Gummer-Goldsmith to recommend freeze on airport expansion

The Daily Mail is reporting that the Conservative Party's Quality of Life group under the chairmanship of John Gummer and Zac Goldsmith will recommend:

• "A moratorium on all airport expansion, including Heathrow, Gatwick and Stansted;
• The imposition of VAT on fuel for domestic flights;
• A "single flight tax" to shift tax burden from passengers to airlines;
• Domestic flight slots to be handed to long-haul trips instead."

The Mail also suggests that the BAA London airports 'monopoly' will be broken up and 4x4 cars will face higher duties.

The second and potentially very bureaucratic tax on a person's second annual foreign flight has apparently been ditched.

Higher green taxation will be used by George Osborne to fund lower taxes on families and business.

12.30pm update: The story is actually a London Evening Standard exclusive (Standard stories appear on Mail Online).  A Standard leader welcomes the "progressive thinking" in the report but warns that it could undermine the already "shaky" support for the Tories in the business community.

Comments

[JimJam]

As long as the report is joined up - £X B will be raised by this and used to fund the following cuts of £X B on the following taxes ...

[CCHQ Spy]

I worry about this. Air travel is a massive UK industry.

[Peter Turner]

Are politicians, Tory, Labour and Liberal, unable to address any matter without resorting to suggesting additional taxation as a conclusion?

[Alan S]

More tax. More controls on development. Effective subsidy of rail.

Is there anything in these recommendations that couldn't have come from a socialist?

[Ben Redsell]

Why don't we wait and see what is actually in the report before we start making judgements? This is the second "leak" from the report, the first was shown to be absolute rubbish and this could well be as well.

Don't believe everything the Brown loving Paul Dacre prints in the Daily Mail.

[powellite]

Not quite sure how this squares with Redwood's recommendations. He says we need a simplified planning system - these suggestions indicate more regulations and controls.

Why is there no-one out there arguing the case for airport expansion? Why are we the only country in the world in thrall to these idiot protesters in the long grass at Hayes? We need more runways at Gatwick and Stansted and a replacement for Heathrow. Let's started working out where it's going to go...

[Ted]

I would like to see less on air travel - which has become the whipping boy for Greenery - and more about what is to be done to cut emmissions and dependence on foreign oil and gas supplies for the big greenhouse gas generators, (power, domestic heating & lighting etc.). Air travel is and will remain a minor contributor.

The oft quoted 25%+ of emissions by 2050 for air travel assumes that the rest of targets have been met. If we met all power needs by nuclear and had electric cars then air travel would probably account for 90% plus but emission levels overall would be hugely lower.

[malcolm]

As we can see from the way the Daily Mail reported today these proposals may be less unpopular than many on this blog expect.
CCHQ Spy, it's true that many people in the UK are involved in the aviation industry but it is also true that BAA and two of the leading budget airlines are foreign owned.It will be quite difficult for them to present a compelling case to leave the aviation industry alone I think.

[Ken Stevens]

I hope the report will include some mention of integrated transport planning, notably hi-speed rail links on dedicated lines, inc direct connections with major airports, so as to minimise the requirement for shorthaul flights.

[215cu]

CCHQ Spy. Aviation is not a 'massive' industry.

In terms of GNP, it contributes the same as Water Treatment and Sewage.

And in terms of earnings, for every £1 spent by tourists in the UK, £2.32 is spent by us on holiday overseas.

As for expansion, why not have all these airports competing against each other and also a free market for landing slots rather than the distortions that monopolistics practices bring.

Then when the capacity runs out, let the market decide where it should go.

Incidentally, Powellite, it was Sipson where the protestors were, not Hayes. An entire village set to be destroyed because of an arcane, socialist predict and provide policy serving a monopolistic, conceited business that should have felt the forces of competition many decades ago.

[Lindsay Jenkins]

Oh dear - a vote winner for sure! Tax tax and more tax.

Yet more Conservatives who don't realise where taxes come from: 'A "single flight tax" to shift tax burden from passengers to airlines'.

Well who is going to fund the airlines' tax burden - the directors?

Please could we have some rational non- socialist proposals to make the Conservative Party electable.

