7. Debate on Air Passenger Duty: The case for devolution

Part of the debate – in the Senedd at 4:27 pm on 2 July 2019.

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Photo of Rebecca Evans Rebecca Evans Labour 4:27, 2 July 2019

Diolch, Llywydd. I'm pleased to open this debate today. On 11 June, the Welsh Affairs Committee published the findings of its inquiry into the devolution of air passenger duty to Wales. We wholeheartedly welcome the unanimous recommendation of the Welsh Affairs Committee that APD should be fully devolved to Wales.

From the outset, the committee recognised that the Welsh Government has been calling on the UK Government to devolve APD and that the UK Government has made clear its reluctance to change existing arrangements. As a result, the inquiry naturally focused on considering the arguments for and against APD devolution. The Welsh Government's written evidence submitted to the committee highlighted the strength of support across this Chamber and across the business, tourism and aviation sectors in Wales for devolving APD, and this support is also reflected in today's joint motion.

The devolution of air passenger duty has been a long-running issue and a point of consternation for all of us. The recommendation to devolve APD to Wales featured in the Holtham commission's first report on funding arrangements for Wales, published 10 years ago this week. Devolution of APD also remains the only significant recommendation of the Silk commission yet to be fulfilled by the UK Government. A decade on from Holtham, decisions on how much income tax Welsh taxpayers pay are made here in Wales, with decisions on rates being made by the Welsh Government every year, which are then ratified by the National Assembly. The introduction of Welsh rates of income tax follows the introduction last year of the first new Welsh taxes in over 800 years—land transaction tax and landfill disposals tax. Together with local taxes collected by local authorities, which have been devolved since 1999—council tax and non-domestic rates—Welsh taxes are now raising some £5 billion each year for our public services. And yet APD, with current revenues generated in Wales of less than £10 million each year, is still a reserved tax and remains within the gift of the UK Government.

The intransigence of the UK Government's stance on devolving APD is further compounded by its previous decisions to devolve APD to both Scotland and Northern Ireland. There is no justification for Wales being treated less favourably and I welcome the committee's specific recognition of the current inequity in the devolution settlement. And this speaks to a wider issue: when asserting whether a power should be devolved, it's the merits of devolution itself that should be the concern of the UK Government and Parliament, not speculative judgments on any future policy decisions Welsh Ministers may or may not make. It's clear to me that devolving APD would be entirely consistent with the UK Government's approach to devolving taxes within existing areas of devolved competence, yet the UK Government's evidence to the inquiry highlighted its concerns that Bristol Airport would be significantly impacted if Welsh Government were to reduce or abolish APD, despite independent peer-reviewed evidence to the contrary. This is clearly not a sufficient or appropriate basis to limit the devolution of powers to Wales, which would be of benefit to our citizens.

In coming to its conclusion, I would like to thank the committee for remaining focused on the evidential and constitutional grounds for devolution of APD to Wales, rather than a premature assessment of potential future policy decisions. And to be clear, there has been no change in the Welsh Government's position.