This afternoon provides an opportunity to help the Government by debating the aviation duty and helping them to come to a conclusion that is better than their original proposals. I know that they are listening, and along with colleagues from Greater Manchester I was able to have a meeting with the Chancellor of the Exchequer. I know that he is thinking hard about the matter, even if not at this very moment, when other things are going on.

Nobody likes taxes, but the aviation duty would be a particularly bad one. I understand the logic of replacing the air passenger duty, which was introduced in the early 1990s with no objective other than to raise funding. I understand the Government’s logic in asking what is the point of only £10 of tax being paid on a plane with one passenger on it, when a plane with a lot of passengers on it will pay considerably more. That seems to provide environmentally perverse incentives and objectives, and I understand why the Government thought that changing the basis of taxation to distance and to the plane itself would provide better environmental incentives. When we look at the details of the scheme, however, it becomes apparent that the proposed aviation duty will also have perverse incentives, and I hope that the Government will change their mind about it.

Before I turn to the details of the tax, it is always worth while reminding ourselves of the importance of aviation to the United Kingdom economy. I was on the board of Manchester airport for a number of years, and 44,000 jobs depend immediately on it. A number of other jobs—it is difficult to define how many—would not exist if it were not there, because having the facility to travel internationally helps firms to relocate to Manchester and the north-west. What is true of Manchester is true tenfold of Heathrow and Gatwick, and it is true of all the regional airports.

I do not know whether this is still true, but three or four years ago, British aviation was the second largest aviation market in the world. Without it, this country would find it difficult to earn its living in the world and we would have a lot fewer jobs than we currently have. Like many parts of the world’s economy, it is going through a particularly difficult time at the moment. Within the past 12 months, 30 airlines have gone to the wall and become bankrupt, which shows what a tough business it is. Although taxation may need to be raised, we want to do so as sensitively as possible and in a way that does not damage the industry.

I have three main concerns, which I shall list before going through them in detail. First, the proposed aviation duty will have a disproportionate impact on regional economies and regional aviation. Secondly, there will be a potentially disastrous impact on the air freight industry. Thirdly, it is likely that if the tax is brought in, it will be environmentally damaging—as opposed to environmentally helpful, which I believe is the Government’s intention.

I turn first to the regional issue. The Government stated clearly in their 2003 White Paper that their policy was to support regional airports, but if we examine in detail what will happen if the aviation duty is brought in, we see that it is likely to damage regional airports. Airports such as Glasgow, Manchester and Birmingham have been trying very hard to build up international and, particularly, intercontinental routes over the past two decades or so. When those routes are started, aeroplanes often have a load factor of 40 per cent., which is not the case with a new route from, say, Heathrow to Shanghai or India, which are among the world’s improving economies. A major airline considering running such a route from a regional airport often has to invest in it for two or three years before it becomes viable. If the airline started with a tax disincentive because it was effectively paying a tax on empty seats, such a route would be much less likely to be established. One fact that I discovered when I prepared for the debate was that the 40 intercontinental routes that Manchester used to provide have been reduced to 17, partly because of the changes to, and reorganisation of, British Airways but partly because of the toughness in the aviation business itself.

I welcome the fact that my hon. Friend has secured the debate. I, too, have had meetings with Treasury Ministers about this subject and expressed my concerns. He has mentioned the regional impact of the aviation duty, and it would have an enormous impact on my constituency, where Glasgow Prestwick airport accounts directly for almost 3,500 jobs. Across the whole of Scotland, it accounts for a phenomenal amount of earnings and capacity to earn from the trade that it brings. Does my hon. Friend think that the amount of money that is tied up in aviation makes it clear that Her Majesty’s Revenue and Customs will lose out in the event of the introduction of the tax? There will be a negative impact, rather than the positive one that the Government suggest will be the case.

My hon. Friend is right. Oxford Economics has done a study showing that, because of the loss of gross domestic product that is likely to be consequential on the introduction of the tax, less tax will be collected. He is right to bring to our attention the fact that the industry—airports, freight carriers and passenger airlines—is extremely concerned about the proposed tax.

The hon. Gentleman is absolutely right—in its current form, the tax will be a regressive, rather than progressive, environmental tax. I agree completely that we will see no lowering of emissions, just their displacement to other European hubs. There will certainly be no incentive for airlines to improve their overall performance, and I agree that there need to be more carrots than sticks. Does he agree that introducing the measure in its current form is likely to delay the modernisation of airline fleets? As he will know, as an expert who sits on the Select Committee on Transport, modernised fleets would be far more environmentally friendly than the current fleet.

I agree completely, and I shall make some of those points later. The hon. Gentleman is absolutely right.

Finally, on the impact on the UK regions, I was told by Flybe that it has a profitable route from Inverness to Belfast. It uses a new aeroplane, but it flies at 60 per cent. capacity. The route is vital to the economies of Inverness and Belfast and it seems ludicrous to impose on that aeroplane, which is doing a commercial job, as well as one that is economically important for those regions, a tax that a plane flying from London to JFK would not have to pay in the same proportion. There are other relevant issues about the regions, but I know that other hon. Members want to raise them.

On the subject of the regions, the hon. Gentleman started by saying that he wanted to help the Government. He will understand that I am not sure I go that far, but I go all the way in backing his desire to help passengers, freight companies, UK airports and UK airlines. I stand four-square on that. It is not just about the regions, although I can understand why someone from Manchester would focus on them. Does he agree that it is equally crucial for the UK’s hub airports that we do something about the matter? He spoke about transferring passengers out of the regions. The measures will give a price cut to people from the regions who go to a hub outside the UK, but not a British hub airport. I am sure he will understand why I am worried about that. It means redundancies for my constituents at Heathrow and a reduction in house values. I wish him well and cheer him on.

The hon. Gentleman makes a pertinent and important point. Heathrow, which is good for the economy of the whole United Kingdom, competes with Schiphol, Charles de Gaulle and Frankfurt, and increasingly with Copenhagen and Madrid, as a major European hub. The measures are likely to help those competitors rather than Heathrow. It will send regional flights into their systems and not the south-east.

My hon. Friend has studiously avoided mentioning East Midlands airport, in my constituency. It is group-owned by Manchester airport and is the largest freight airport by weight in the country. The points that he is making about the over-taxation of the aviation industry would bring tears to a glass eye, but since the Chicago convention between the wars, aviation has benefited from generous largesse in being free of VAT and fuel tax. No one would suggest for a moment that it is on a level runway with other forms of transport, because it is not. Something must be done about that, which is why I welcome the Government’s attempt to balance a small proportion of aviation’s environmental impact with the contribution—not a great one—that it will make when the duty is introduced.

