserve a larger claim to our interest and concern than many other larger countries with which we have no equivalent links. Secondly, as we heard from the noble Baroness, Lady Howells, and others, the Caribbean diaspora in the UK is directly and adversely affected by the current APD situation. Thirdly, these links have a downside. The collapse of the banana industry has led to greater involvement in the drug trade in some countries in the eastern Caribbean, such as St Lucia and St Vincent, and many of those drugs find their way here.

Just about the only thing that these islands now have from which they can gain an economic advantage is tourism. Therefore, it is in our interests, as well as theirs, that the tourist industry flourishes. In my view, a number of developments are needed if that is to happen. The new international airport in St Vincent is an example, as well as—one hopes—a reliable inter-island airline. However, given the importance of the UK tourist trade to the region, the cost of air travel is clearly a key factor.

In answer to the noble Baroness, Lady Dean, I am a supporter of air passenger duty. It is a highly progressive tax. However, its differential application to the US and the Caribbean is both illogical and damaging. Therefore, rebanding is crucial. The Government’s option 1, which would divide the world into short-haul and long-haul regions, is clearly the only one that would deal with this Caribbean problem. It also has the advantage that it would have an equivalent effect in a number of other countries—principally in sub-Saharan Africa, with which we have the same historical relationship as we have with the Caribbean.