We are very pleased to invite you to ConservativeHome’s next live online event, in which our special guest Grant Shapps, Secretary of State for Transport, will be joined by a distinguished panel for this timely discussion.
Following the recent publication of the Global Travel Taskforce report, there are a host of crucial questions to explore, from the return of tourism and business travel, to the reunification of families separated by the pandemic.
When and how can international travel reopen? What approach offers the best route to do so safely, promptly, and to the greatest benefit for passengers and the wider economy? After a year of unprecedented disruption, how soon will things return to normal, and what will normal look like?
In this event, hosted in partnership with Airlines UK, the Secretary of State will be joined by:
Keith Glatz, Vice-President of Airlines for America and
David Evans, Group CEO of Collinson Group, the UK’s leading provider of Covid-19 travel testing.
The event will be broadcast live via Zoom at 7pm on Tuesday 20th April.
As ever, there will be the chance for the audience to put your questions to the panel.
Sir Roger Gale is MP for North Thanet.
Since the mid-20th Century, duty-free sales at airports have been a fundamental part of a passenger’s journey. Today, they are an inseparable part of the way our travel ecosystem functions.
In Europe, for example, duty-free sales were predicted (pre-pandemic) to exceed £13.5bn by 2022, with the UK set to retain its position as the largest market in the region.
However, this often misunderstood driver of growth and affordable travel has come under some unfair criticism recently from ardent tax-purists. To understand the impact of duty-free, you must look beyond the point of sale and consider the wider implications and landscape.
Over the years, duty-free sales have become an increasingly vital source of revenues for airports, with annual sales equating to up to 35-40 per cent of total revenue for some. This revenue has helped to provide jobs, keep ticket prices at historic lows (through subsiding airport charges) and support regional and international connectivity – ensuring that the UK remains ‘open for business’ and can support this Government’s ‘global Britain’ agenda.
Without non-aviation income such as duty-free sales, airports will have to raise landing charges, driving up airline prices for consumers and eating into airport revenue. And bear in mind that this airport revenue is a major driver of local capital investment. Profits are impacted, but so too is the community labour market. The effect on the regions outside of London would be profound as many regional airports already require support from the Government in order to operate and greatly depend upon the revenue derived from duty-free sales.
With the ongoing pressure on the whole aviation sector the suggested removal of duty-free shopping would, if implemented, be an absolute hammer blow for the UK’s travel industry and ‘UK plc’ more broadly. The travel sector is hugely important to Britain. Aviation alone contributes over £52 billion to the national economy and supports over 960,000 jobs and the UK`s airports are vital international economic gateways that enable our economy to prosper through trade, tourism, business travel and global connectivity.
Our aviation industry is on its knees as a result of the pandemic. While the introduction and successful roll-out of a range of viable vaccines has at last delivered an end in sight to the current situation that the travel industry finds itself in, most travel hubs will require further assistance to speed recovery and to help them return to being net contributors to the UK economy.
Policymakers need to be looking at ways in which they can support this critical industry. Any suggestion that puts the fastest possible recovery for the aviation sector at risk must be discounted.
Government support, while welcome, is no long-term answer either. A diverse and integrated passenger experience, which of course includes duty-free, is what will meet passenger demands and put travel hubs in the right place to not only survive but to prosper. Rather than distributing taxpayers hard-earned money in the forms of tax breaks or grants, the Government needs to implement self-sustaining measures that are not only mindful of the fiscal restraints on our economy but also allow the industry to stand on its own two feet and flourish.
Duty-free on-arrival shops, for example, would enable passengers arriving in Britain to purchase duty-free items immediately before going through customs. This easy to implement, cost-neutral proposal would drive forward investment through capital expenditure, create jobs and, according to independent research, increase passenger spend in the UK by between 20-30 per cent.
This is a proven concept, successfully deployed around the world, including by some of our closest allies, such as Australia and all of the EEA countries, that have very similar taxation principles and structures to our own.
