Air Passenger Duty

Penny Mordaunt Excerpts

Thursday 1st November 2012 Commons Chamber

[Adam Afriyie (Windsor) (Con)]

I welcome this debate and the motion tabled by the Backbench Business Committee and moved by my hon. Friend the Member for Witham (Priti Patel).

Of all campaigns in this Parliament, I have received the highest level of communication from my Windsor constituents about the air passenger duty, and that says a lot. My constituents are wonderful people. They are incredibly articulate and eloquent, and although they are extremely good at writing letters on all sorts of subjects, I was taken aback by the level of communication on this issue.

Although we love our noisy neighbour, Heathrow, do not wish to see it close and hope that its status will be maintained, the air passenger duty lies right at the heart of the airport’s future. We will need further capacity in the south-east, but Heathrow is not fully utilised at the moment, and I wonder whether part of our failure to use it to its full capacity is due to air passenger duty.

Let me make some brief observations about APD. First, it is an odd tax in its own right; it is a tax on the free movement of people and goods in our country, the European Union and the world in general. It is a harmful tax—it harms competition and trade—and it is damaging to our reputation and connections with the rest of the world. The tax directly affects people’s behaviour. I am sure that many hon. Members have had their mouse hovering over the online basket when buying air tickets, and then suddenly realised that on occasion, the tax is higher than the price of the ticket. That bizarre anomaly lies at the heart of today’s debate.

It strikes me that there is an evidence-sized hole at the heart of this debate. The Treasury may have conducted reviews into how much revenue is raised and how much money APD brings in, but the absence of a full review leaves a huge hole and lack of information about the overall economic impact of this tax on our nation.

[Penny Mordaunt (Portsmouth North) (Con)]

I represent Portsmouth, which is quite a deprived area, and my constituents are concerned about keeping interest rates low and expect the Government to be watchful of the cost of living and life’s necessities. Much like my hon. Friend, however, the volume of mail that I have received on this issue suggests that my constituents are sceptical about whether air passenger duty produces a positive return for the Exchequer.

[Adam Afriyie]

My hon. Friend puts her point incredibly well. This issue has led to more than 200,000 communications with Members of the House of Commons, let alone the House of Lords and other places. Interestingly, just 100,000 names on a petition would have, in any case, triggered a debate in this Chamber, and the Government would have had to listen closely to that.

APD is a very blunt tool. The hon. Member for Edinburgh West (Mike Crockart) referred to his days studying economics in the ‘80s. I also studied economics at that time, and it is clear that air passenger duty does not recognise the elasticity of demand, and potentially the elasticity of supply. It does not differentiate between different types of consumer or passenger.

The APD is also a blunt instrument and an anomaly because it does not deal with carbon emissions or global warming—the EU emissions trading system deals with them. The APD does not recognise opportunity cost. By raising revenue through the APD, the Exchequer might be forgoing a great deal more revenue from trade and travel, which might generate economic activity in other spheres.

The APD is an odd tax, but I should give a little credit to the Government, who had an opportunity to raise even more money from it in the past year or two. Thankfully, they contained the rate of increase. Nevertheless, it is beholden on them to consider the overall economic impact of the APD to ensure we have evidence and move forward on a rational basis and tidy up the matter.

The beauty of the motion is not just its presenter, but the motion itself and the fact that it is reasonable. It is not strident and does not attack the Government, and it is not party political. We have had a free and easy debate because all hon. Members recognise that we are talking about the rational outcome of tax. The motion is not party political or contentious; it is plain common sense. I urge my good and hon. Friend the Minister wholly to embrace the direction of the motion and to commission an overall review of the economic impact of this rather bizarre tax that is holding our country back.