I do not particularly want to go down that route, as there is a huge debate to be had about subsidies that go to other parts of the transport industry which aviation does not receive, and about how different parts of the aviation industry are taxed. I am not making an argument about differential taxation between aviation and railways or cars. I hope to make a point about the proposals before us, whose aim is to raise tax. I understand that and am not against it, but the way in which it is being done will have perverse consequences, both for the environment and the industry.

Moving to freight, I have been provided with quite startling information, which I have sent to the Chancellor of the Exchequer, about the profitability of a freight route between Manchester and Hong Kong. I can provide detailed documentation to show that if the proposals go ahead, a freight aircraft flying from Manchester to Hong Kong would go from making a profit of £5,600 a flight to making a deficit of nearly £3,000 a flight. It just will not exist. The companies are not in it for charity; they must make money. If that particular route were withdrawn from Manchester, it would damage the north-west economy by £28 million a year.

The proposals have stopped FedEx running a flight between Manchester and Memphis: that flight has gone. It was expected 12 months ago that the flights would double in frequency, but what has happened is that FedEx has moved them to Charles de Gaulle in Paris, which is not good for the economy. A lot of the manufacturing economy left not just in the north of England but elsewhere in the country depends on just-in-time delivery of high-value goods by air freight. If that is not available, costs go up, cars go by road from Paris to Manchester and the environment and the economy are damaged.

At Glasgow Prestwick, we have already had redundancies from freight companies that have withdrawn for those very reasons. The sad fact, to return to a point made in an earlier intervention, is that they are now landing their planes at either Schiphol or Charles de Gaulle and trucking all the goods into the United Kingdom, as far up as Scotland. On balance, it does not make a bit of sense for the environment. Trucking creates more emissions than flying. As a consequence, the Government should consider the matter if they are intent on doing something about the climate.

I agree completely. East Midlands airport was mentioned. Nearly 3,500 jobs are dependent on freight at East Midlands. If those jobs move to Brussels or Paris, where the main worldwide integrators’ huge hubs are located, they will be lost to the east midlands, and it will be difficult to get them back.

As the MP for that area, I think that that is grossly distorted. My hon. Friend is right about the number of jobs relating to freight; I accept that. There are 7,500 jobs in and around East Midlands airport, 10 per cent. or so of which belong to people living in my constituency, but a whole load of scaremongering is going on in relation to the impact of changed taxation on aviation, suggesting that somehow all those jobs would decamp to northern Europe. There is not a scrap of proof that that would be either economically viable or politically acceptable. It is highly unlikely to happen. It is just a false trail through the sky.

I hope that what I have shown so far is that some of it has already happened as a result of the proposals becoming public.

My hon. Friend said 3,500.

I was saying how many jobs would be at risk. I was not saying that all of those jobs would go. However, in a marginally profitable business—the margins per ton of freight are tiny in those areas—jobs are at risk. The viability of freight at East Midlands depends partly on critical mass as well as the individual profit that can be made on each route.

Will my hon. Friend comment on the impact on British road hauliers? If freight is trucked in from overseas after having been flown into Charles de Gaulle or Schiphol, that will mean more overseas trucks on our roads taking work from British hauliers. Also, despite the good work done to seek agreement at the European level about such hauliers taking on domestic jobs once inside the UK, the greater volume coming in will mean that more overseas trucks can take domestic jobs, again taking work from British-based hauliers.

My hon. Friend makes his point well.

Turning to the issue of the environment, I shall try to speed up. I have tried to be generous in giving way, but I know that other hon. Members want to speak. One can dispute the overall environmental costs of aviation, but it is the view of the Department of Transport that the external costs of aviation to the environment in this country are about £1.6 billion. However, the industry pays £2 billion in taxation, so generally, aviation’s financial contribution to the environment is positive.

We have already touched on the fact that if someone is charged £40 to fly to New York, for example, from a regional airport, it would be cheaper for them to pay the £10 tax and fly through a European hub, and go through Schiphol or Frankfurt, or wherever is easiest from their local airport. There would be a significant saving, particularly if they are taking their family away for the weekend. That is self-evident. What is less obvious—this was mentioned earlier—is that if the basis of taxation is both distance and the maximum take-off weight, there is no incentive, when there should be, for airlines using old planes to invest in new ones with less environmental or noise impact. We have a perverse incentive to keep using the old aircraft, in which an investment has already been made, instead of moving to newer ones.

Let us compare the carbon dioxide emitted by similar airplanes of different generations—the Boeing 737-200 compared with the Airbus A319. The Airbus is a heavier plane, but gives off approximately 25 per cent. less carbon dioxide, both in flight and at take-off. We should want to incentivise people to use that plane, but on the basis of the proposals before us doing so would cost more in tax, which is not sensible.

I wish to make a brief point, before the hon. Gentleman moves on from environmental issues. Doubtless, he would agree that trying to sort out environmental issues arising from aviation is a noble cause, but is it not the case that we are trying to use national action to solve an international problem? Simply by taking national action, we will not help the environment, but we will damage the British economy.

I agree with the hon. Gentleman, who answers the point made by my hon. Friend the Member for North-West Leicestershire (David Taylor) very adequately.

Administratively, air passenger duty is collected by the airlines, and the collection system is very efficient—it costs a few pence per £100 to collect the duty. Transferring responsibility to airports would result in an inefficient system; the set-up and administrative costs would be large, and there would be difficulties if an airline was diverted—say from Manchester to East Midlands—over who would collect the tax. Would it be East Midlands or Manchester? It is not sensible to move the tax collection from the airlines to the airports.

Will the hon. Gentleman give way?

For the very last time, then I shall sit down, because I have just two more points to make after this one.

I am extremely grateful to the hon. Gentleman for his remarks. I represent Farnborough, in Hampshire, which is the finest executive jet base in Europe, and has received many nominations to that effect. Is he aware that what he is saying about the airlines does not just apply to them, but to a very important sector of general aviation in our country—corporate aviation—and that the airport will be obliged to collect the duty perhaps from an infrequent visitor who comes from, say, the United States for one visit and then returns? The airport will incur the cost and angst of having to administer a very complex system in the place of what he rightly says is a simple system.