Breaking up BAA would be a good start but no doubt the Labour government is already working on it.

[support the strivers]

This hits expansion. Why?

It is embarrassing to claim that the VAT and single flight costs hit "the airline not the passenger". Taxes filter through to the consumer of the product.

(If they don't realise this, does it not occur to our Shadow Treasury team to wonder why economic indicia such as factory gate prices are relevance to inflation stats.?)

Green taxes might play well in comfortable Lib Dem areas but they are completely wrong, morally AND economically, for the vast majority of people we should be aiming to help - the beleagured, overtaxed, undersupported, just keeping head above water "strivers" (to steal from the excellent Fraser Nelson).

[Justin Hinchcliffe]

Seems sensible to me...

[support the strivers]

Lindsay, yes I too suspect the Govt is working on breaking up BAA. Kitty Ussher triggered the whole discussion and debate about Heathrow out of the blue.

[michael mcgough]

Arrogant head in the clouds nonsense from the global warming patsies,
ranking alongside the anti yob extra drinks tax in its appeal to the average voter.

[Graham Checker]

I worry about this.

The trouble with saying "tax X to pay for Y" is that it fails to understand the reality of how the treasury operates. All tax revenues go into one giant pot to be carved up at spending reviews. We might well say all green taxes will be used to pay for public transport, but when the cards are down and the treasury is struggling for cash, spending will be allocated according to pressing political priorities, as always.

I don't expect very much money to (a) be raised by this and (b) to find its way into paying for public transport. It just doesnt work that way.

Secondly, you simply can't stop the expansion of air travel, unless you tax and restrict it to such a phenomonal degree it chokes the economy. We'd lose traffic and business to other nations, who'd emit the "gases" we didn't anyway. Net benefit? Less noise around Heathrow and crowded airspace, but that's about it.

Government should only tax to incenitivise behaviour switch when there is a viable, underused sensible alternative - like a high-speed rail network - otherwise, people will just pay more for no benefit.

The government should focus on clean power stations (mainly nuclear), encouraging micro-generation, subsidising the research of renewable fuels/energy and the development of a high-speed rail network. Positive steps to encourage moves towards greenery.

Tax and restriction will not be the way to success.

[215cu]

This is an economic argument, not just some touchy-feely green issue.

If aviation in this country is allowed to continue it's growth (5% annual). By 2050, bearing in mind our C02 emission target ambitions, if EVERYTHING else creating CO2 in this country stopped (power generation, road transport, household), aviation would use up the entire emissions amount.

Bearing in mind forthcoming carbon pricing legislation and its targets on a sliding scale to tighten up over the coming decades, cap them and reduce them. It's a case of getting aviation provision in this country competitive based on the soon to be largest factor to their profitability - CO2 pollution credits.

[Ted]

As regards taxing the airlines not the passengers - yes we pay in the end but currently Air Passenger Duty isn't a Green Tax as it is a poll tax. If I fly on a more fuel efficient, fully loaded plane I pay the same as I would on an less efficient, near empty flight. The case of an airline keeping its landing slot by flying an empty plane - so not paying either VAT on the fuel or having any passengers paying duty - shows what a bad tax the current one is.

[Adam]

Hopefully, the final report won't be so transport-focussed (although I can see why that would be the most interesting part). There are huge gains to be made in energy efficiency, for example, which merit interest and action.

[Surrey Boy]

Really poor effort.

"A moratorium on all airport expansion, including Heathrow, Gatwick and Stansted" - well, Heathrow is already operating at 98.5% capacity. Stansted will be full in a year's time. Gatwick is full at its busiest periods. There is clearly demand for more runway capacity, especially when you consider that Stansted, Heathrow and Gatwick have a combined total of 5 runways. Amsterdam airport has that number on its own!

"The imposition of VAT on fuel for domestic flights" - this would be a regressive tax. If I fly on business to Edinburgh, the company reclaims the VAT. An average punter would not be able to do so.

"Domestic flight slots to be handed to long-haul trips instead." - er, how does that work?? Easyjet operates 1000 domestic flights a week. Would they therefore be able to fly to New York a 1000 times a week instead? How would that cut carbon emissions from aviation?!

