By Joseph Willits
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Chloe Smith's appointment as Economic Secretary to the Treasury caused a bit of a stir, so it's worth clocking her first Commons speech in the post, which she made yesterday. Smith spoke of the need to be “frank about the situation in which we find ourselves” with regards to Air Passenger Duty (APD) – praising her predecessor, Justine Greening (an even bigger beneficiary of the reshuffle) for spending time engaged in dialogue with airports, airlines, and other organisations in the industry, and pledging herself to do the same.
Smith said that due to the importance of tackling the deficit and the need to “steady the ship” after inheriting a “fiscal deficit of historic proportions", she could not “promise the House that APD will be cut in the near future”.
However, she acknowledged MPs' concerns about APD – in relation, for example, to changes made by the previous government in 2009. Banding structures on the APD, and the “anomalies” in them, have prompted concern, she said, and the Government has “received a number of representations from those who feel that flights to Caribbean destinations are unfairly penalised”. On this particular issue, like Greening, Smith promised to “hold a series of meetings with stakeholders on that subject” – and could thus only give “assurances” on the continuation of dialogue with representatives from the Caribbean, rather than declare a change in policy.
An “unfairness in the system” has been addressed she said, with the Chancellor’s announcement that “APD would be extended to passengers flying aboard business jets”.
APD she said, was “fundamentally a revenue-raising duty”, raising £2.5 billion each year:
“The forecast revenues that will result from aviation joining the ETS are only around £0.1 billion a year, reflecting the fact that under the relevant EU directive most of the allowances for the system will be given to airlines for free. In looking forward, however, the Government will assess the revenue requirements from aviation taxes, including those from the ETS, in the round”
To conclude, Smith talked of the “scale of the challenge that confronts us” of the environmental impact of aviation. She said it was crucial that the response to the issue should be an international response, hence the Government's support for “the inclusion of aviation in the EU emissions trading system from 2012”. Since 1990 CO2 emissions have more than doubled, and the aviation industry counts for 6% of those emissions.