Air Passenger Duty

Thomas Docherty Excerpts

Thursday 1st November 2012 Commons Chamber

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

I do not intend to rehearse the arguments that have been made so eloquently by several hon. Members, especially my hon. Friends the Members for Aberdeen South (Dame Anne Begg) and for Paisley and Renfrewshire North (Jim Sheridan) about the impact on Scotland and the wider aviation industry. Like colleagues on both sides of the House, I have had hundreds of e-mails on this subject, and I am delighted that it would appear that the Treasury is beginning to take heed of the arguments.

The issue that I wish to raise is one with which you are familiar, Mr Deputy Speaker. It was first raised with me at last year’s Commonwealth parliamentary conference by many of our colleagues from elsewhere in the Commonwealth, especially the Caribbean. You will be aware, Mr Deputy Speaker, of the excellent work that the right hon. Member for Saffron Walden (Sir Alan Haselhurst) has been doing as the chairman of the Commonwealth Parliamentary Association to highlight to the Treasury the damaging impact that the current APD rules have on the Caribbean.

It is worth noting that some Caribbean countries, particularly our overseas territories, have not yet moved to a fully mature local economy, and in some the percentage of gross domestic product coming from tourism is astounding. In Antigua, it is 75%; in Anguilla, one of our overseas territories, it is 65%; and in the British Virgin Islands—I am the chair of that APPG—is 58%. The way in which APD is structured has a negative impact on those Caribbean countries, because their rather larger neighbour, the United States, is classed as single zone for travel, so regardless of whether someone is going to Washington DC or Honolulu they pay the same rate of APD. That has a significant impact on the Caribbean’s ability to compete. Of course, it is not just about tourism or business going from the UK to the Caribbean. My hon. Friend the Member for Slough (Fiona Mactaggart) tells me that she has a vast number of constituents originally from Anguilla and that for those who wish to travel home to see relatives, loved-ones and friends the cost is prohibitive.

The right hon. Member for Saffron Walden has previously made representations to the Treasury about this matter, and the Economic Secretary, whom I welcome to his place, will be familiar with the representations made earlier this year by the Caribbean Council of Ministers. I would be grateful, however, if he could indicate whether in the near future he would be prepared to meet a cross-party delegation of Members with an interest in the Caribbean, led by me and the right hon. Member for Saffron Walden—I am sure that the hon. Member for Romford (Andrew Rosindell) and others would be keen to take part too—to discuss the impact of APD on the Caribbean, particularly the overseas territories. I would also be grateful if the Minister could indicate whether the Treasury plans to meet the Premiers and Chief Ministers of the Caribbean overseas territories affected when the overseas territories council meeting, which the Foreign Office holds every year, takes place in December.

Finally, I congratulate the hon. Member for Witham (Priti Patel) on securing this excellent debate. Almost every Member has been thoughtful and added something to the debate, and I look forward to hearing further contributions from other colleagues.

--- Later in debate ---

[Mr Slaughter]

I am grateful for that intervention. I was just going on to talk about the effects not only on families, which is often devastating, but on commercial organisations, and not just those in this country, but, to continue with an earlier example, in the Caribbean as well. I got to meet the Caribbean Tourism Organisation and Ministers from Caribbean countries—sadly, it was here rather than there, but there it is. We share a long historical tradition and we have not just family and cultural ties, but economic ties with the Caribbean. There was and still is a strong feeling that this country was letting the Caribbean down. It came up in many debates under the last Government, particularly during the passage of what became the Finance Act 2009. I found myself in the unusual and uncomfortable position of agreeing with the then Opposition Front-Bench team more than my own. I went to see the then Chancellor with a number of my hon. Friends, particularly my hon. Friend the Member for Hackney North and Stoke Newington (Ms Abbott), who took a strong stand on this issue. When we debated the Finance Bill, I was perplexed that the then Opposition did not push the issue to a vote, as I thought they might have won. I was a little suspicious about why they did not press it then.

