Finance Bill

The hon. Gentleman makes a very good point. Interestingly, both those territories are in part 2, but logically they should be in part 4 because, by definition, they are the furthest points from Greenwich. Yet the Government are saying that they are as close as Egypt. That is some of the craziness involved in the schedule. We also need to examine the environmental arguments for having a per-plane duty, which is the point of the amendment. The reaction of environmental groups to the abandonment of that policy has been mixed. Many welcomed the headline rises in APD, which they thought would combat excessive use of aviation, but, like us, decried the abandoned attempt to find a per-plane methodology. Friends of the Earth responded:""The rises in APD are welcome, but should be seen in the context of the abandoning of per-plane aviation duty."" Greenpeace stated:""Plans to tax flights instead of people would have encouraged the industry to fill their planes instead of flying half-empty jet liners around the world…Once again the aviation industry has been given a free pass at a time when its contribution to climate change is rising."" Nobody was satisfied with the Government's climbdown. Why have the Government rejected the per-plane tax? To return to the Exchequer Secretary before last, the hon. Member for Wallasey, she told the Public Bill Committee:""We had hoped to proceed with the per-plane tax, but we decided against it for a fair number of reasons…It was not thought to be the best time to shift from one tax to a completely redesigned one, given the uncertainty in the economy."" She added:""we wanted to avoid the disruption and costs associated with a transition to a new tax right in the middle of a period of economic uncertainty that did not exist when the original change was announced."—[Official Report, Finance Public Bill Committee, 2 June 2009; c. 164.]" Those are curious justifications, because to return to the point made by the hon. Member for Manchester, Blackley (Graham Stringer), apart from the state of the economy, no detail at all given was of why the per-plane duty had been rejected. In fact, the Government said that they had suspended the move because of the change in the global economy, but of course the credit crunch began many months before the original consultation was even launched. When the Government were thinking about embarking on a per-plane duty, in the early months of 2008, the economic difficulties were already happening. The Northern Rock crisis had already taken place, some months earlier. The consequences of their decision are dire. The move to a per-plane tax, which would bring in most other forms of aviation, was slated to raise much more in revenue and be a genuinely environmental tax, but the Government choked in the middle of last year and were left to make up the revenue shortfall by clobbering air passengers. The result is what we are considering—the huge hikes in clause 17 and schedules 5 and 5A. The reason for the climbdown is that the Government were too busy elsewhere to drive through the necessary reforms once they had started the process. It is difficult to sell to the general public a big increase—a huge increase, in the case that we are considering—in air passenger duty without reforming the system to make it a genuinely environmental tax. We want the following to be done. First, we want the duty to be linked to the pollutant—the plane—rather than directly to the passenger. Secondly, empty or near-empty aircraft should be taxed at the same rate as full ones. Thirdly, the tax should logically be extended to transfer passengers, who fly in and out of a UK airport. There is no logic to a system whereby the only passengers who fly in and out of the UK tax-free are those who do not live, work or visit here. Fourthly, the Government's four-band system must be axed. It is arbitrary and discriminates against important UK partners such as India and the Caribbean for no good economic or environmental reason. Fifthly, other forms of polluting aviation need to be brought into the air duty regime, notably corporate jets, parcel services and other freight. Finally, the tax should encourage a move to cleaner aircraft. Ironically, higher APD will probably make that less likely as airlines become even more cash-strapped, and less able to invest because more of their money goes towards APD. Most of all, we argue that if there is to be a big hike in the tax take from the sector, now is the time not to postpone reform but to make it happen.