Chancellor is 'robbing Peter to pay Paul' with Air Passenger Duty reforms

George Osborne will scrap the air levy for children but Newcastle International Airport says fears remain over devolving APD to Holyrood

Owen Humphreys/PA Wire A plane leaving Newcastle Airport
A plane leaving Newcastle Airport

Fears that devolving an air levy to Scotland could damage the North East economy have not been alleviated by a key announcement.

Newcastle International Airport’s David Laws sounded the alarm as Holyrood looks set to have power over Air Passenger Duty (APD), while English airports were handed a simple cut to the same tax for children.

Chancellor George Osborne had moved to quell anger about APD in his Autumn Statement earlier this month to announce he would scrap APD for under-12s from May and under-16s the following year.

Airport Chief Executive David Laws
Airport Chief Executive David Laws

But Mr Laws said the measures do not go far enough and the North East Chamber of Commerce has accused the Government of “robbing Peter to pay Paul”.

The duty can make a sizeable reduction to the price of long haul travel and Mr Laws has previously said devolving the duty to Scotland could place jobs in jeopardy.

“We welcome any reduction in Air Passenger Duty and the two-stage abolition of child APD will definitely help hard-working families across the North East region,” he said.

“But we remain very concerned about the impact that any reduction in APD in Scotland will have in the North East.

Anthony Devlin/PA Wire Chancellor George Osborne
Chancellor George Osborne
 

“Concerns remain and we are engaged in positive, proactive discussions with government ministers, other politicians and civil servants to try and find a mechanism that avoids damage to the North East economy.

“The main political parties have indicated their willingness to talk to us, but reassurances cannot wait for the Budget or party manifestos.”

Mr Osborne has agreed to work with an all-party group after Labour MPs wrote a joint letter.

It comes as Northern Ireland already has the power to set its own APD and other airports in English regions fear they will lose custom.

The North East Chamber of Commerce also called on the Government to make a firm commitment on the duty for all airports.

NECC policy and research manager, Mark Stephenson
NECC policy and research manager, Mark Stephenson

Policy and research manager, Mark Stephenson, said: “Providing a competitive advantage to airports in Scotland places our region at a disadvantage. North East businesses are doing all they can to provide jobs and grow our economy and if Scotland is handed powers to set its own APD it will be a slap in the face to those firms.

“What we require from a future Government is a firm commitment to address this unfair levy as rapidly as possible, rather than dill-dallying over a decision or making one that hands one part of the UK an advantage over another. Reaching a fair deal for Scotland as well as in UK regions is crucial, but it makes no sense to rob Peter to pay Paul.

“The Government must set out, at the earliest opportunity, how English airports such as those close to the border will be protected should these measures be introduced.”

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