Let me remind the present Government Front Benchers what their equivalent numbers were saying at the time, as it bears repetition. The hon. Member for Canterbury (Mr Brazier), who was a shadow Transport Minister, gave an interview to The Daily Telegraph in late 2009. He said that his party supported

“a per plane tax rather than the existing one based on passengers”

and that

“whatever tax is employed if the Conservative Party wins the next General Election, the ‘absurd capital cities rule’ of APD banding would be abolished.”

On 15 April 2010—some three weeks before the election—the hon. Member for Chelsea and Fulham (Greg Hands) gave a fuller interview to the Travel Trade Gazette, in which he outlined details of the plans for the first time. He said that the Conservative Government

“would scrap the much criticised system of distance bands, which have led to people travelling to the Caribbean paying more than those to the west coast of the US, which is further from Britain. A replacement system possibly using more bands and based on actual distance rather than distance between capital cities…would be introduced.”

He said:

“the reform would change APD to tax aircraft rather than passengers, apply to transfer passengers who are now exempt, and charge a lower rate for newer, more fuel efficient aircraft.”

Finally, he said the aim of the reform was to

“properly tax the environmental impact of aviation, not raise more revenue.”

Let us have a look at how many of those promises, made just three weeks before polling day, have been kept. Those same promises appeared in the manifestos of both coalition parties and in the coalition agreement. We are perhaps used to over-promising, particularly from this Government, but this is over-promising on a tuition fees scale. What happened as a consequence? We had the review during the Government’s moratorium on an increase, but after a year of engagement with the industry, the Government decided not to change the tax’s banding structure in regard to different classes of flights or in respect of the application of APD to the regions. The Government’s only proposed reform was to extend APD to business aviation from 1 April 2013. That may be welcome, but it will raise only about £5 million a year, without addressing the central issue that all hon. Members who have spoken today would, I think, wish to see addressed. The dismay that this has caused to those who lobbied so hard and were promised so much is very clear from a press release put out at the time the consultation was published by the Caribbean Tourism Organisation. It said:

“Today’s announcement on the APD is a slap in the face for all Caribbean people. It dismisses all of the research and information CTO has provided to the British Government over the past three years, and it contradicts the message sent by the UK Chancellor…in March 2011 when he cited the discrepancy between the USA and Caribbean APD rates as one of the reasons for holding a consultation on reform of UK APD. The Caribbean is the most tourism-dependent region of the world and the British Government’s decision totally ignores the negative effect that APD is having on our economies and the Caribbean’s business partners in the…travel industry.”

[Thomas Docherty]

My hon. Friend is presenting a compelling argument. He may be interested to know that in the last three years the Eastern Caribbean Currency Union has seen a 20% drop in the number of people travelling to the area.

[Mr Slaughter]

That is a good point.

The fair tax on flying campaign was organised very efficiently, but I do not think that the 200,000 UK residents and about half that number of people living abroad who have written to the Chancellor, either via their Members of Parliament or directly, have been treated terribly well. I have received letters from more than 500 constituents, and I note that the hon. Member for Chelsea and Fulham (Greg Hands) has received 1,281. Perhaps there is some justice, as that is only 10 shy of the highest number received by any MP.

I have seen the standard replies sent by the Treasury and by Conservative MPs, and I am dismayed by them. They are positively insulting to the people who wrote those letters. They do not deal with the issues at all; they simply mention that VAT is not charged on domestic flights, which is almost entirely irrelevant when long-haul flights are the issue, and that the business jet loophole will be closed, which, as I have already explained, goes nowhere near dealing with the problem. I feel that my constituents and those of many others have been treated with contempt. They have been betrayed by the Government’s broken promises, and they have received a wholly inadequate response to the campaign that they mounted.

The demands made in the motion are very modest, and an economic case has also been presented. I urge the Minister to accept the proposals in the motion, and I urge the House to vote for it in the event of a Division. I hope that there will be a review which, unlike the consultation that has taken place so far, will enable us to address the real problems that air passenger duty is causing, not only for my constituents—and not only for the poorer constituents mentioned by my hon. Friend the Member for Mitcham and Morden—but for the economy of this country, and the economies of many regions with which we trade.