Air Passenger Duty

Nigel Mills Excerpts

Wednesday 23rd October 2013 Commons Chamber

[Sammy Wilson]

There probably is a sigh of relief from hon. Friends behind me, because they do not all share my views on that.

[Nigel Mills (Amber Valley) (Con)]

I was enjoying that part of the hon. Gentleman’s speech. For the Assembly, how close did the abolition of APD in Northern Ireland come to being a viable way of encouraging investment? Was it anywhere near that, or was it way down the Assembly’s list of priorities?

[Sammy Wilson]

It was very high on the Assembly’s list of priorities. We entered into the devolution of air passenger duty for long-haul flights not knowing what the final bill would be, but we did so in the knowledge that, regardless of what the bill would be, it was a very significant issue for the Northern Ireland economy—I can say that now because the bill has been settled, but if I had said it earlier Treasury Ministers might have thought, “Oh well, we can stick the arm in as far as we like.” It was one of our top priorities. Indeed, many people argued at the time that it was all about tourism, but it was not; it was essentially about the investment strategy that had been set out for Northern Ireland and the need for connectively with one of the main markets from which we attract inward investment. All the indications we had from investors show that ease of travel was very important, whether for their managers into Northern Ireland or for staff going to north America for training purposes or whatever, so for Belfast to have that connection was essential. For those reasons, the Northern Ireland Executive decided to seek the devolution of air passenger duty for long-haul flights.

[Nigel Mills]

I understand that completely, but can the hon. Gentleman explain why the Executive are not taking a similar view on short-haul flights and why it presumably thinks that there are better ways to encourage inward investment or tourism than at least partially reducing APD for flights from Northern Ireland?

[Sammy Wilson]

It really comes back to the point made in an earlier intervention about chipping away at it and trying to use arguments to undermine the tax and its anomalies and to highlight its impact at the regional level. We took the view that it was most important that the long haul part of the tax should be devolved because we were about to lose Continental Airlines flights into Northern Ireland. That issue had immediate priority.

As the Executive have discussed again just this week, we believe that the problem is UK-wide. One of the reasons why this debate is important and why we did not frame it solely in terms of Northern Ireland is that we believe it is about a UK-wide issue. If there is to be change, it should be made here in Westminster rather than the full cost—anything up to £90 million—being borne solely by Northern Ireland. That would have a significant impact on the block grant.

--- Later in debate ---

[Nicky Morgan]

I return to my original point, which is that if we were to abolish air passenger duty, as is called for in the motion, it would have to be replaced by something else to meet the Government’s commitment to put the nation’s finances on a sound footing and reduce the deficit. Although the hon. Gentleman makes an interesting point, I have not heard from him—indeed, I have heard from only one hon. Member—a suggestion as to how that revenue could be replaced.

I will come on to talk about investment and the PWC report. The hon. Member for East Antrim will not be surprised to hear that the Government have some questions about the assumptions that are made in that report.

[Nigel Mills]

I welcome my hon. Friend to her new post. I accept that the Government cannot fully abolish air passenger duty, but will she consider a short holiday for new long-haul routes, especially at regional airports? For example, if there was a new route from East Midlands airport to India, it could be spared APD for the first three to five years to give it a chance to bed in and to become viable. That would have no immediate cost to the Exchequer, but it may well help to generate the growth that we need.

[Nicky Morgan]

I thank my hon. Friend for that suggestion. Like him, I know East Midlands airport very well as an east midlands Member of Parliament. The difficulty with regional holidays or variations is that they must be quite substantial to change passenger behaviour. That takes us back to my original point that the £3 billion that is raised by APD is a significant contribution to the Exchequer when we are tackling the deficit.