Brexit, love it or loathe it, has presented the British travel industry with an opportunity to reinvent its future outside of the EU and forge its own path on the world stage. Fundamental to achieving this ambition is ensuring the UK retains its supremacy as the most globally-connected country in Europe – be that for trade, tourism, or overall connectivity.
Duty-free on arrival shops would not take sales away from the UK’s high street, and neither would they increase the amount of goods being sold. Rather, they have the potential to repatriate sales that currently take place at the point of departure abroad – whether within the EU or further afield. Passengers arriving in the UK would still be subject to the same limits upon purchases that they can carry with them as duty-free purchases, so no additional goods will enter the UK.
Regardless of whether this policy is implemented, these products will still be purchased – so better that they are bought on arrival in Britain. This is an opportunity to capture duty-free sales already taking place abroad, save the unnecessary carriage of goods over many miles crammed into overhead lockers, and ensure the economic benefit of those purchases are realised in all parts of the UK.
With the European Union currently considering such a proposal as part of the ‘EU Tourism and Transport Package’, it is vital the UK Government follows suit.
Duty-free on arrival shops would make a tangible difference to the UK’s travel sector by helping to kickstart economic growth, support regional development, and deliver employment opportunities. They would also raise revenues for the Treasury through Corporation Tax and increased PAYE from the jobs created. I urge my Conservative colleagues, including the Chancellor of the Exchequer, to join me in helping to turn this opportunity into a reality.
Simon Jupp is MP for East Devon and a member of the Transport Select Committee.
The Prime Minister’s desire to cut air passenger duty on domestic flights is exactly the boost our regional airports need. Operators will no doubt welcome the announcement last week of a consultation to examine the possibilities of creating a new lower rate or an exemption for returning flights.
On 5th March 2020, the largest regional airline in the UK and Europe, Flybe, collapsed into administration. The impact of coronavirus on flight bookings proved the last straw for its already precarious finances. The first major casualty for ‘UK plc’.
We are still picking up the pieces a year on. Some new operators have taken on the more profitable routes. Other routes, ill-served by road and rail, could remain cut-off long after travel restrictions relax in a few months’ time.
Environmental lobby groups often tell me this is no bad thing. What is the point in encouraging cheap ‘carbon-guzzling’ domestic air travel, when we could focus our efforts on improving road and rail connections and make sure customers pay cheaper rail fares and less at the pumps, they ask? Coronavirus has just accelerated an unavoidable process already in motion, so the thinking goes in some quarters.
But affordable and frequent domestic flights are vital to the UK in many ways.
Without them, we risk irreparable damage to trade, travel and business across the whole country, and connectivity between all four nations of the UK. Aviation remains a popular mode for British journeys over often long distances. In 2019, some 9.7 million passengers flew between England and Scotland, with Heathrow to Edinburgh being the most popular route.
Between English airports, it was 2.3 million. A flight from Leeds-Bradford to the beaches of Newquay takes one hour, compared six hours by road or eight hours by rail. M1 upgrades, HS2 or Northern Powerhouse rail when completed are unlikely to drastically bring those times down.
Regional airports don’t just help commercial passengers get from A to B quicker, they also assist with vital services which help save lives. With passenger numbers down around 90 per cent, these airports are still stepping up to the plate in playing a critical role in supporting our national effort to combat coronavirus, be it providing supplies for the NHS, army, and emergency services or ensuring mail continues to flow. To give an example, the Channel Islands continue to fly healthcare patients to Southampton for some urgent treatments.
Simply staying open can cost millions a week in fixed costs and regulatory fees. These are vital Public Service Obligation routes, in all but name, and need support to match.
Domestic air travel can become greener as we continue to decarbonise domestic aviation, including through mandating the use of sustainable aviation fuels. Unlike international flights, domestic aviation emissions are included in national carbon budgets. Indeed, greenhouse gas emissions from domestic flights make up less than one per cent of total domestic transport emissions.
