Prime minister concedes Scottish APD changes could create ‘unfair tax competition’

Prime minister David Cameron has conceded that there will be “unfair tax competition” for airports in the north-east of England if Scotland abolishes Air Passenger Duty.

He reportedly said that a lower APD rate in the region is a “positive suggestion” and that “we will do what’s necessary to make sure that England’s regional airports can succeed”.

The comments, reported in an interview to The Northern Echo, are the first time the government has committed to lower airport taxes south of the border, if the Scottish administration acts first under devolution plans.

Cameron revealed that a list of options would be drawn up within months of a Conservative election victory to examine how to vary rates of APD.

He sought to head off the growing concern of airport bosses about the threat posed by much lower – or abolished APD – in Scotland, saying: “I get it.”

Cameron said: “We are not going to accept a situation where there’s unfair tax competition. I’m very keen to make sure that Newcastle airport has a bright future and I think it does.

“We will do what’s necessary to make sure that England’s regional airports can succeed.”

British Airways, whose passengers paid £646 million in APD last year, jumped on the comments by reiterating calls for the tax to be abolished across the UK.

Adjustments at Newcastle airport will lead to a domino effect across England with Leeds Bradford and Manchester airports demanding similar concessions to remain competitive, according to the airline.

Willie Walsh, chief executive of BA parent company International Airlines Group, said: “The prime minister’s words speak volumes. He has finally conceded that APD damages growth and stifles job creation.

“If APD is on the way out in Scotland, it needs to be scrapped UK- wide.”

Thomas Cook Group chief executive Peter Fankhauser said: “It’s important that consumers are not faced with a confusing array of different taxes.

“Following the work to reduce the burden of APD on the British taxpayer by abolishing the tax for children, we’d call on the next government to ensure a level playing field if future reductions in APD take place in Scotland.

“Over the last year, the changes announced have signified that the government has taken the impact of APD on both the industry and consumers seriously and we look forward to further reform in the next Parliament.”