Listening to the Chancellor’s autumn statement today, one had to admit it was an impressive effort, writes John Barrington-Carver. Money seemed to be being thrown at everything – the NHS, education and even infrastructure projects as well. Even the need for airport capacity was mentioned – but emphatically no third runway for Heathrow.
The statement did have have a sting in the tail though. What he avoided mentioning was that the much-opposed 10 per cent proposed increase in Air Passenger Duty will go ahead on 1 April; final figures for APD rates for 2012-13 are due to be announced in December.
This seems ironic, in that the statement was all about injecting investment and new life into the UK’s economy. However with the world’s highest tax on flights already in place it seems obvious that even more tax is going to have a negative effect on inward tourism and business. It is going to also drive business to other European airports and that cannot be good for the UK as an international hub.
While the government’s infrastructure plans announced today, that cover road, rail and airport development, are generally a welcome development and they have even indicated that they accept that the lack of runway capacity in the South East needs to be addressed – though without a third runway at Heathrow.
They also state that they want to protect the UK’s international status as a banking centre. It is therefore a great surprise that they have not listened to the aviation and tourism industry and will go ahead with the planned double inflation rate rise in APD.
Hugo Burge, CEO of Cheapflights commented: “The UK already has the highest tax on flying in the world, so it is perplexing that Air Passenger Duty is due to rise yet again and at double the rate of inflation. This cannot be good news for consumers, UK business or our tourism industry.
“It is a painful snub to hard-working families looking for a break in the sun from the gloomy headlines. In our proud Olympics year APD is certainly not putting out a welcome mat to visitors to the UK in 2012. This squeeze on a vital sector of our economy suggests a lack of understanding and vision surrounding the importance of travel to our economic welfare.”
The call of the main airlines’ “Axe the Tax” quartet to the Chancellor for an independent study into the effect on the economy and jobs seems reasonable given the Dutch Government’s negative experience with their version of APD. An independent study could do no harm and could confirm or relieve fears that the net effect of APD is more damaging than positive for the UK economy. This would seem a responsible course of action given that other studies already indicate that jobs are being lost because of APD.
If no study is commissioned urgently then the Government is guilty of following a course which may well endanger its other laudable efforts to kick start the UK economy.
(Image: Images_of_Money)
