The Treasury has dashed hopes of a swift reduction in Air Passenger Duty (APD) to offset the costs of airlines joining the European emissions trading scheme in January. Economic secretary to the Treasury Chloe Smith told MPs at the end of last week: “I cannot promise APD will be cut in the near future.”
In an exchange in Parliament with Crawley MP Henry Smith, the Treasury secretary referred to the recent consultation and industry lobbying on APD and said: “I cannot promise . . . we will meet everyone’s wishes.”
The Treasury secretary said: “APD is fundamentally a revenue-raising duty and currently raises around £2.5 billion a year. The forecast revenues that will result from aviation joining the emissions trading scheme [ETS] are only around £0.1 billion a year.”
Smith repeated the government line that a cut in APD on long-haul flights from Northern Ireland was a response to a “unique” set of circumstances. Her comments suggest the government remains on course to impose a double-the-inflation-rate rise in APD next April in line with the Treasury Budget Statement issued in March.
Smith also highlighted the conflicting demands of different industry sectors on whether APD should be lower from the UK regions than from London. She said: “It is fair to say there is no consensus on the matter. Some regional airports have asked us to consider lower APD rates for the regions, but several airlines have asked us to consider the opposite.”
Abta head of public affairs Luke Pollard said he was not discouraged by Smith’s remarks on emissions trading. He said: “We are working on offsetting the cost of ETS against APD as a long-term objective.”
Smith replaced Justine Greening as Treasury secretary responsible for APD in the reshuffle following the resignation of Liam Fox earlier this month, with Greening taking over as transport secretary.
The government is expected to respond to make an announcement on APD as part of the Chancellor’s Autumn Statement due on November 29. Pollard said: “There are still a few weeks to do something. There is still time for the industry to get its voice heard – people should get in touch with their MPs.