Devolved air passenger duty for Wales rejected
10 Sep 2019
The government has rejected proposals to devolve responsibility over air passenger duty (APD) to Wales, unlike in Scotland and Northern Ireland, citing concerns about the possible impact on competition
10 Sep 2019
The Welsh affairs select committee published a report looking at the arguments in favour of devolving APD, as has happened in Scotland. APD has also been partially devolved to Northern Ireland, making Wales the only devolved administration with no power over any aspect of APD.
The committee recommended that APD should be devolved in Wales, saying it would unlock the potential of Cardiff airport, boost the Welsh brand and promote economic growth. MPs called on the government to set out plans to do so by 2021.
Now Simon Clarke, exchequer secretary of the treasury has written to the committee dismissing the recommendation and saying that ‘the UK government remains concerned about the competitive impact of introducing tax competition within a single aviation market'.
Clarke said: ‘We consider Cardiff and Bristol airports to serve the same market. This is consistent with state aid guidelines which consider airports to operate in the same market if they are within 63 miles of each other. Cardiff and Bristol are within 60 miles of each other by road.
‘Whilst it would be for the Welsh government to decide whether to reduce rates if the power was devolved, previous statements from Welsh ministers have indicated that they consider control of APD as an opportunity to promote Cardiff Airport. This will naturally have an impact on Bristol Airport, Cardiff’s closest competitor, and to a lesser extent other English airports.’
Clarke argued that the decision did not create inequity in the devolution process, as the devolution settlements for the nations of the UK have always been asymmetrical, taking into account the specific circumstances for each nation. In the case of APD, the aviation markets in Northern Ireland and Scotland are fundamentally different to that in Wales, and as such warrant a different approach.
David Davies, chair of the Welsh affairs committee, who commented at the time the report was published that he was ‘not often persuaded by arguments for devolution’, expressed disappointment at the decision.
Davies said: ‘The government has only offered a flimsy excuse for why APD should not be devolved to Wales despite it being devolved to Scotland and Northern Ireland. I find the government’s suggestion that it is “not a question of trust”, but rather of shared aviation markets, very unconvincing.
‘I am disappointed that the government has not recognised the significant arguments in favour of devolving APD to Wales, and I know that many others will feel similarly. My committee will continue to press the government to create a fairer tax system throughout the UK by devolving APD to Wales.’