[ceidwadwyr]

I hope this is true. Taxation to discourage socially unacceptable behavior is no bad thing.

[ceidwadwyr]

Surrey Boy - long haul flights are more efficient carbon wise than short haul.

[Stephen Tolkinghorne]

Yeah, let's tax the ordinary working man and woman - who try to take advantage of the occasional cheap deal on air travel.

That'll be a vote winner ! No, really it will.

People just love paying more tax for the privilege of knowing that they get to support armies of welfare scroungers and immigrants.

They'll be even more keen, considering it's those nice multi-millionaire, posh Etonians (whose massive trust funds are safely squirrelled away in tax-havens) Gideon and David who are telling them what's good for them. Tax 'em and tax 'em proper.

[ceidwadwyr]

Putting vat on domestic flights and taxing 4x4 more is not going to affect the ordinary working man Stephen

[Moral minority]

"A "single flight tax" to shift tax burden from passengers to airlines".

The passengers will pay through massive fare hikes, even bigger with the Goldsmith and Gummer's VAT stealth tax.

You can also kiss goodbye to votes of domestic air travellers living in Scotland and northern England who will be forced onto over-crowded trains.

Do the Cameroons want to win the next election? It does nott look like it.

[Taxing aviation doesn't work]

Cut internal flights, & you overload the rail system. Probably be cheaper & easier to fly to London to Paris, then Paris to Glasgow, rather than take London-Glasgow train, so no gain.

Secondly replace current tax revenue streams with green taxes, & if they work as a disinsentive to polluting behaviour, then over time your revenue will decrease (as polluting behaviour decreases). Then you are left with a revenue shortfall. Osborne has never explained how he will overcome this.

[215cu]

SurreyBoy,

Domestic flights contribute 1.2% of the UK's CO2 output (Stern report).

Overseas flights contribute 1.5% of the UK's CO2 output (Defra numbers taken from UK fuel bunkers).

However, that doesn't take into account inbound overseas flights fuelled elsewhere. One model by Imperial College using air-traffic control data puts the number at 6 to 6.5%

And that is growing 5% every year as more planes are needed to take more passengers. Working on a business model that the fuel is not taxed, nor duty paid but working on a business model of flying planes half-empty to keep slots in use and selling last minute cheap price tickets on peak time flights and cheap price tickets all the time on the off-peak flights.

Also, Schipol is the Dutch national airport and they had the good sense to build well away from residents, build fantastic public transport infrastructure and then operate it 24-hours a day. To suggest that Heathrow, Gatwick and Stansted can compete is madness.

The last Conservative administration position was to stop Heathrow expansion at T5 and then to tout for a new super-airport on Maplin Sands for a large multi-runway airport that could operate 24-hours a day. This was to be combined with Crossrail services and rapid mass transit links.

Incidentally, I dispute your capacity figures also. Heathrow is having the capacity of Gatwick bolted on the side and it's called Terminal 5. If capacity was running that high, why are BAA demolishing the Queen's terminal to rebuild it for 2012?

Gatwick is operating under a restrictive covenant until 2019 and has plenty of capacity until then. The issue of capacity gets urgent in 2030, still plenty of time to sort this out.

This proposal is eminently sensible until a global tax framework can be put in place for aviation fuels. Many european countries already have national fuel based taxes for aviation in place and it hasn't hurt business one bit.

[Stephen Tolkinghorne]

"Putting vat on domestic flights....is not going to affect the ordinary working man Stephen"

I don't quite understand what you're saying. Is it that the ordinary working man doesn't use internal domestic flights ?

I do hope you're not saying that, and that I've just missed something.

[William Norton]

Taxing aviation doesn't work: correct, revenue from sin-taxes are supposed to fall off as the tax 'works' in stamping out the sin. It only creates a problem if you haven't budgetted for an equivalent tail-off in expenditure. So we can't really judge the shift to green taxation without knowing what the overall expenditure plans will be, but 'sharing the proceeds of growth' means some sort of growth-rule to curb the increase in expenditure.

