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Financial Assistance to Industry

Debated on Monday 24 May 2021

The Committee consisted of the following Members:

Chair: Mr Laurence Robertson

Abbott, Ms Diane (Hackney North and Stoke Newington) (Lab)

Barker, Paula (Liverpool, Wavertree) (Lab)

Beckett, Margaret (Derby South) (Lab)

Caulfield, Maria (Lewes) (Con)

† Courts, Robert (Parliamentary Under-Secretary of State for Transport)

† Kane, Mike (Wythenshawe and Sale East) (Lab)

McDonagh, Siobhain (Mitcham and Morden) (Lab)

† Mak, Alan (Havant) (Con)

Mann, Scott (North Cornwall) (Con)

Mishra, Navendu (Stockport) (Lab)

Mohindra, Mr Gagan (South West Hertfordshire) (Con)

Morris, James (Halesowen and Rowley Regis) (Con)

Pursglove, Tom (Corby) (Con)

† Rimmer, Ms Marie (St Helens South and Whiston) (Lab)

Rutley, David (Macclesfield) (Con)

† Throup, Maggie (Lord Commissioner of Her Majesty's Treasury)

Tomlinson, Michael (Mid Dorset and North Poole) (Con)

Yohanna Sallberg, Committee Clerk

† attended the Committee

First Delegated Legislation Committee

Monday 24 May 2021

[Mr Laurence Robertson in the Chair]

Financial Assistance to Industry

I remind Members to observe social distancing and to sit only in places that are clearly marked. I remind them also that Mr Speaker has stated that masks should be worn in Committee, other than when speaking. Hansard colleagues would be most grateful if Members sent their speaking notes to hansardnotes@ parliament.uk.

I beg to move,

That the Committee has considered the motion, That this House authorises the Secretary of State to undertake to pay, and to pay by way of financial assistance under section 8 of the Industrial Development Act 1982, sums exceeding £30 million with an estimated total sum of £44 million, to be made available, through the renewed Airport and Ground Operations Support Scheme announced in the 2021 Budget, to eligible commercial airports and ground operators to compensate for the damage caused by COVID-19, on the basis of business rates liabilities or COVID-19 losses—whichever is lower—from April-September 2021, subject to certain conditions and a cap of £4 million per eligible company.

It is a great pleasure to serve under your chairmanship this afternoon, Mr Robertson. With your leave, before I speak to the motion, I will say a word or two about the situation in Belarus.

Belarus’ reported actions represent a danger to civilian flights everywhere. The whole international community has an interest in ensuring that civilian aircraft can fly safely and unmolested. That is why we are calling for the Council of the International Civil Aviation Organisation to look into the matter urgently. In the meantime, my right hon. Friend the Secretary of State for Transport is taking the following actions: we will be issuing an advisory notice to strongly advise all UK airlines to cease overflights of Belarusian airspace, and we are suspending Belarusian airline Belavia’s operating permit, with immediate effect; furthermore, the Civil Aviation Authority will be instructed not to issue any further ad hoc permits to Belarusian carriers. I am sure all hon. Members agree that those immediate and decisive measures are necessary to protect both the right to freedom of expression and the safety of international travel.

The motion before the Committee comes during one of the most challenging periods faced by this country. The covid-19 pandemic has affected every aspect of our nation, and the Government have put in place an unprecedented package of measures to support the economy. The Government recognise the challenging circumstances facing the aviation industry, which continues to operate with demand significantly below pre-pandemic levels. In total, we estimate that by the end of September 2021, the air transport sector will have benefited from about £7 billion of Government support since the start of the pandemic. That includes support through loan guarantees, support for exporters, the Bank of England’s covid corporate financing facility and the coronavirus job retention scheme.

The Government recognise the importance of protecting aviation infrastructure in the short term, to continue the operation of vital services that we rely on for passengers and freight, and of avoiding any longer term retrenchment of the sector but preserving capacity and connectivity, so that as recovery gains pace we are able to build back better. That is why in November I announced the introduction of the airport and ground operations support scheme to support eligible businesses and limit the harm caused by covid-19 losses.

The scheme was designed by the Department for Transport under pressure of circumstances and limited time. It was opened at the end of January for three weeks, with payments made to successful applicants by April. Over the winter, it became clear that the situation remained challenging. Despite the recent opening of international travel, on 17 May, measures remain in place at the border to protect public health. It is therefore right that we continue to support the sectors hardest hit by covid-19. That is why the Chancellor announced the renewal of the AGOSS in the Budget.

The renewed scheme continues to provide support to eligible airports and ground handler companies up to the equivalent of their business rates liabilities or covid-19 losses, whichever is lower, from April to September 2021, subject to certain conditions and a cap per claim of £4 million. To provide financial assistance to the sector, the Government intend to use powers contained in section 8 of the Industrial Development Act 1982. Under the Act, Parliament’s consent to the use of the powers is required where a project will exceed £30 million. Given the need to continue to protect our vital aviation infrastructure and support the recovery, I ask the Committee to support the motion.

