Flying Schools

Debate between Chris Law and Jesse Norman

Tuesday 12th September 2023 Westminster Hall

[Jesse Norman]

I am not making policy from where I stand; I was speaking as a former Treasury Minister about the general attitude towards VAT and the general problem that no Government of any stamp can compel a private company to pass a saving on to consumers. Indeed, whether or not savings are passed on is itself a function of the competitive conditions in the sector. I will come on to what the CAA can do later in my remarks, but although I understand my hon. Friend’s concern about the cost of VAT, let me remind him that the taxpayer will be a significant loser from the failure of these companies. I recognise a certain strength in his point about individual students being recognised; if he wishes to raise that point with the Treasury or with Baroness Vere, he is very welcome to do so. However, the general policy, as far as I am aware, is the one that I have enunciated for the Government.

[Chris Law]

I am trying to reflect on what the Minister has said about VAT, and specifically on one of the clear points that has been raised. We are at a competitive disadvantage because we charge but no other country in Europe is charging. If we look at the decline in flying schools and the issues with financing to go and study in the first place, and then someone is being asked to pay 20% on top, what is to stop any young aspiring pilot from saying, “Wait a minute, I’ll just go to Europe where I won’t have this extra 20% surcharge”?

[Jesse Norman]

Of course individuals are welcome—and will want—to consider all the options under all circumstances, but I have not accepted the hon. Member’s narrative that the sector is in decline. We have had three important local failures of flying schools, but in general the sector has rebounded remarkably well from the pandemic. I would not accept that it is in decline; in fact, in many ways it has made a robust recovery.

In his own remarks, the hon. Gentleman highlighted the failure of Tayside Aviation. As far as I understand it, however, it would absolutely have been within the power of the Scottish Government not to change VAT, but to provide some grant intervention to Tayside Aviation had they wished to do so, either as an education provider or under the heading of industrial strategy, both of which are devolved areas. I do not know whether the hon. Gentleman wants to comment on whether the Scottish Government had considered that, either as a matter of intervention at the time or now, in order to support Tayside Aviation if it wished to get back up as a trading entity.

The hon. Gentleman does not respond. Let me press on. The question is what we can do to support students under the very difficult circumstances in which they have found themselves. The CAA has responsibility for flight safety rather than for the financial wellbeing of the flight schools. Nevertheless, I think it has understood and recognised that there is every benefit to the UK in seeking to retain the value of students’ training so far. It has therefore enabled the transfer of training records to other ATOs so that, wherever possible, training is not lost. It also lies within the CAA’s power to extend the 18-month period in which students can restart their training; it can do so on a case-by-case basis for anyone caught out by exam timescales or other aspects.

The hon. Member for Wythenshawe and Sale East mentioned first officer apprenticeships. I do not share his rather negative approach. This is an important development, which can itself be further built on. It may not provide the full total towards the training, but it is a very substantial contribution. It remains available to sponsors of apprenticeships, beyond the individual students, to support—as they do in other industries—students who wish to complete the training under that framework.

It is also important to say that treating ATOs as higher education providers would carry costs to them. They would be required to register as higher education providers with the Office for Students. There would be a number of regulatory burdens that ATOs might wish to take on, but they might very well decide that they did not want to submit to them. Some of those would address the issue of concern here, for example through student protection plans, compliance with consumer protection laws, Ofsted inspections, quality and standards assessments and the like. My hon. Friend the Member for East Worthing and Shoreham may wish to pick up that point with my noble Friend Baroness Vere when he sees her. It is a matter of empirical investigation whether ATOs would be interested in registering as higher education providers with the Office for Students and whether they would treat it as a competitive trading advantage.