[Traditional Tory]

Splendid! This is perhaps the first policy to really excite me.

The airplane, and its selfish and unappealing users, is eating our country. Time to ring down the curtain on any further extension of airports, cheap flights etc.

Let people take their holidays in the UK and benefit our home economy. My wife and I detest airports, planes and delays so we very seldom holiday abroad. If we can do it, and Brown can do it, so can others.

Not sure this is a vote-winner, but who cares?

[Northern Tory]

Stopping the expension of regional airports like Newcastle International makes no sense economically, politically, or environmentally.

[Moral minority]

The "ordinary working man" and his family use domestic flights to get to major airports like Heathrow.

These proposals are an attack on such holidays, increasing the cost by hundreds of pounds. Families cannot reclaim VAT or offset increased fares (that what the transfer from domestic to long haul transfer plan will do) against corporation tax. The businessmen (who can) will use the freed up space, vacated by working families, on the fewer domestic flights available.

This report really is the work of the nasty party. It is a viscious attack on the family holiday. Truly disgusting and uncaring!

[TaxCutter]

I suppose if like Gummer and Goldsmith you don't have a job, then you need not worry about going on holiday.

[Traditional Tory]

These proposals are an attack on such holidays,

As I said, they can holiday in the UK.

Why are we encouraging unpatriotic holidaymaking which boosts overseas economies?

[Justin Hinchcliffe]

"This report really is the work of the nasty party. It is a viscious attack on the family holiday. Truly disgusting and uncaring!"

This quote shows that Moral Minority isn't a Conservative. More UKIP or Labour, IMHO.

[Moral minority]

Traditional Tory, would you want to holiday in Britain after this year's atrocious summer weather?

Tax cutter, Gummer does have a job. He owns a large environmental consulting business. Conflict of interest?

[215cu]

Moral minority,

Let's put it another way. The national annual commute to work emits the same amount of CO2 as the entire aviation industry in the UK.

A motorists pays VAT on their car (if it's a new one), annual vehicle excise duty, VAT on their insurance, VAT on servicing and spares, then they pay duty on the fuel and then VAT on the fuel and the duty.

The aviation industry pays.... erm... well no VAT on the planes, no VAT on anything they sell in the airport, the passenger pays a duty on their ticket. As for the fuel? No Duty and no VAT. They pay corporation tax but then all businesses above a threshold pay corporation tax. All other businesses with very few exceptions pay duty and VAT on the fuel they use, that includes haulage and public transport.

So who is being the nasty party here? How much more important is enabling people to get to work without that ridiculous burden of tax? Bearing in mind, motorists have to face the prospect of road-pricing.

Motorists contribute 4 times the amount required to keep the road infrastructure running.

The aviation industry pays almost nothing towards the public infrastructure required to keep them running.

In fact, if they were taxed on their fuel consumption even to the levels of other forms of public transports it would increase their contribution to the Treasury four-fold!

That's the whole point.

As for families that fly from Heathrow, they are hardly 'ordinary working man' or woman. Heathrow predominantly serves transit passengers (around 40-50%) going elsewhere in the world, the rest are equally split between business and leisure. Most people going on holiday fly from regional airports and/or Gatwick/Stansted/Luton. Hardly requiring a domestic local flight.

Incidentally, BA have been cutting domestic flights for years to/from Heathrow and not a squeak of protest from potential customers.

[Moral minority]

COMMENT OVERWRITTEN BY THE EDITOR.

[Ken Stevens]

Surrey Boy | August 28,12:54
"..Stansted, Heathrow and Gatwick have a combined total of 5 runways. Amsterdam airport has that number on its own!"

Posted by: 215cu | August 28, 13:25
"..Schipol is the Dutch national airport and they had the good sense to build well away from residents, build fantastic public transport infrastructure and then operate it 24-hours a day. To suggest that Heathrow, Gatwick and Stansted can compete is madness..."

Schiphol has a variety of runways for different circumstances, inc minimising noise disturbance over surrounding areas.
" For take-offs the Aalsmeerbaan can only be used in southern direction. The Polderbaan can only be used for take-offs to the north. Moreover there are basically no take-offs from the Aalsmeerbaan, Buitenveldertbaan and Schiphol-Oostbaan between 2300 and 0600 hours. At that time of day the Zwanenburgbaan is also out of use for take-offs to the north.." [--that was more info than necessitated but I thought it rather charming that the runways had names!]