It is a pleasure to serve under your chairmanship today, Mr Robertson. I congratulate you on your football team, Bolton Wanders, gaining promotion to league one. The Trotters have an astonishing history of football in the north-west. As a Manchester City fan, having watched them lift the premier league title yesterday and having worked for the club in the 1990s on a zero-hours contract—the lowest paid, highest status job I ever had; my job now is well paid, but I leave hon. Members to decide the status of the work we do—I can say that there is hope for all clubs in the future. That is why the proposed superleague was such a bad idea.

I wholeheartedly concur with the Minister’s comments about Belarus. The news yesterday of a Ryanair flight being diverted from its course to land in Minsk by the Belarusian Government is very troubling. We rely on free and open skies for our aviation markets to work. I join the Minister in condemning this act and support the strong response that the British Government have just announced—suspending Belavia’s licence to operate and avoiding Belarusian airspace. It is the best we can do in a limited period, and I am sure there is more we and the international community can do to stop what Ryanair called “state-sponsored hijacking” in the sky.

I welcome the extension of the AGOSS for a further six months. The scheme provided up to £8 million in rates relief to airports and ground operators last year, and it will offer £4 million in the first half of this year. While the scheme is indeed welcome, financial support for the aviation sector is something Labour has been demanding for over a year. The Minister laid out certain measures the Government have taken, but did not provide the context of what has been happening. The money provided under the motion will not cover even the rates bill for our largest airports. Manchester Airport, which is in my constituency, is losing tens of millions of pounds every month, even with the bare minimum of operating costs and while running a skeleton staff. The £4 million relief this year barely touches the sides.

Realistically, with our domestic vaccination programme extending into the autumn and with very few overseas destinations on the green list, aviation will be grounded for much of the rest of the year. It is great to see confidence coming back in the past few weeks, particularly about Portugal, but it remains a worrying time for the industry. Without further financial support, the chances of failures in the sector are becoming very real. The UK has the third largest aviation sector in the world, but we are now at risk of falling behind other countries, which are supporting their aviation sectors fully. For example, France has bailed out Air France-KLM, and the US has offered tens of billions of dollars to its sector.

The UK Government have halted all covid-related appeals of business rates and said they will introduce a new rates relief fund to provide support for businesses that need it, but they have yet to set out any details of how the new fund will work. Retrospectively changing tax laws has created huge financial uncertainty. The Government need to confirm the terms of their rates relief fund as soon as possible. I know the Minister shares my passion for our aviation industry. I hope he will work with colleagues in government and ensure that the sector gets the vital support it needs, so that it gets back in the air as soon as possible.

Finally, let me take this opportunity to say that, without our staff, parliamentarians are nothing. I lost a member of staff, who retired at the age of 67, a matter of weeks ago, and now, after four years with me, my parliamentary assistant Steve Kay, who writes these fantastic speeches to hold the Government to account, is off for a bigger and better job in the private sector. I wanted to put on the record my thanks to him for all his hard work to keep Government and Opposition functioning, and particularly to keep the Government on their toes.

I am grateful to the hon. Member for his comments, particularly on the Belarusian situation and the Ryanair flight. I echo his comments about our parliamentary staff—I would echo his tribute to my own staff. It is a perhaps under-recognised aspect of this place that there are people working very hard for very little recognition, helping constituents, supporting constituency MPs and holding the Government to account, day in, day out. They make this place tick and they make our democracy work. The hon. Member is quite right to pay tribute to his long-serving staff, and I do so as well on behalf of all Members.

I share the hon. Member’s passion for the aviation sector and I agree with every comment he made about the importance of the sector. I am determined to see it get back in the air and fighting fit as we build back better after the pandemic. I entirely understand the challenges facing the aviation sector, which is why I hope the Committee will support the measures in the motion today. The hon. Member suggested several areas where we could to further. I am grateful to him for raising those points and will continue to work him and others in all parts of the House and in the sector as we consider what measures we can take. I believe the measures set out in the motion strike an appropriate balance between supporting airports and ground handlers and protecting the interests of the taxpayer.

The hon. Member mentioned the rates relief fund. I confirm that work is ongoing between Her Majesty’s Treasury and the Ministry of Housing, Communities and Local Government to lay out the terms of the scheme. I cannot give any more precise details today, but I understand that as soon as further details can be provided, they will be.

I am grateful for the hon. Member’s comments and questions. As we start to relax the restrictions and to rebuild after covid-19, the picture is encouraging. Of course, we have to note that the recovery is cautious and remains under constant review. Despite the efforts to drive down the incidence of covid-19 and the success of the vaccination programme, the aviation sector remains sensitive to the recovery here and elsewhere, and demand is of course still down on pre-pandemic levels. It is right that we continue to support our commercial airports and ground handlers, preserving and protecting jobs and safeguarding vital infrastructure.

Question put and agreed to.

Committee rose.