Finance Bill

There has been no conversion at all. That was the view of a transport policy group, but for as long as I can recall being involved in these matters it has been the official policy of the Conservative party to back a per-plane tax. Let us look at the extent of the proposed changes in air passenger duty in clause 17 and schedule 5 to try to understand the scale of the Government's proposals, because there is a link with the failure to move towards the per-plane tax. Because the Government had budgeted for raising revenue from freight and corporate and other aircraft, and from transfer passengers, and that business did not deliver on that revenue, there was a huge shortfall that had to be made up in the air passenger duty figures—hence the huge increases outlined in schedule 5 and clause 17. Currently, there are two levels of APD. Roughly speaking, there is one rate for flying to a UK or other EU destination and another rate for flying elsewhere. As part of the climb-down, the pre-Budget report proposed replacing those two rates with four rates, making all flights more expensive but with the really big duty increases imposed on long-haul flights. The existing two-band regime becomes the four-band version laid out in schedule 5 and new schedule 5A, with all rates significantly higher than at present. Under the status quo, the first band is currently £10 per passenger for economy and £20 for all other classes. The long-haul band, which includes all the territories in parts 2, 3 and 4 under the new schedule, is £40 and £80 respectively—for economy class, on the one hand, and all other classes, including, interestingly, premium economy, on the other. The four new bands start with part 1, which is similar to the existing short-haul band, with rates going up in November 2009 by 10 per cent. to £11 and £22. It now includes the Maghreb countries and Russia west of the Urals. New part 2 territories include north America, Egypt, the middle east, eastern Russia—that is, east of the Urals—and Pakistan. From November 2009, those rates will be £45 and £90—a 12.5 per cent. rise on the status quo. Returning to the point raised by the hon. Member for Brent, East (Sarah Teather), part 3, which includes the Caribbean, will be banded at £50 and £100—a 25 per cent. rise on the status quo. That band also includes India, China, Japan and much of Latin America. The rates for part 4—it is not actually defined as such but covers all the territories not in parts 1 to 3, including Australasia, Argentina, Chile, Bolivia, Peru, some other smaller south American countries and the Falkland Islands—will be £55 and £110: a huge 37.5 per cent. increase on the status quo. Even more importantly, the Government are programming further big rises—far bigger than those this coming November—for November 2010. Part 1 charges will go up to £12 and £24, part 2 charges will go up to £60 and £120, part 3 charges will go up to £75 and £150, and part 4 charges will go up to £85 and £170. Those are huge increases. Air passengers from the UK will be cursing Labour's economic mismanagement and the fact that owing to the Government's botched reforms and failure to opt for a per-plane duty, all aviation except commercial passenger aircraft will be exempt from APD. In the next 18 months, for economy class passengers, those flying to popular destinations such as France or Spain will face a 20 per cent. tax hike, those flying to Florida will face a 50 per cent. increase, those flying to the Caribbean and India will face an 87.5 per cent. increase, and those flying to Australia will face a whopping 113 per cent. increase—a more than doubling of the tax take.