TAXES could be cut or scrapped at North-East airports, under Government proposals – but cash-strapped local councils would have to foot the bill.

Control of air passenger duty (APD) would be devolved to town halls to head off Scotland’s plans to curb or end the levy, a Treasury paper suggests.

The idea follows David Cameron’s pre-election pledge – to The Northern Echo – not to allow “unfair tax competition” to hurt Newcastle and Durham airports, if Holyrood acts.

But the sting in the tail is the North-East Combined Authority (NECA) would have to pay up for the lost APD – an estimated annual bill of £45 million at an airport the size of Newcastle.

Phil Wilson, the Sedgefield MP, who has campaigned for lower APD in the North, immediately warned that could be too high a “burden” for hard-up local councils.

Scotland enjoys far higher public spending under the Barnett Formula, but English local authorities are expected to be hit by a further £3.3 billion in cuts next year alone.

Mr Wilson welcomed the publication of the consultation paper, but added: “This needs to be looked at in further detail.

“I think the Government needs to take the initiative and pay for different rates around the country, rather than out the onus on local authorities to pick up the tab.

“That would be an extra burden on them when they are facing massive cuts in their budgets anyway.”

The Treasury document – prompted by the devolution of APD to Scotland - puts forward three options:

*That APD be “switched off” – partially or fully – in an area choosing to do so and central Government funding cut to make up for the loss to the Treasury.

*Higher APD rates on flights from more “congested” airports – Heathrow and Gatwick – than at regional airports.

*Investment aid at the smallest regional airports.

The document appears to favour the first option, suggesting higher APD in the South would do little to help Northern airports and that EU state aid rules prevent significant help for larger ones.

Devolution to councils would be necessary because the same EU rules prevent the Government varying APD “in a way that is more favourable to individual regions”.

The Treasury states: “One medium sized airport would require a reduction in the central government funding to that authority of around £45 million per year.”

Authorities would “need to weigh the economic or social benefits for a region of lower APD against the impact on a local authority’s budget”, the document warns.

Graeme Mason, Newcastle Airport’s planning director, said it would “give each of the three options careful consideration” before commenting further.

The airport has warned of devastating consequences if the SNP slashes APD, suggesting 1,000 jobs will be at risk, draining £40 million from the region's annual economic output.

Interested parties have until September 8 to make their views known to the Treasury, by emailing ETTanswers@hmtreasury.gsi.gov.uk.