The hon. Gentleman makes a pertinent point.

I have a question that I would like the Minister to answer, but if she cannot do so, I would be grateful if she could make the information available in the House of Commons Library. UPS wrote to me—I dare say that it has written to other hon. Members, too—saying that the tax is unlawful, and in breach of the Chicago convention and the open skies agreement between the European Union and the United States of America, partly because it implies that this country will take tax in somebody else’s air space. Has she taken legal advice on that matter? If so, will she provide that legal advice, or a summary of it, so that we can come to a view on it?

Finally, I was not drawn into the debate on green issues. Today’s discussion is specifically about this particular aviation taxation, which will not do what it says on the tin. It will do something quite different: it will damage the economy, and it may well damage the environment. However, behind aviation debates often lies a general dislike of the high technology of aviation, which is used by some members, but not all—I accuse no one in this Chamber of doing so—of the lobby who tend to exaggerate the impact of aviation and who would actually prefer it if it did not exist at all. I found that to be the case when I chaired the board of Manchester airport and had to deal with some of the green campaigners protesting against the building of the second runway at the airport and its general development. One can argue about the details—whether the impact of aviation on global warming is 2 or 4 per cent.—but either way it is relatively trivial compared with other factors. It gets the attention of some in the green lobby, who like to point to it as a symbol of modern high-technology and because they would prefer lower-technology solutions.

I have a list of five hon. Members who have indicated that they would like to speak. I shall be calling the Front Benchers for the winding-up speeches at 3.30 pm.

I congratulate the hon. Member for Manchester, Blackley (Graham Stringer) on initiating this debate. The number of people here illustrates the interest in, and concern about, this topic. Governments introduce aviation duty for three reasons: first, as a tax-raising revenue; secondly, for its effect on the environment and climate change; and, thirdly, as a transport policy. The fact that a Treasury Minister is here illustrates one thing for certain: this is mainly about tax-raising revenue.

The hon. Gentleman very adequately explained the concerns that many of us have about this particular proposal. I want to make it very clear that I and my party are in favour of environmental taxation, if it is fair and will change behaviour. However, we are not in favour—I certainly am not—of a policy that will merely export jobs and economic prosperity from Britain to the continent, at the expense of our economies, whether regional economies, such as those of Scotland, Manchester or the east midlands, or around our main hubs, such as Heathrow and Gatwick. The impact will be the same in all those economies: they will be massively disadvantaged. That is what this proposal seems designed to do.

The hon. Gentleman used the example of a family going on holiday to America. If it costs £10 per head in taxation for a flight from Manchester or Heathrow via Schiphol or Charles de Gaulle, and £40 per head for the same journey straight from Manchester or Heathrow, which will the passenger choose? Obviously they will choose the cheaper option, which will mean that our airlines, such as British Airways, BMI and Virgin, will be massively disadvantaged by the impact of the tax. That might be acceptable if it did something about climate change and reduced emissions. With great respect, however, all that will happen is that instead of being emitted by British aircraft, those emissions will be emitted by French or German aircraft. That is perverse.

Similarly, on the point that the hon. Member for Manchester, Blackley made about weight, it is a nonsense that a modern aircraft such as the Airbus 319 is going to end up paying more than the Boeing 737-200. The policy is based not on carbon dioxide emissions, as a fair policy should be, but purely on weight. That is like taking a crowbar to this matter, and it will do damage as a crowbar would—it will damage jobs and employment in this country.

Freight has also been discussed. We have heard about Manchester and the flight from Memphis that has been withdrawn. There was talk of a second flight, and now it too has been withdrawn. We know also that the impact on the east midlands will be disastrous. What will be the impact of that? There will be more lorries on British roads, because goods will be flown into Brussels or Charles de Gaulle and then taken across the channel. That will have the perverse effect that VAT will not even be paid on the fuel that is used, because drivers will fill up on the continent, where it is cheaper. That will put more of our hauliers out of work. It is not only the impact on aviation that should be taken into account, but the impact on hauliers.

I agree entirely with the point that the hon. Gentleman is making. The situation will be even worse for Belfast International airport and Belfast City airport because Dublin International airport is just an hour down the road. It is inevitable that, for tourism, business and freight travel, people will move in that direction, adding to truck and other traffic on the roads to Northern Ireland. Does he agree that it will have a devastating impact on Belfast, in particular, given the proximity of Dublin airport, in another jurisdiction, just an hour away?

I agree entirely. We have seen that this week with the change on deposit guarantees. What one country does impacts directly on another.

There is a solution: it is to move away from the idea that this is about raising revenue. We have heard that airlines are already paying their fair whack in relation to the environmental cost. We need to have a proper debate, initially within Europe—that is happening within the EU regarding the carbon emissions trading scheme. It must also happen internationally, because aviation is an international business. We must have agreements in place to ensure that the carbon cost of flights is properly accounted for, not just in Britain, France or America, but across the globe. That would be much more sensible. The net effect of the policy will be to disadvantage British airlines and jobs, and none of us wants that. It will have the perverse effect of putting more lorries on our roads, thus increasing those emissions, and it will have a negative effect in terms of what we want, which is a positive effect on climate change and a change in policy. I ask the Minister seriously to reconsider the policy, which is bad for British jobs and for Britain and does nothing for climate change.

I congratulate my hon. Friend the Member for Manchester, Blackley (Graham Stringer) on securing this important debate. It might appear as though he tried to pour cold water over the Government’s proposals, but he and we want a successful and sustainable ecologically and environmentally progressive system that is administered sensibly and fairly.

The first thing I should point out is that I believe climate change is, in the main, man-made. I believe that radical action is needed to tackle it, and that aviation and shipping should be included in our climate-related reduction targets in the Climate Change Bill. I stand squarely behind that notion so I am not arguing against an aviation tax per se, but I want one that will help us to meet our targets. As the duty is based on maximum take-off weight rather than CO₂ or other emissions, the current proposals will mean that planes with identical maximum take-off weights will be charged the same, irrespective of noise or emission levels. So although a newer, heavier plane might produce fewer emissions than an older, lighter model, it will pay more duty because it will have a higher take-off weight.

