The SNP’s U-turn over Air Passenger Duty or ‘Air Departure Tax’ was not the result of any supposed environmental virtue, writes Brian Wilson.
The Scottish Government’s discovery that cutting and then abolishing Air Passenger Duty is “no longer compatible” with its environmental objectives is risible – but tells us a lot about how Scotland is run.
When was the policy ever “compatible” with any environmental imperative? Was it compatible a fortnight ago when Ministers were still assuring businesses that the 50 per cent cut would go ahead, once a few wrinkles had been sorted?
Did the requirement to cut carbon emissions suddenly spring into view, having been entirely missed by the geniuses in St Andrew’s House for whom this has been a flagship commitment for the past decade, to justify the demand for the tax to be devolved?
In truth, the chaotic abandonment of the policy has precious little to do with the environment. Rather, it is the culmination of a process which dictates so many of the headline-grabbing initiatives which come to nothing or very little.
First you have the grievance. The fact APD was UK-wide basis figured high on the list of complaints about what could be done better if only, if only, Holyrood had the powers – denial of which demonstrated another Whitehall conspiracy to hobble our initiative, our creativity, our potential. How many headlines and (as it has now proved) false promises were generated around that narrative?
Yet it always seemed a slightly odd priority, even by grievance standards, since it so obviously ran counter to all the fine talk about the environment. Ever since it was introduced by Kenneth Clarke in his 1993 budget, APD has had a clearly stated environmental rationale – it was a “green tax” before the term had been coined.
Flying was under-taxed compared to other forms of transport because there was no VAT on aviation fuel. Furthermore, a modest tax would slow the growth in passenger numbers. As taxes go, it was a hard one to argue with – which explains why the Treasury has never shown the slightest interest in abolishing it.
Changes along the way brought an improved degree of equity. Gordon Brown in 2000 switched the burden towards long-haul and business flying while reducing the tax for ordinary holiday flights. Critically from a Scottish perspective, a derogation was cleared with the European Commission to make flights from Highlands and Islands airports free from APD – good practical politics.
As part of the Smith Commission package in 2015, APD was devolved to Holyrood. Only then did it dawn on the Scottish Government that the loudly proclaimed promises to reduce and then abolish the tax were a little trickier to deliver than they had assumed. Grievances are rarely accompanied by homework. The biggest problem was with the derogation. It became clear that any new scheme would need to go back to Brussels for approval – and there had been one very significant change in circumstances, namely the sharp rise in passenger traffic through Inverness, not least because of the APD exemption.
Since 2015, we have had Holyrood legislation, working parties, thousands of civil service hours ... all to be blown away overnight in a puff of supposed environmental virtue with the problems unresolved.
Just as important, airlines have been seduced into Scotland on the basis of an undeliverable promise – and are now pulling out again.
Incidentally, the Inverness issue will not go away. Every passenger there is now subsidised by over £30 through APD exemption plus Scottish Government grants to Highlands and Islands Airports. Others, particularly Aberdeen, are unlikely to ignore that hornet’s nest, now it has been disturbed.
It’s worth remembering that there was another way. Between 2002 and 2007, the then Scottish Executive ran a very successful Air Route Development Fund which shared the risk with airlines until the viability of routes was established.
The hugely influential Glasgow-Dubai service was one of its products and it also breathed life into Prestwick for a few more years.
That too was an example of good practical government using the available powers. Compare and contrast with the protracted grievance, the blowhard promises and the ultimate retreat which is now the story of APD. Which does Scotland prefer?