Future of Aviation (HC 499-vi) Transport Committee 15 Jul 2009

Q579 Mr. David Clelland: Does that mean that that levy [air passenger duty] is going to be ring-fenced to use for reducing carbon in that area?

Lord Adonis: All levies of this kind, of course, go into the general pot so far as the Treasury is concerned.

Q580 Mr. David Clelland: The objective of the levy is to deal with the impact of air travel on the environment but the actual levy is not going to be necessarily used for that purpose.

Lord Adonis: The Chairman said what is the primary purpose; I said the primary purpose was to meet the environmental impacts of aviation but it is also a contribution to the wider cost of public services and of course the Treasury would not accept a case for ring-fencing it given the wider role.

Q581 Chairman: Would you be concerned if air passenger duty was seen to threaten the viability of some regional airports?

Lord Adonis: We do not believe that it does so.

Q582 Chairman: Has a case ever been put to you that it does and how many representations have you made?

Lord Adonis: We think it is appropriate. I will be quite frank, Chairman, I do not think aviation has a credible future unless it is able to make a bigger contribution to meeting its environmental costs and we therefore stand by decisions we have taken in respect of air passenger duty.

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Q595 Mr. David Clelland: Is there not a big problem with this because at the moment air passengers can voluntarily pay a carbon offset when they travel? They pay an additional fee and that money specifically goes to reducing carbon emissions. If we put on a new air passenger duty is that not going to encourage passengers not to pay their carbon offset, yet the air passenger duty is not going to go for the purposes of reducing carbon so we are actually going to lose the benefit for the environment?

Lord Adonis: The funding from air passenger duty like all sources of income to the Treasury goes on all of the purposes of government. One of the principal purposes of government, as we have seen today in Ed Miliband's statement, is carbon reduction. In my Department we very recently announced a £250 million fund to incentivise motorists to buy ultra low carbon or electric vehicles.

Q596 Mr. David Clelland: But how is it going to help if passengers now say "I am not going to pay the voluntary levy because you have put this additional tax on us"; how is it going to help the environment?

Lord Adonis: There are many different sources of funding for carbon reduction. The Government is responsible for the public funding and that public funding goes into a pot, one of the principal objectives of which is carbon reduction so it is perfectly sensible what we do now. The decisions that individuals make on their account thereafter are a matter for them.

This is an uncorrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee. Neither witnesses nor Members have had the opportunity to correct the record. The transcript is not yet an approved formal record of these proceedings.

The full transcript may be read here.