Concerns have also been expressed that the proposals might lead to a significant increase in fuel-thirsty take-offs and landings. As we have heard, passengers will pay less tax if they avoid long-haul flights from the UK and fly instead from France or Holland. I want a duty that will not impact negatively on the UK’s regions. I accept earlier comments about Heathrow and other hubs, but I do not want the system to impact negatively on UK regions such as my own—the north-west. I am uneasy about the consequences for my constituents who wish to travel from Manchester or Liverpool airports for their hard-earned annual holidays, and for the economic development prospects of my region. My colleague and good friend the Member for Manchester, Blackley has covered that ground comprehensively. He pointed out that FedEx’s freight service to Memphis, in the USA, which operated four times a week from Manchester, ended in August 2008, and has transferred to Paris. That is real. It is not a projection or conjecture; it has happened. Manchester had expected a second daily FedEx service, and was in discussions with FedEx about a 50,000 sq ft freight facility. It is believed that FedEx was frightened off by the proposed aviation duty—wrongly, in my view. Such organisations should not be frightened off using what is a world-class facility. I support the comments of my hon. Friend and others about the disadvantage for regional airports inherent in the current proposals.

The hon. Gentleman is talking about regional issues. Northern Ireland is only part of the United Kingdom, but shares a land mass with another EU member state, the Republic of Ireland, which is not currently imposing that form of duty on aviation. I am led to believe that it does not intend to impose it. Significant investors will therefore bypass a region of the UK to go to another place that they find more attractive.

There is no way that the hon. Gentleman is going to draw me into Irish politics, but I agree with him. That is a clear consequence and it might happen.

Regional airports such as Manchester are already at a disadvantage when it comes to long-haul route development. They have fewer affluent customers to serve and fewer business headquarters to generate business travel. My colleagues have examined the arguments in fine detail, and some have taken the arguments outside the box.

In my final comments, I shall concentrate on another aspect that needs airing: the employees who need to be taken into consideration. We should hear from their representative unions. I am a member of the Unite the Union parliamentary Labour group, having previously been a full-time trade union officer for 20 years, and I am also concerned about the employment impacts of aviation duty.

We have heard much in recent weeks about the need to act globally to deal with the worldwide economic collapse of financial institutions. Equally, we must consider carefully the realities of introducing aviation duty in the UK in a competitive international market. I support the arguments put forward from all the sections gathered today about the international implications of this issue.

I know that Unite the Union is worried that if freight operators are charged, they will change their routes to avoid the tax. Moving freight by road to a European hub airport could lead to job losses. Although those numbers can be debated, it is quite clear that such a move would lead to job losses at UK distribution centres—a legitimate concern for existing employees in the UK—and the loss of capacity to have next-day delivery for documents and packages, except at a premium price. Although aviation duty would affect only aircraft departing the UK, if long-haul routes are slashed by operators this could affect our facility to import food from developing nations.

Finally, the Government want airports to collect the new tax. Airports have no systems in place to administer aviation duty. Surely given the recent problems in the delivery of tax credit, child support and the education maintenance allowance, we should be wary of imposing new systems for payments. It seems daft to stick airports in that position when there are existing facilities, skills and experience within the airlines themselves.

The Minister has been open to all arguments and has made it clear that she is prepared to consider seriously all sensible suggestions. If we propose anything that the Government regard as sensible, they have said that they will accept it. I would like to compliment the Minister on that openness and to put the same comments to those who have access to the Chancellor.

In conclusion, I want a much more rigorous assessment of the environmental, economic and employment consequences of the proposed aviation duty and I call for other alternatives to be considered. As a north-west MP, I argue strongly that it should be recognised that Manchester airport is the single most significant economic factor in the north-west, and we must not jeopardise that.

I welcome today’s debate. Air passenger duty is not a great tax, and it is quite something to invent a scheme that is considerably worse and that will greatly disadvantage our aviation industry which, as we have heard in this debate, is the second largest in the world. It has been a great British success story, but it is a very competitive industry.

As we have seen with developments in Schiphol and at Charles de Gaulle, there are great temptations for carriers to move overseas. The problem with the tax is that it is unilateral and will lead to the export of jobs. We have heard the concerns of hon. Members from Northern Ireland. We have also heard about the problems that may lead to foreign road hauliers bringing in goods on our roads. There is a real problem with the concept of it being a unilateral tax. The Government have not said very much about what will happen when the EU comes up with its new trading system. What will happen then? Will our companies effectively be double taxed?

We have also heard about the disadvantage for long-haul flights. The duty will greatly add to the red tape at airports. The Manchester Airport Group thinks it might have to collect £400 million from airlines, which is more than its total revenue of £300 million. It is concerned about who is liable for the tax because it will have to chase people and may spend a considerable amount of its revenue having to pay the Treasury for money that it cannot get back from third parties. We have already heard from my hon. Friend the Member for Aldershot (Mr. Howarth) about his concern for business aviation. I and my hon. Friend the Member for Christchurch (Mr. Chope) have a first-rate airport in Christchurch—Hurn airport—which does quite a lot of business repairing aircraft. An aircraft that comes in to be repaired by a local engineering company may end up paying a considerable sum of money even before one screwdriver has been used. There are real concerns about the perverse impact of this particular charge.

Does my hon. Friend share my concern that this is also sending out a very negative message to the very successful British aviation and aerospace manufacturing industry. In my constituency we have FR Aviation, Meggitt Aerospace, and VT Aerospace. They are major users of the airport and a showcase for British manufacturing, yet this Government proposal seems to pour cold water on this very important part of British manufacturing industry.

My hon. Friend makes a very good point. He is a great defender of the economic significance of Bournemouth airport, which offers a real benefit to the people in our part of the world. We have heard about the successful development of regional airports. Such airports are very important to local economies. If the Government proceed with this tax, they will be disadvantaged. The best thing that can be said about the proposal is that it is at its consultation stage. A final decision does not yet have to be made. I hope that this is one occasion when the Government, for good economic and tax reasons, listen. Ultimately, the tax will damage many thousands of jobs, a very successful industry and regional policy. There is concern across the parties and across the country; otherwise there would not be such a range of people in this debate pleading with the Government to listen to the very sensible arguments made by the hon. Member for Manchester, Blackley (Graham Stringer). That is all I want to say. If the Government go ahead with this proposal, it will damage Britain. That would be a very sad day.

