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House of Lords

Monday, 19th July 1999.

The House met at half-past two of the clock: The CHAIRMAN OF COMMITTEES on the Woolsack.

Prayers--Read by the Lord Bishop of Hereford.

Air Passenger Duty

Lord Campbell of Croy asked Her Majesty's Government:

    Whether they intend to increase air passenger duty, now charged on airline tickets, as anticipated by the European Commission.

Lord McIntosh of Haringey: My Lords, I am not aware that the European Commission is anticipating that Her Majesty's Government are going to increase air passenger duty. Any decision about the setting of rates of duty is a matter for the Chancellor of the Exchequer.

Lord Campbell of Croy: My Lords, I am pleased to hear that reassuring reply. Is the noble Lord aware that if the European Commission's proposal were to be adopted, the recently introduced poll tax on passengers would be doubled in relation to return tickets. For short domestic flights the tax would be nearly 50 per cent of the cost of a return ticket. Is that consistent with an integrated transport policy?

Lord McIntosh of Haringey: My Lords, the European Commission has not made a proposal. Last year it gave a reasoned opinion in which it challenged the domestic return leg exemption to which the noble Lord refers. How that is implemented is a matter for the Chancellor of the Exchequer. The Commission does not dictate the solution. Currently, negotiations are taking place in relation to a number of options.

Lord Moynihan: My Lords, we on these Benches have no criticism of the air passenger duty, which my colleagues introduced. However, last Friday, why did the Government feel it necessary to commit to a substantial extension of our obligations to give relief from APD and include, among others, employees of the International Rubber Study Group, the International Lead and Zinc Study Group and the European Centre for Medium Range Weather Forecasts?

Lord McIntosh of Haringey: My Lords, I am glad that the noble Lord accepts responsibility for the air passenger duty which his noble friend--not I--called a poll tax on air passengers. I would not dream of using such prejudicial language. I am interested to hear what the noble Lord says about further possible exemptions. Many possible options are being considered, but there is an international obligation under the Treaty of Rome of which the noble Lord is well aware.

Lord Gordon of Strathblane: My Lords, in considering the options, can I invite the Minister to consider the

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possibility of a reduction, or indeed the abolition, of the APD at certain regional airports? I understand that that would be legal provided it is abolished on all flights out of such airports. I should declare an interest. I am chairman of the Scottish Tourist Board, having been appointed by the noble Lord, Lord Forsyth of Drumlean. Along with every other body in travel and tourism, the Scottish Tourist Board is extremely concerned about the deleterious effects of this tax, which was introduced by the previous government, on travel and tourism to Britain.

Lord McIntosh of Haringey: My Lords, I hear what my noble friend says about the exemption of particular airports. It is true that in our discussions with the European Commission we are considering all options. I am sure that my noble friend would agree that one of our objectives must be to have simplicity in the application of air passenger duty.

Lord Monson: My Lords, would the Minister agree that air passenger duty--unfortunately introduced by the previous government, but doubled by the present Government--is one of the most regressive taxes we have? Is he aware that the effective rate of tax on a one-way Concorde flight to New York or first-class flight to Tokyo works out at just over one-half of 1 per cent, whereas the effective rate of tax on a one-way flight on a no-frills airline to Glasgow works out at almost 53 per cent, about 100 times as much? How does that square with the principles of New Labour?

Lord McIntosh of Haringey: My Lords, the decision to double air passenger duty was taken by the previous government and merely implemented by this Government.

Noble Lords: Answer the question!

Lord McIntosh of Haringey: I shall certainly answer the question. The noble Lord makes a perfectly valid point about preferring an ad valorem duty, which would be a percentage of the fare rather than a flat tax. Indeed, that is a consideration which the Government are taking into account.

Lord Bruce of Donington: My Lords, is it not valid to argue that the tax should be abolished altogether?

Lord McIntosh of Haringey: My Lords, the Treasury does not like abolishing taxes if it can possibly avoid it. They bring in revenue which would have to come from somewhere else. That is a matter for the Government and not a concern of the European Commission.

Highways Agency

2.42 p.m.

Lord Peyton of Yeovil asked Her Majesty's Government:

    Whether they are satisfied with the performance of the Highways Agency and, if so, why.

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The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Lord Whitty): My Lords, on 27th October last I announced to your Lordships' House the start of a quinquennial "Next Steps" review of the Highways Agency. It is considering the agency's performance since its creation in 1994 and whether executive agency status remains the most appropriate institutional option for carrying forward the work it currently does. That review is nearing completion and I hope to announce the results shortly.

Lord Peyton of Yeovil: My Lords, now that the Government do not have a road-building programme in England, what is the need for the agency employees? Am I right in suggesting that from time to time--rather too often--they break off from their enforced idleness to cone off inordinate lengths of road for huge periods of time while they do trivial if any work upon them? Consequently motorists often have the disagreeable experience of travelling along great stretches of coned-off road with no one doing anything on them, not even resting.

Lord Whitty: My Lords, I regret the noble Lord's experience. It is not entirely typical. Less than 1 per cent of motorway is under maintenance at any given time. We have shifted substantial resources into maintenance because it was neglected on both trunk and local authority roads for many years by the previous government. It is completely untrue to say that we have no road-building programme. Our targeted programme of improvement includes 37 major building schemes which are funded and which have a start date. That is quite different from the wish list we inherited from the previous regime.

Lord Campbell of Croy: My Lords, the Highways Agency has no functions or authority in Scotland so there is no question of its presence being missed there. Would not the Government therefore be well advised to study the arrangements in place in Scotland under the supervision of the Scottish Office? They may indicate another more satisfactory pattern.

Lord Whitty: My Lords, we are always prepared to learn, even from the Scottish Office. However, the Highways Agency is regarded internationally as being at the cutting edge of road technology and civil engineering. It is also highly regarded throughout the world in terms of its techniques and contracting activities. We have found that the Highways Agency, by and large, met its performance targets. There are some which are under review and new performance indicators will need to be set for the shift of policy towards maintenance and making better use of the network.

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However, by and large the agency has done well and it may be possible for the new Scottish Executive to learn from it.

Lord Richard: My Lords, is my noble friend aware that the 1 per cent of motorway under improvement is infinitely mobile? Whichever motorway I travel on, I always seem to meet it.

Lord Whitty: My Lords, I could not possibly establish that causal connection. One per cent of the motorway will be encountered on one in 100 journeys or one in 100 miles. If the noble Lord travels down to Devon, as I know he does, he will probably pass part of the motorway network being improved as a result of our insistence on better maintenance. It will probably be undertaken by the Highways Agency. But we need to maintain and improve our highways and the Highways Agency is doing a good job in achieving that.

Lord Ezra: My Lords, is it part of the function of the Highways Agency to oversee contracts to road building? If so, are those contracts performed according to time and budget?

Lord Whitty: My Lords, in terms of contracts for the trunk road network, the contracts are managed by the Highways Agency both for maintenance and building. In most cases those contracts are performing to time. If they are not to time, then of recent years penalty clauses have been included.

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