It doesn't mean five runways in use at the same time. With its two main runways, Heathrow alone handled more aircraft and passengers than Schiphol in 2006. Schiphol is nevertheless a rather nice airport and it has a 'proper' railway station with international destinations, as opposed to just an airport/city centre link.

A major constraint on Heathrow is surrounding infrastructure. Have you tried getting into the airport by road lately?

[Justin Hinchcliffe]

**Yawn**, MM. I never made those libellous comments and the matter is being taken up by the PCC. Why are so afraid to use your own name, MM?

[215cu]

The major problem with Heathrow is it was built in the wrong place under the pretence of an RAF Bomber Station. The fact there is a 'kink' in the M4 J4b to J3 near Heathrow is due to the plans in the late 1940s to build more runways there.

Bearing in mind, the requirement for large jets didn't exist in 1948, they simply hadn't been invented!

The problem now is that flights in all directions from and towards Heathrow approach over the most densely concentrated conurbanations in Europe.

As for the infrastructure, well there's a nice private fast rail link to Heathrow but the Tube and Bus services are lamentable.

Heathrow is a 1950s solution to a 1950s desire to fly.

There is an apt saying "You can't polish a turd."

Quite.

[George Hinton]

Why are we in the thrall of Zac? a self-opiniated rich kid with an agenda that he has created to give him something to do other than spend his fathers ill-gotten millions.
The party would do well to deal with real people, not these wretched fantasists, who want to jump onto the political bandwagon and impose their views and ideas on a sceptical public.
As for the proposals, oh wonderful, nothing like raising the price of cheap internal flights to match that of the railco's and eliminate competition.

[Surrey Boy]

215cu:

Wrong - domestic UK flights contribute around 0.5% of total UK C02 emissions. That is the government figure.

International flights departing from the UK account for just over 5.5%.

Schipol was alowed to provide more capacity than was necessary - its called long term planning. The airport is not allowed to be operating at more than 70% capacity at any one time.

BAA is demolishing the Queen's terminal plus T2 because once T5 opens it provides a once in a lifetime opportunity to replace it without affecting caapcity. T5 was not built to provide additional flights - it was built to provide state of the art faciltiies for passengers.

Gatwick is indeed operating under a restrictive covenant until 2019 and only gets a new runway if Heathrow fails.

"Many european countries already have national fuel based taxes for aviation in place" - indeed, but every single one of those countries also imposes VAT on all forms of public transport.

[support the strivers]

There is a chunk of the UK who I call the "strivers", copied from Fraser Nelson, whose votes we should look to attract.

First, the moral argument - because these people are the backbone of Britain and, when they WERE educated properly via, inter alia, grammar schools, highly achieving men and women were produced.

Secondly, the practical argument - they live in the marginals we desperately need to win.

They MIGHT vote for us as it is but it's a gamble - we aren't showing them many reasons to.

[powellite]

"The airplane, and its selfish and unappealing users, is eating our country."

"Traditional" Tory - that's a pretty unfair generalisation. What about people who are visiting relatives or friends abroad?

"Why are we encouraging unpatriotic holidaymaking which boosts overseas economies?"

Damn those foreigners, taking all our money! Not only do they come over here, taking our jobs, they stay at home and profit from us as well...Seriously, should we only holiday British and buy British? I would tentatively suggest that this brand of autarky might have been appealing in the 1930s, but might not be the best way forward at the moment...

[215cu]

Surrey Boy,

Really? Want to give your sources? I have. Stern and Defra.

So according to you there is no capacity now or capacity to demolish and rebuild two terminals at Heathrow over the next six year? Please decide.

T5 was built for the additional capacity of another 30 to 35 mppa (million passengers per annum) basically another Gatwick on the side of Heathrow. Whilst the number of aircraft movements at Heathrow are capped at 480,000 per year (to allow for mixed mode runways and no night flights) passenger movements are not capped.