Hopefully, I will not take up too much time because I realise other hon. Members want to speak. I am not going to make the case for or against this particular tax; I will leave that to others. I want to bring up the unintended consequences of the tax, particularly for passengers who are flying from regional airports. I hope that you do not mind, Mr. Caton, if I confine my remarks to Aberdeen. It is not that it is at the end of the universe, although some people think it is—I do not mean that in a negative way. Obviously, because our economy in Aberdeen depends in part on international travel, there are important issues that we must face.

Aberdeen is the energy capital of Europe and many of my constituents make international flights weekly—and sometimes more often—to areas such as Azerbaijan, the middle east, Nigeria and Texas. That is part of our economy. Obviously many of my constituents want to fly abroad.

It has been hinted at by other hon. Members this afternoon that the problem with this tax is that when it is based on aircraft rather than passengers and passenger journeys, there may be a double or even triple effect on passengers flying from a regional airport to a UK hub. Someone from Aberdeen who wishes to fly to Florida to visit Disneyland will either have to fly from Aberdeen to Heathrow or Gatwick and pay one set of tax, and then fly from Heathrow or Gatwick to Florida and pay the second tax. On the way back from Florida, they do not pay the tax at all, but from Heathrow to Aberdeen they will pay the tax. As I understand it, they will be taxed three times. It is very difficult to work out because there are no figures on how much it will cost. There is potentially a triple cost on passengers. If passengers do not want to pay that extra £300, or whatever it might be for a family of four—it is very difficult to work out the figures—the real incentive begins to develop for them to travel by car to either Edinburgh or Glasgow Prestwick in Scotland to get those international flights. Aberdeen has some international flights, but none outside Europe. It has regular flights to both Schiphol and to Charles de Gaulle. My fear is that if the tax is introduced, there will be real economic incentives for my constituents to use either Charles de Gaulle or Schiphol as their international hub and not Heathrow or Gatwick. A number of holidaymakers use Manchester as the hub in order to transfer on to further international flights.

I should be grateful if the Minister could address that particular issue to show that at least some thought has been given to it, because under air passenger duty, if someone has a through ticket they pay duty not on every individual leg of the flight but just on the through flight. So it is difficult to see how something like that can be introduced when the tax will be on the aircraft and not on the individual passenger journeys. I do not want to say any more, but I hope I have explained the difficulties that my constituents might face: either they will be forced to spend a lot more money going through a British hub, or to use their cars more, which defeats the environmental purpose of the tax; or, they will feel that it is easier for them to use one of the international hubs.

I congratulate the hon. Member for Manchester, Blackley (Graham Stringer) on securing the debate and on making a serious contribution to an important issue. Next Thursday we celebrate the centenary of flight in this country. On 16 October 1908, Samuel Cody became the first man to make a powered flight, flying 1,390 ft from Laffan’s plain in Farnborough in my constituency. For 100 years, aviation has been one of Britain’s most successful industries; let us ensure that we do not knock it now.

I also declare an interest: I am a currently licensed aviator, together with the hon. Members for Edinburgh, South (Nigel Griffiths) and for Montgomeryshire (Lembit Öpik), and my hon. Friend the Member for Welwyn Hatfield (Grant Shapps). We have sought to speak up in this place not so much for the airlines as for general aviation, comprising light aviation, sporting aviation and business aviation, which already contributes £15 million in tax and VAT. We pay and the airlines do not—Mr. Walsh, please make a note.

I have two points to raise. First, general aviation—below 5,700 kg—generally uses Avgas, which is a petrol and on which we pay tax, so we are not affected by the measure. However, the industry is affected, because we are increasingly trying to move to diesel engine development, which is far more fuel-efficient and reduces emissions. It will be hit very badly, because diesel engines use Avtur Jet A-1, and such development will be seriously affected, meaning bad news for aviation in this country and for the British aviation industry.

My second point, which builds on a point that I made earlier, is about the concerns of the British Business and General Aviation Association, which represents the air taxi business, smaller airports, charter businesses and so on. It is very concerned about the impact of the proposals on its members, who are an increasingly vital part of the economy as major airports become congested. Businesses find it hugely convenient to use airfields in all our constituencies to enable them to get from A to B on the continent and to avoid the hubs, which is good for British business and for the local economy. The association told me:

“Absolutely no detail has been forthcoming from HMT or HMRC”—

Her Majesty’s Treasury and HM Revenue and Customs—

“about the scale of the duty calculation. It would be an absolute disaster if they simply drew a straight line based on MTOW”—

maximum take-off weight. The association continued:

“There has to be some degree of proportionality based on the number of seats to provide a smooth transition from APD to Aviation Duty.”

The market is seriously mobile: these people can up sticks and go somewhere else, which would be very bad news not only for the economy but for the Treasury.

I have discussed the process of collection, which will be much more complicated, and this afternoon I spoke to representatives of Farnborough airport in my constituency about the issue. Why impose another burden on that business? The airport is flourishing, so I hope that the Minister will attend to those concerns and ensure that the business aviation community is told exactly what plans the Government have for the implementation of the tax on a highly successful and enterprising part of the British economy which is vital to British interests. I hope that she will be able to do so in this debate.

In the meantime, I hope that everybody will take note of the events next Thursday. I have been asked by my hon. Friend the Member for Christchurch (Mr. Chope) whether the Vulcan bomber, of which I am a trustee and which I have helped restore to flight, will take part in the flypast. We hope that it will. I shall be in a smaller aeroplane in front of it, and I hope not to get overtaken by it. I hope, too, that the duty will not apply to the Vulcan, because we would just have to raise more funds from charitable sources.

I shall rush through my speech.

Currently, aviation use is taxed through air passenger duty. A freighter carrying cargo alone bears no levy, but a passenger aircraft carrying belly freight, which many do, is disadvantaged against the dedicated freight carrier, which is clearly anomalous. I therefore support the principle of fiscal measures to equalise burdens between different carriers and payloads.

The second issue, however, is how any tax should be designed, which depends on its purpose, presuming, as one does, that revenue generation is not the only motivation. The focus should be on the efficient use of aircraft capacity and the carbon impact of the flight itself. The tax should be used as an incentive to modernise carriers’ aircraft fleets. That has a particular bearing on the dedicated freight sector, which tends to use relatively old and less efficient aircraft. The tax should also remove perverse incentives towards particular transport choices. No rational integrator would move its operation without some long-term assurance about any marginal advantage that they would achieve through it. Bearing in mind the pressure that exists on all Governments to comply with carbon reduction targets, how realistic would any such assumptions be?

Will the hon. Gentleman give way?

