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Mr. Oppenheim: I accept my hon. Friend's point that we must consider all fuels of that type. The problem with the fuel he has mentioned is that it is significantly more expensive than other low-sulphur fuels, without offering significant benefits. Therefore, from the point of view of
the taxpayer and the environment, it would be wrong to concentrate funding on one fuel when others would be more cost-effective, and would achieve the same, and possibly better, results.
If the cost gap can be narrowed, there may be an opportunity to re-examine the matter. We will always keep an open mind on it. However, my hon. Friend the Member for South Worcestershire should realise that the fuel is produced partly because of the common agricultural policy. Particularly in France and in Italy, the policy is to reduce rapeseed surpluses by refining some of it into fuel.
In the long term, once technology improves and costs are reduced, it may be a feasible solution. We have not yet reached that stage, although I can certainly give my hon. Friend an absolute assurance that we will keep an open mind on the issue. If in future the fuel is a cost-effective way in which to reduce emissions, we will certainly reconsider it.
Sir Michael Spicer:
When my hon. Friend throws the CAP at me, I feel a little on the defensive.
I do not think that my constituent will be particularly pleased with my hon. Friend's response, although he has opened the door for the matter to be thought about in future. It has been useful for my constituent to have the opportunity for the matter to be aired on the Floor of the House. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Mr. David Trimble (Upper Bann):
I beg to move amendment No. 7, in page 8, line 38, leave out from beginning to end of line 3 on page 9.
Madam Deputy Speaker:
With this, it will be convenient to discuss amendment No. 22, in page 9, line 3, at end add--
Mr. Trimble:
The amendment would leave out clause 9, which doubles air passenger duty. When air passenger duty was introduced, we thought that it was misconceived. We do not need provisions that increase the cost of air travel. In the British Isles in particular and western Europe in general, we need the cost of air travel to come down.
I have in my pocket the airline ticket that I used to get me over here this afternoon. It cost £247 for a return fare. In my briefcase, I have a return ticket to take me to North America tomorrow morning, where, no doubt the Government will be glad to know, I shall be away for a week. That ticket to Washington and back cost £209. That is a ridiculous state of affairs. We need lower fares, not just for the comfort of those going on holiday--I am not doing that tomorrow, of course--but for business.
We in Northern Ireland are particularly conscious of that need. Unlike those hon. Members who fly to Glasgow or Edinburgh, we have no alternative--we fly or we do not travel. Taking a boat and then a car or a train is not a realistic alternative for business users. It is all right for
holidaymakers. When I go on my holidays, I go by car and boat, but for business purposes that is not feasible. Air travel is essential for business. I have not bothered to do any studies on the matter, but the fact can be seen by looking around at people who travel on aeroplanes. Most of the traffic is business travel. The duty is penalising business. That is an important consideration.
One must also consider the impact on private citizens. The Government may have thought that the duty--introduced at £5 and now increased to £10--was a comparatively small amount in relation to ticket prices. In relation to the ticket that I have here, it is a small percentage sum, but there is a range of prices. For those who are planning family travel on cheaper fares, the duty is quite hefty in percentage terms. I expect that the hon. Member for Banff and Buchan (Mr. Salmond) will elaborate on that, considering the impact of the duty on short-hop journeys to the Scottish islands. A £10 duty on a £50 fare is a significant extra cost, and an unfair burden.
We considered tabling amendments to exclude Northern Ireland, because we are uniquely dependent on air traffic. We could have considered amendments to exclude areas such as the islands of Scotland, which are also uniquely dependent on air traffic. However, we preferred to table an amendment on the general provision. The tax is bad. We do not want to single out one part of the kingdom against others. We prefer to leave out the clause. We would like to repeal the duty, but at least let us not make it worse.
Mr. Salmond:
I support amendment No. 7, and shall speak to amendment No. 22, which would provide a low-cost alternative to the proposal of the hon. Member for Upper Bann (Mr. Trimble). It would concentrate relief on objective 1 areas of the United Kingdom--the highlands and islands, Northern Ireland and Merseyside. If the Government have any sympathy for the arguments, they might at least consider this low-cost alternative.
In Committee, the Exchequer Secretary was sympathetic to the arguments for the highlands and islands not undergoing the doubling of air passenger duty. However, he doubted whether the duty was having a substantial effect on the area. Rather than giving him my arguments, I should like to read a letter that appeared in the Financial Times in December from a number of people who have a deep knowledge of the highlands and islands and a deep interest in the economy of the area.
The letter said:
I want to stress three arguments. The hon. Member for Upper Bann put his points well. Northern Ireland is particularly dependent on air travel, and so are the highlands and islands of Scotland. There are lifeline services for which there is no acceptable alternative. It was remiss of the Government not to consider beforehand the impact on those areas of doubling the duty, which is damaging to the local economies.
Levying the duty at two flat rates brings about the extraordinary anomaly of charging £20 on a business class fare to Japan, which costs many hundreds of pounds, perhaps even thousands of pounds, and £10 on a fare from Inverness to Stornoway, which costs a mere fraction of that. The charge is therefore proportionally much greater.
The hon. Member for Upper Bann pointed out that the fare from Northern Ireland to London was more than that to cross the Atlantic. People in the islands of Scotland will rightly point out that many fares are already too high in relation to the distances travelled. There are some extraordinarily high fares at the moment. Is it not all the more anomalous to impose a flat-rate duty on vulnerable communities?
Secondly, amendment No. 22 refers to objective 1 areas. Do the Government not consider it somewhat anomalous on the one hand to identify those areas as objective 1, with special help for transport infrastructure and other facilities, while at the same time imposing national taxation, without any differential, on the self-same areas?
In Committee, the Exchequer Secretary said that he thought that some of the fares in the Western Isles were already supported. I do not know whether he was sure about that. Yes, some fares in the highlands and islands are supported. Is it not therefore anomalous not to take that into account when considering the taxation system?
(4) Subsections (1)-(3) of this section do not apply for flights to and from airports in areas in receipt of Objective 1 funding from the European Union.'.
"Air services to and from the islands of Scotland are an essential part of the transport structure of the region. The natural boundaries of mountain and sea make air travel a social and business necessity and, in many instances, a lifeline service with no acceptable alternatives in road and rail.
11 Mar 1997 : Column 218
It is our view that the imposition of the Duty in November 1994 was inequitable and has had far reaching detrimental repercussions to island life and the local economy. In adding to the cost of travel, the duty is contrary to the special case presented by the government for European structural funds to achieve lower transport costs through Objective 1 status. The lower than projected passenger numbers on these lifeline services is already jeopardising some routes and frequencies and the reduction expected as a result of the doubling of duty will increase subsidies already paid by the Scottish Office with the net tax take to the Exchequer being reduced.
While the amount of duty to be raised from November 1997 by the Exchequer nationally from the duty will be about £700 million in a full year, the amount collected in the Highlands and Islands will be less than £2 million. However, the consequences of the duty in the Highlands and Islands are greater because the proportion of tax is four or five times that on fares in other parts of the UK.
That letter was signed by Alan Wilson, the chief executive of the Scottish Council (Development and Industry), and supported by Air UK, Highlands and Islands Airports, Highlands of Scotland tourist board, Loganair, the Orkney Islands council, the Shetland Islands council, the Highland council and the Western Isles council. All those organisations have a deep interest in the development and welfare of the highlands and islands of Scotland. Their arguments should be taken more seriously than the Minister was prepared to do in Committee.
Although in national terms, therefore, the Highlands and Islands tax take is insignificant, to the region it represents a very substantial penalty which will be detrimental to the future growth of the area's economy."
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