So if you can use larger planes to get more people through the airport - fine.

Just a shame they put more shops in as well.

What the Conservatives proposing is removing the short haul flights from Heathrow, bearing in mind these on average create four times more CO2 than a train, it would free up flight movement capacity in the airport for higher mppa numbers.

So no need for a Third Runway then which is for short-haul flights as it's only a 2000m one.

Incidentally, a sentiment argued for by Sir Richard Branson himself when interviewed by EarthMatter magazine. Y'know? The boss of Virgin Atlantic.

So the Conservative proposal is a straight progressive tax on the emissions from the journey taken rather than a regressive duty tax. It's fairer than the current system.

As for taxation, I've stated rail and road pay far higher taxes than aviation. Rail over the same distance emits less CO2. In the case of Eurostar, actually gets you there quicker too.

Also, in terms of contribution to GNP, rail is a far more important contributor to the economy yet they have to pay higher fuel based taxes but they emit less CO2.

Is that fair?

I remember the last time the aviation industry said the sky would fall in when duty-free was ended. Plenty of aviation bosses saying 10,000 jobs would be lost and 'hard working families' with no breadwinner. That was nearly 10 years ago.

Still hasn't happened.

[David T Breaker]

Everyone, calm down a little.

"Is there anything in these recommendations that couldn't have come from a socialist?"
Yes, the tax cuts.

Tax is being shifted away from families and businesses to aviation. Any tax harms the industry it's imposed upon, any tax cut helps the industry it's targetted at. Now pick, do you want to tax aviation or small businesses?

Small businesses are the foundation stone of the economy and need our help through lower taxes more than BAA or Ryanair, and politically there's more votes in them too.

Yes if the tax reduces flying it will net less revenue, but it's not going to have that bigger effect and any decrease will be offset by growth in the lower taxed small business sector.

I would also rather have lower personal taxation so I can decide where to spend my own money myself, rather than have the Govt subsidise aviation with VAT exemptions so I get slightly cheaper flights. I'd rather have more money and more expensive flights, that way I'd have the choice. People can spend their own money better than Govt, and I bet that'll boost the British economy more than having cheaper flights.

Putting taxes on aviation will let us fund targetted tax cuts which, like in Canada, people notice more and swing voters our way more. A few headlines about Tory taxes on flying will be lost in the long run amid headlines on abolishing inheritance tax or cutting the standard tax rate etc. It will also let us target tax cuts that will boost growth more, such as stamp duty on shares. We should tax in a way that will damage growth least, and cut taxes in a way that boosts growth most, i.e. £1bln tax cut for small businesses will do more good than the harm done by a £1bln tax on aviation, and so making a net gain.

Airport expansion also grossly infringes property rights, which are the basis of a free, capitalist country. It's not up to the Govt, BAA, Powellite or any one of us here to tell people their property is being compulsary purchased for a runway. In my opinion that is State dictat, how very socialist.

Transit flights should be taxed the most. We gain nothing from someone landing here then flying off again. Then domestic flights, which could be better served by a high speed rail network (following existing roads and railways).

And why does everyone think "strivers" are only interested in cheap flights, as if their only interest in life is a cheap fortnight in the Costa? I think tax cuts on small businesses and families will be of more interest than making airlines pay VAT like the rest of us already do.

If Amsterdam already has all these runways that aren't near capacity, can't we encourange them to build a high speed rail-link from the Channel Tunnel to it?

[215cu]

Well said Mr. Breaker, I couldn't agree more.

[Jomo]

Gummer has always been something of a flat earther. Goldsmith is hardly an icon of the unbroken society.

I hope these proposals are recycled as some as possible. What a report to appear when the there are other much more important issues to focus on. Where's the grid?

[TomTom]

If Amsterdam already has all these runways that aren't near capacity, can't we encourange them to build a high speed rail-link from the Channel Tunnel to it?

High-speed rail link from Zeebrugge and Hoek van Holland to Schiphol and to Duesseldorf is all those travelling from Hull or Leeds-Bradford would need.....

After all it is better to feed Northern England into Brussels, Amsterdam, Paris, and away from London