It is a bit unfair to do so when someone else is coming up, I am afraid—particularly as I am his MP.

I represent a constituency adjacent to East Midlands airport and live under one of the flight paths. I also participated in an Industry and Parliament Trust attachment to UPS, but I think that Members will interpret that, in this debate, I do not necessarily represent its sentiments. The airport is not always the best neighbour to those who live close to it. It is the largest dedicated freight airport in the UK and the hub for two of the main freight integrators. Its carriers are modernising their fleets rather too slowly, and the duty could, if applied properly, incentivise that process. I conclude by saying yes to a tax, but design it properly, please.

I very much share the views of my hon. Friend the Member for Manchester, Blackley (Graham Stringer). My view is simply that the proposals for consultation are fundamentally flawed, that the new tax will not produce the environmental benefits that are claimed for it, that it is unlikely to provide any additional revenue to the Exchequer and that it will simply damage the UK’s competitiveness and, particularly, its employment.

I stand in the Chamber between two colleagues, my hon. Friends the Members for South Derbyshire (Mr. Todd) and for North-West Leicestershire (David Taylor), who may have slightly different views from me, but all three of us live close to East Midlands airport. Although I live well within the area where one picks up the noise that the airport generates, I believe that it is a very positive facility in the east midlands. It has been a real job-generator; it is a successful airport, with 6 million passengers passing through it; and, by volume, it is probably the largest parcel hub in the UK. The East Midlands Development Agency has stated in its regional economic strategy:

“In the context of international trade and competitiveness, the ongoing function and success of (the airport), particularly as a strategic express freight hub, is important as it is one of the region's key economic assets.”

The companies that operate out of the airport, such as UPS, DHL and other, smaller, freight-forwarding companies, have invested about £70 million, which has created a large number of jobs. I shall knock around a few figures, which my hon. Friend the Member for North-West Leicestershire may contest, but if we consider the direct, indirect and induced impact of jobs, the number of jobs is about 9,000 to 10,000. Certainly, at the airport itself, about a couple of thousand people are employed on activities that are directly associated with incoming and outgoing freight, and a good number of them are my constituents and the constituents of my neighbouring colleagues, my hon. Friends the Members for South Derbyshire and for North-West Leicestershire.

I am concerned about the impact on jobs. The proposed aviation taxation is likely to lead to the danger of companies like UPS and DHL pulling out, retracting into Europe and back-shipping by road many of the parcels and bits and pieces that currently fly into the airport. That would be disastrous for the region, and it would also be disastrous environmentally. That is why I support the views of my hon. Friend the Member for Manchester, Blackley. The proposed taxation is bad news, and the Government should think again.

I add my congratulations to those already given to my fellow Manchester MP, the hon. Member for Manchester, Blackley (Graham Stringer), on securing this important debate on the future of air passenger duty and its proposed replacement by aviation duty. When I found out this morning that the Treasury was responding to the debate, I thought that I had better check that I had not been transferred from the transport team to the Treasury team. I was relieved to hear that I am still a member of the transport team. However, I have been given the job of responding to this debate.

Air passenger duty is unsustainable. It provides no incentive for airlines to invest in more efficient and less environmentally damaging aircraft, nor does it incentivise against the use of half-empty planes. Hon. Members may recall a parliamentary question to the Prime Minister of 16 July in which the Liberal Democrat shadow Secretary of State for Transport, my hon. Friend the Member for Lewes (Norman Baker), highlighted the scandals of BMI’s intention to fly empty planes to keep its slots open and Flybe’s hiring of actors to fly between Norwich and Dublin to boost passenger numbers. Such things are clearly not acceptable. The Liberal Democrats therefore welcomed the consultation on aviation duty, and we welcome the principle of replacing air passenger duty with aviation duty as a positive step forward in cutting carbon emissions.

Since 1990, the proportion of total UK carbon emissions coming from aviation has more than doubled from 2.5 per cent. to 5.8 per cent. Since the Government have given the green light to the expansion of airports in the aviation White Paper, emissions are due to rise by up to 83 per cent. on 2002 levels by 2020. Greenhouse gases from aviation are expected to be responsible for 25 per cent. of the UK’s contribution to global warming by 2020. Bold steps must be taken to tackle that problem.

Aviation duty is only one part of the issue. We want a cap on airport capacity in the south-east, including no expansion of Heathrow or Stansted; the inclusion of aviation in the UK emissions target in the Climate Change Bill; an additional per passenger climate change charge on domestic, non-lifeline flights in the UK; and the development of an internationally agreed aviation fuel duty. At the same time, we want to encourage domestic passengers away from flights and on to the railways. We support a new high-speed rail link to the north and beyond. I am glad to see that the Conservative party has followed our lead on that.

The Liberal Democrats have long argued for a change to a per plane aviation duty, but we support basing that duty on the carbon emissions produced by the aircraft rather than its take-off weight. That would encourage aircraft manufacturers not only to build lighter planes, but to invest in lower-emission engine technology. Will the Minister explain why the Government favour maximum take-off weight when that will not encourage the use of newer, more environmentally friendly engines?

Opponents of aviation duty have claimed that although it should in theory incentivise airlines to offset the cost of the tax by carrying as many passengers as possible on each flight, there will be little practical benefit, because over the past 20 years, planes have gone from being two-thirds full to three-quarters full. However, that does not take into account the sharp discrepancy between different flights and airlines, particularly between chartered flights, which are often busy and full, and scheduled services, many of which remain half full or less.

Manchester Airport Group has expressed concern that while air passenger duty is a transparent, fixed fee that can be shown clearly on the ticket as a green tax, aviation duty will be based on a number of variables. If it is not transparent, it will be perceived as simply a stealth tax. I have some sympathy with that argument, but it could easily be overcome by ensuring that passengers or freight carriers are made aware of the aviation duty that they are paying within their ticket price.

Concern has been expressed about the impact of including freight in aviation duty. Manchester Airport Group has suggested that that could lead to freighters introducing a stop en route from the UK so that they are taxed only for the first leg of the journey or that the UK will be bypassed altogether, with transhipments using mainland European hubs and with freight being brought to the UK by road instead. It is an anomaly that freight-only flights should have been exempt from paying a form of aviation duty, so we therefore support their inclusion. I pay tribute to the hon. Members for North-West Leicestershire (David Taylor) and for South Derbyshire (Mr. Todd) for making those arguments and countering those made by opponents of the proposal. It is vital that the air freight industry take into account the carbon cost of transporting goods by air.

