The government has delivered a nasty slap to industry lobbyists in the past week, believes Ian Taylor
Let’s return to a question asked in this comment less than four weeks ago: “Is the government listening?”
On July 5 I suggested “maybe a little” after news that VisitEngland’s budget had suffered a smaller-than-expected cut by the Treasury – but added: “Does it mark a shift?Probably not.”
Government action in the past week has spared us further conjecture.
Ministers have given two fingers to the industry to say nothing of human rights and anti-racism.
The government delivered its considered view on calls for a review of Air Passenger Duty and its economic impact last week.
This weekend we learned the Home Office has revived plans to demand tourists from the Indian subcontinent and parts of Africa pay a £3,000 bond for a visa to visit Britain – plans that prime minister David Cameron supposedly scuppered in June.
Let’s take the latter first. As Travel Weekly reported yesterday, the UK Home Office is pressing ahead with a scheme to demand tourists from India, Sri Lanka, Pakistan, Bangladesh, Nigeria and Kenya or Ghana (reports vary) hand over £3,000 before they get a tourist visa.
The Home Office says it won’t require a bond of every visitor from the six countries, but confirmed those it considers “high risk” will have to pay.
A Home Office spokesperson repeated the words of home secretary Theresa May last month: “We are interested in a system of bonds that deters overstaying and recovers costs if a foreign national uses our public services.”
The scheme could apply to up to 500,000 applicants a year and Home Office officials admit privately it will deter visitors. The pilot is due to begin in November.
Never mind that the inbound sector long since placed improved visa-processing and a relaxation of visa rules at the top of its wish list.
Tory ministers prefer ‘dog-whistle’ measures aimed at undermining support for anti-immigration party Ukip to anything resembling a rational policy.
Never mind that according to The Financial Times (June 25): “Cameron has told Theresa May he will not sanction any policy that undermines his growth agenda or the ‘open for business’ message.”
Six weeks earlier, on the day of the Queen’s speech to Parliament, Cameron had declared immigration measures the “centre piece” of his government’s plans.
I would be interested to hear a rationale for the selection of the six Commonwealth countries that might stand up to a charge of racist discrimination in court.
Imagine if Zimbabwe proposed a £3,000 visa bond for visitors from England, Wales, Scotland, Canada, Australia and New Zealand.
The government delivered an earlier blow to the travel industry – one with narrower political and human consequences but possibly broader economic implications – when it dismissed evidence of the economic case for reviewing APD.
The rejection of the case to abolish or review the duty came in a reply to a Transport Select Committee report last week.
The committee of MPs had called for a Treasury study of the impact of APD and for a government view of a PwC study on that impact – one commissioned by British Airways, Virgin Atlantic, easyJet and Ryanair.
I suppose we should be grateful the government at least give a view, although the response came from the Department for Transport (DfT) when it is the Treasury that oversees APD.
Indeed, DfT ministers generally defer to the Treasury when rebuffing questions on the tax. Perhaps ministers are as confused about who deals with what as the industry is about what bit of government is responsible for which burden on it.
Anyhow, PwC concluded abolishing APD would benefit the economy. The DfT said it “disagreed with the findings”.
This will irk the airlines which commissioned PwC because the idea came from within the Treasury.
However, the DfT believes: “Abolishing APD would have a smaller impact on GDP than the report implies and cause a net loss of tax receipts. This . . . would need to be paid for through tax rises or spending cuts elsewhere.
“In contrast to PwC, the government considers APD a relatively efficient and non-regressive tax.”
So there you have it. The demand for a review of APD got equally short shrift: “The government has no plans to undertake a review.”
The suggestion of a 12-month “APD holiday” for new services from regional airports went the same way, as did a call for an analysis of varying APD rates around the country.
This last point was dead in the water, of course. The DfT could dismiss it by pointing out: “The majority of airlines oppose any regional variation of rates.”
It added that a report by HMRC [Revenue and Customs] suggested regional rates would have an impact on traffic only “if APD at Heathrow and Gatwick increased by 50% or more”. There is a warning in there.
Members of A Fair Tax on Flying expressed dismay, saying they were “extremely disappointed”.
“Disappointed but not surprised” would surely have been a better response.
So, is the government listening? The sector should face facts and focus on the next government – which may of course mean courting members of this one.
But let’s acknowledge reality and not waste further time.