Monday 20 February 2017 4:15 am

We won’t build a Global Britain with the highest taxes on air travel in the world

The Prime Minister – in her Lancaster House speech last month – set out her vision for Brexit and her goal of “a truly global Britain”. She has been clear that she seeks to lead “a country that reaches beyond the borders of Europe” and “a country that goes into the world to build relationships”.

As we disentangle ourselves from the EU those are the right aspirations, but if they are to become a reality the government has a duty to implement “A Plan for Britain” that will truly enable UK businesses to travel the world to strike the export deals on which our country’s future prosperity will be built.

It is clearer than ever that the achievement of these strategic goals is simply incompatible with the Treasury’s current stance of maintaining one of the highest global taxes for air travel in the world. That is why the chancellor must seize the opportunity to cut Air Passenger Duty (APD) in the upcoming Budget.

Consider the facts: today the UK’s APD is the highest aviation tax levied on passengers departing from airports in the EU, Norway and Switzerland. It is more than three times the rate in France, more than twice the rate in Germany and nearly twice the rate in Italy. But it is worse than that – UK APD is not just the highest among EU countries, but the highest globally, above those of key international competitors such as the United States and Australia.

In one part of Whitehall, the Department for Transport, ministers and civil servants recognise the importance of developing policies over the next decade to help UK aviation to grow sustainably. That is why they will shortly be publishing their plans for a new UK aviation strategy, and why they have recognised the importance of ensuring that, post-Brexit, the UK retains market access to the EU, US and other third party countries, in recognition of the crucial role aviation plays in an island nation.

But their efforts will be largely in vain if the Treasury cannot be persuaded to abandon hopelessly uncompetitive APD rates that are a major obstacle to UK businesses seeking to follow the Prime Minister’s lead by going into the world and building new trading relationships.

The truth is that companies are not going to be able to reach new markets, especially from regional airports where there are currently few or no direct long-haul links, unless the government appreciates that the high aviation tax environment which it has created inhibits airlines from opening new routes to and from key target markets.

Of course, it is good news that the government has given the green light to the construction of a new runway, but the fact is that we will massively reduce the impact of expanding aviation capacity if we don’t have a competitive tax regime that will enable us to take advantage of it. Saying yes to a new runway while refusing to act on APD would send the kind of mixed signals which would be the very opposite of a coherent strategy for a truly global Britain.

Equally, it is encouraging that ministers and civil servants seem to understand that retaining access to a fully deregulated and liberalised EU aviation market and creating opportunities for the UK to strike new air services agreements with other countries will be vital for the UK.

The government should also ensure that aviation-related negotiations and decisions are prioritised during the EU withdrawal process – but unless the UK tax environment is competitive, all the air services agreements in the world won’t make it viable for airlines to open new routes to and from the UK.

The Prime Minister, who is also First Lord of the Treasury, must ensure that her made-in-Downing Street plan for a country reaching beyond Europe, whose business people will travel the world to build new relationships, is built on a successful aviation sector. When the chancellor announces his plans for the coming year on 8 March, he must take a decisive initial step towards a competitive aviation tax regime for the UK.