I have listened carefully to what the hon. Gentleman has said. I am interested to know the impact on passenger costs in the UK and internationally of all the proposals put forward by the Liberals. On freight transport, has he made any estimate of the impact on carbon emissions that would result from airlines switching from British to European airports and then carrying goods into the UK by road?

I cannot give any exact figures. It is vital that we know what the Government are doing to encourage other European countries to follow our lead and I hope that the Minister will say something about that. I do not accept the argument that we should not do something simply because no one else in Europe is doing it. We should be taking a lead on this issue and ensuring that the rest of Europe follows.

We believe that the Government have got these proposals horribly wrong, given their intention that airports rather than airlines should collect the duty. Manchester Airport Group estimates that it would be expected to collect about £400 million a year in aviation duty at Manchester airport alone, which is more than the combined turnover of the four airports in the group. That would make the group’s main business tax collection rather than running successful airports. Surely it is more logical for airlines to continue to pay HMRC directly, rather than adding an additional unnecessary tier of administration. There is great potential for airports to be saddled with unnecessary bad debts even though the tax will already have been paid by passengers and freight customers. Additional costs will be incurred for staffing and administration. Will the Minister explain what will happen if an airline that owes aviation duty to an airport goes bust? Will she assure the House that the debt will not fall on the airport?

Finally, I urge the Minister to look carefully at the proposed distance banding system. We support the introduction of more distance bands to ensure that a flight’s band better represents the distance travelled and its emissions. That would help to protect lifeline flights from areas like the highlands, where there is no real alternative to air travel on domestic or international routes.

I shall try to keep my comments brief. Because so much has been discussed in this debate, I want to ensure that the Minister has ample time to respond.

There is no doubt that people approach the whole area of environmental tax with a massive amount of scepticism as the result of things such as the road tax earlier this year. The Government introduced proposals which, on the face of it, could have had a positive impact on the environment and changed behaviour but were found not to work effectively when one considered their substance. Broadly, that is our concern in this case.

I congratulate the hon. Member for Manchester, Blackley (Graham Stringer), and I thoroughly understand his concerns. It is clear that there is consensus on some areas, including the methodology by which the charge will be levied—the maximum take-off weight—and the collection methodology. I shall briefly touch on those matters. As the Opposition spokesman, it is worth my reinforcing points that have been made.

Let us not forget that the Conservatives proposed reforming air passenger duty because of its impact on the environment. We recognised that, in some situations, planes were half empty. We have heard that some planes fly with virtually no passengers and pay no tax, yet they cause the same amount of environmental pollution as a full plane. There is clearly a need to reform the tax so that, from an environmental perspective, it works more effectively. The question is whether the Government proposals will achieve that.

Perhaps the Minister could discuss in detail whether Government thinking has moved on since the consultation. The current proposal, which is to use maximum take-off weight, simply will not achieve what they say they want to achieve in changing environmental behaviour. As we heard, it is not a good enough proxy for the environmental effect of the aircraft that will be subject to the tax, because it does not take emissions into account.

The hon. Member for Manchester, Withington (Mr. Leech) asked why maximum take-off weight had been chosen. My understanding is that the Treasury believes that the data on emissions from aircraft are not good enough for people to be able to use carbon dioxide or nitrogen oxide emissions, but, frankly, I do not accept that argument. Data are available, and if the Government are to reform air passenger duty, they must take responsibility for doing so and ensure that it works effectively.

As Members will be aware, I, too, have an airport near my constituency. I am constantly being told that the extensive and time-consuming work that was done by the Government and the Department for Transport on expanding Heathrow focused mainly on the environmental impact of the fleet—and the future fleet—using that airport. I would therefore be amazed if a Treasury Minister said in this debate that there was not enough information. I urge the Minister to live the joined-up government dream and start talking to the Department for Transport, because it has data that can be used efficiently and effectively to make an emissions-based pollution calculation which would work much better than the proposal to use maximum take-off weight.

On the collection system, I have not heard anyone, whether in discussions with the industry or in this debate, who thinks that it is a good idea for airports to take collection on board. The old saying, “If it ain’t broke, don’t fix it,” comes into play. Again, I would be interested to hear whether the Government are listening to representations from the industry and from Members, and whether they are considering changing the approach that they say they will push on with, which is getting the airports to collect. I shall not go into all the reasons why it would be difficult to do so. We all recognise that the proposal is, frankly, fraught with risk and danger. A much better approach is to leave collection to the airline operators, as is currently the case.

Freight is a much more contentious issue, and there was no agreement among Members who contributed to this debate. We must take care to find a balance between ensuring that freight pays its way, as it does emit pollution, and taxing freight companies out of the UK and thereby losing jobs. Finding that balance will be vital. To do so, the Treasury will need a carefully thought-through fact base if it is to understand exactly the likely impact of the pricing level of aviation duty on the freight industry.

At present, we do not know what level the Minister is proposing to place on freight. We will all look at that key issue with real interest, because there is a danger that levels of taxation that are too high will put at risk some freight operators’ logistics and operations in various regions of the country. That includes the Manchester region, which we have discussed today, but also airports such as Kent International. We must be extremely careful that we do not embark on a blunderbuss approach and, by overtaxing, achieve the exact opposite of what we want. Freight can be included in any new duty, but that needs to be done sensitively so that the industry is not, in effect, taxed offshore, which would not be good for anyone.

I have been listening carefully to the hon. Lady. So far, she has not said anything about Conservative policy. Does her party have a policy on whether to replace air passenger duty?

My party drew up its policy before the Government. It was actually the Conservative party, in a relatively lengthy consultation document, that first proposed moving to per-plane duty. We obviously have a policy. Our concern is that any policy must be made to work effectively and efficiently, and we think that neither of those criteria is met by what the Government are proposing. That has come through clearly in comments made in this debate. It is important that the Minister tells us a little more about whether the Government are willing to take those concerns on board and make changes.

Finally, I urge the Minister to set out the Government’s time line for resolving the outstanding aviation duty issues. When will we hear final decisions on the exact tax? When will the industry find out what the proposal is, and will it have time to prepare for any change? Many of us are beginning to wonder whether we will hear about the proposal in the pre-Budget report—perhaps she could confirm that we will—or whether the Government are now thinking that it will take longer to reach a conclusion. If the Minister could explain the time line for finally getting a conclusion from the Treasury, it would be welcomed by everyone.

