Prime Minister pledges air passenger duty cut for North-East airports - if Scotland does the same

Speaking to The Northern Echo, the Prime Minister vowed that – if re-elected – he will not allow “unfair tax competition” that would hurt Newcastle and Durham Tees Valley airports.

Mr Cameron revealed that a list of options would be drawn up within months of an election victory, to examine how to vary rates of air passenger duty (APD).

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

The Prime Minister added: “No-one should think that, after a decision by the Scottish Parliament, the Westminster Parliament will simply sit there and say ‘that’s fine then’.

“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.”

Mr Cameron added that a lower APD rate in the North-East – as proposed by some of the region’s Labour MPs – was a “positive suggestion”.

The comments are the first time the Government has committed to lower airport taxes south of the border, if the SNP administration in Edinburgh acts first.

Last month, transport minister Robert Goodwill warned airlines – as well as huge numbers of passengers – will desert Newcastle Airport if Scotland slashes its taxes.

And he admitted the Government was struggling to find a solution to that threat, telling the same committee: “We are pretty much limited by EU competition rules.”

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

Last week, a committee of MPs pointed to the example of Northern Ireland, which is “losing 1.5 million passenger journeys” – and 1,500 jobs, worth £30 million in salaries - to Dublin, where APD is lower.

And this week, CBI North-East added its voice to the chorus of alarm, telling MPs at Westminster that it fears companies will cut investment in the region.

The devolution of APD was hastily pledged to Edinburgh after the narrow’ no’ vote in last year’s referendum.

All three main Westminster parties agreed that Holyrood should control the tax, although the legislation will not be passed until after the May general election.

Mr Cameron added: “There will be a discussion paper in the summer that will look at APD rates within England, variation of rates and support for regional airports.

“They’re popular. I recognise that lots of people would rather go on a holiday flight from a regional airport than have to travel to London.”

However, cutting the levy – £13 for an economy flight of under 2,000 miles and £71 for longer flights, from next month – will be costly, as it raises £3 billion every year for the Treasury.

Ministers have already bowed to pressure by axing two higher bands and charges for under-12s, at a cost of around £250 million in the next financial year.

Phil Wilson, the Sedgefield MP – who has led calls for regional APD rates – welcomed Mr Cameron’s comments, but said they sounded “very vague”.

He pointed out that Labour had requested cross-party talks on how to respond to tax cuts in Scotland last autumn, but had received no response.

Mr Wilson said: “We need to find out what the prime minister means. This is a cross-party issue and we need to work together to find a solution that helps airports in the North-East.”