The debate has been wide ranging. What came through the most is the expertise of hon. Members, initially in the very able speech of my hon. Friend the Member for Manchester, Blackley (Graham Stringer), who was successful in his bid for a debate on this important issue. We have heard a microcosm of the consultation process that I have been involved in at the ministerial level with various stakeholders who have been in to see me. Those stakeholders included many hon. Members, as some were kind enough to mention, who have attended this debate but also many other people with particular interests in the issue.

It is important to note that we have tried to have as open a consultation process as possible on the design, not on the rates; although we do not consult on tax rates, we do our best to consult on the design. Not all those who have been to see me accept that this should be so, and some want to consult on the rates. Obviously, some of the details about effects on particular sectors in the aviation industry are dependent on rate setting. However, we cannot have discussions ahead of announcements about such matters, as I am sure everybody understands.

The Government recognise the important contribution that aviation plays in both regional and national economies. We have heard in detail about that from many hon. Members and many of my hon. Friends. For example, aviation directly supports some 200,000 jobs and indirectly supports up to three times as many jobs. All the evidence suggests that the growth in the popularity and importance of air travel is set to continue over the next 30 years. The Government are committed to supporting the sustainable growth of the aviation industry.

My hon. Friend the Member for Manchester, Blackley, in a comprehensive speech, mentioned a range of worries that reflect those of his own regional airport, which I saw in April. Representatives from that airport have continued talking to hon. Members and hon. Friends about their worries, particularly with respect to disproportionate regional effects, including the potential effect on the freight industry and whether there will be environmental savings. I have said to all those who have been to see me, “Please give us the data that you are worried about. Please give us the elasticities of some of your routes, including the ones that you think are vulnerable, so that we can try to work out, behind the scenes, before we set rates, the correct balance between enabling this tax to be effective and making certain that it does not have perverse effects”. As the hon. Member for Putney (Justine Greening) said, we should see that it does not chase freight offshore—it is in nobody’s interests to see that happen—so the elasticities of demand and use, and the economics of particular routes are important. I have said to all those who have contributed the 170 responses to the consultation, people who have been to see me personally, and people who have seen officials personally, “Give us as much information as possible, so that we can try to model these effects to make a sensible, reasonable decision about levels.”

I just want to clarify whether there has been any dialogue between the Treasury and the Department for Transport.

I can assure my hon. Friend that there is constant dialogue between the Treasury and the Department about a range of issues. Officials from the two Departments have been in touch with one another to see how best we can model and design this tax: that is what the consultation has been about, in some detail.

I accept that there are arguments for saying that introducing a new tax with a different basis changes behaviour. It is question of how we can best anticipate and model that so that we can achieve our environmental and revenue-raising objectives without causing damage. Hon. Members have talked about the aviation industry and the positive effect it has, both technologically and economically, in our society. I am still trying to get out of my head thoughts of the hon. Member for Aldershot (Mr. Howarth) in his aeroplane, hopefully ahead of the major bomber that will be taking part in the flypast. The hon. Gentleman captures the enthusiasm of a lot of people who are interested in industries that were created a century ago and upon which the prosperity of our country has been based for many years. The Government have no wish to do anything but continue to encourage them to prosper and grow.

My hon. Friends the Members for Eccles (Ian Stewart), for South Derbyshire (Mr. Todd), for Derby, North (Mr. Laxton), for North-West Leicestershire (David Taylor), and for Aberdeen, South (Miss Begg) made important and pertinent points. I can assure all of them that each detail is being kept in view in the work that is going on to design the tax. We are aware of all the issues to do with chasing freight offshore, the issues affecting particular regional airports and, obviously, of the economic benefits that come with having an expanding regional airport doing business. Clearly, Aberdeen has its own international context, which my hon. Friend the Member for Aberdeen, South talked about a great deal. Taking all these things into account is an important part of our design for the tax.

Opposition Members and hon. Friends talked about the way in which the tax was being modelled, particularly about whether using the maximum take-off weight was the right basis for the tax. This is probably the best proxy that we can get, in the current circumstances, upon which to base the tax, because we are trying to find an objective, uniform measure or combination of measures that will define an aircraft’s flight, and maximum take-off weight is a reasonable one. Many hon. Members have said, understandably, that emissions would be a better basis on which to levy the tax, but the difficulty is the Chicago convention. Charging for emissions on routes has already been deemed illegal in the European courts, so it is dubious in the extreme whether we could charge a tax purely on emissions for those purposes, given our international agreements. We therefore have to find a proxy. We consulted on maximum take-off weight, and heard about some of the problems that have been raised in today’s debate. We are happy to listen to other observations about whether we could use nitrate emissions and various other things, but the key to levying a tax is that it has to be simple enough for people to understand in advance what their liability is likely to be, robust enough not to vary between different flights by the same aircraft, and stable enough. Again, if hon. Members in the Chamber have other views, or have been in touch with stakeholders who have other views, I should be happy to hear them. However, we are still of the opinion that maximum take-off weight is probably about the best proxy for emissions that we have at the moment.

Will the Minister give way?

Yes, but I have only two minutes and I wish to deal with another issue raised by my hon. Friend the Member for Manchester, Blackley.

Will the Minister confirm that it is not lack of data that has prevented the Government from taking a different opinion? Is she saying that it is a legal issue rather than a lack of data?

It is not only a legal issue. If the hon. Lady looks at paragraphs 2.14 and 2.17 of the consultation paper, she will see that we say that nitrous oxide emissions

“have been shown to provide a reasonably good correlation to emissions en route”.

However, we are not assured there is enough robust, comprehensive data to base a tax on those emissions. There are therefore some technical issues that would put uncertainty into the tax base, which is not desirable. A combination of reasons have led us to use maximum take-off weight as the best proxy that we have for pollution and CO₂ emissions in this instance.

My hon. Friend the Member for Manchester, Blackley asked whether we were confident that the proposed tax was legal. We have taken legal advice. We would not propose a tax that we thought was illegal, since that is not a sensible way for Governments to behave. I suppose one can always find a lawyer to take a contrary view, but the way things stand, our legal advice is that we have a robust legal case for taking this tax forward and we will proceed with that advice. My hon. Friend asked whether I would publish our legal advice. That is a nice try, but he knows that Governments do not publish their—

Order. We now move to the next debate.