Without reform, British air taxes will perversely hit our tourist industry hard as it looks to bounce back this summer. As the Prime Minister wrote last week, someone flying from Belfast to London and back pays more tax than someone flying from Dublin to London and back. That is because our Air Passenger Duty rate – a tax on flying introduced in the 1990s purely as a revenue raiser – is the highest in Europe at £13 per leg for short-haul travel.
For a long time, industry calls to correct this have fallen on deaf ears. Hearing this call is all the more important now that domestic holidays look like a safe bet in 2021.
A review into domestic Air Passenger Duty as part of the wider Hendy Review on UK connectivity, with Boris Johnson signalling his support for a cut, is extremely welcome. There are two options: to cut it to £7 from the existing minimum of £13, or to remove the return leg fare. A tax holiday for new UK routes could also better use airport capacity and help form established services.
Reforming Air Passenger Duty remains the quickest tool in the Government’s arsenal to get the country truly moving again and reintegrate the four nations of the Union. Now firmly out of the scope of EU competition law, it is time to crack on.
When Flybe collapsed last year, a dozen or so MPs with regional airports in their backyard spoke passionately in Parliament about jobs and connectivity lost overnight. I highlighted the impact the collapse of Flybe, which was based at Exeter Airport, in my East Devon constituency. Yet, some 110 MPs represent catchment areas for these non-London airports. We can, and should, shout louder. Ultimately, we cannot level-up our communities if we level-off their vital transport links.
Paul Mercer is the director of an international consultancy firm, and is a Charnwood Borough councillor.
The move to insist that returning travellers take a negative Covid-19 test makes sense, because it reduces the chance of new infections being brought into the UK, and means that passengers are less likely to infect each other.
Tests in Canada revealed that 1.5 per cent of non-symptomatic travellers were positive. Although this number seems low, it suggests that every international flight is importing potentially three or four infected people. Other research has suggested a minimal chance of catching Covid-19 from another passenger on a plane. But even if only 95 per cent of passengers succeed in getting the test, that would reduce the number coming into the UK with it to less than one in 1,300.
Governments rightly recognise that some foreign travel is necessary for international business to continue, but placing impenetrable barriers in their way ultimately means that contracts don’t get signed and the economy suffers.
On January 11, Robert Courts announced that “passengers arriving by ship, plane or train will have to take a test up to three days before departure and provide evidence of a negative result before they travel”. This was defined in a subsequent statutory instrument published on January 16 – the day before the changes were implemented.
The rules largely rely upon threatening to fine airlines who fail to check rather than doing so when one arrives in the UK, although immigration officers can still impose fixed penalty fines, starting at £500 for failure to produce a certificate.
The Government recognises that in some cases obtaining a test within three days may be difficult, but the problem is that airlines, faced with the threat of a £2,000 fine, are unlikely to allow any UK-bound passengers to board without a certificate.
A significant problem is that although many countries are offering ‘48 hour checks’ the reality is that these take longer, because the certificates can only be picked up later on the third day.
Typically, they recommend that you turn up for the check at 8.00am and collect the result two days later at 3.00pm – a 54-hour turnaround. If you assume one hour to get to the airport, it follows that you can only depart between 7.00pm and 9.00am to meet the 72-hour rule. The rules are quite specific that it is the time from when the sample was taken rather than when the certificate was produced that counts.
A third difficulty is that the negative test result must include one’s date of birth and when the sample was taken. I have had two Covid PCR tests outside the UK in the past two months, and neither of them met these requirements, although both included my passport number – which, curiously, has been omitted from these requirements. If airlines follow these rules strictly, then many people will be unable to return to the UK. The new policies stipulate that certificates must be in English, Spanish or French, and this seems likely to exclude even more people.
A final problem is that there is no way for travellers to get clarity about these regulations. Courts stated that British nationals who were having problems meeting this requirement “should contact the nearest consulate, embassy or high commission”.
When I followed his advice last week, I was informed by ‘David F’ at the ‘Consular Contact Centre’ that “the Home Office owns information regarding entry to the UK, including testing requirements, quarantine and exemptions”, and that he could therefore not help. Instead I should “contact the Home Office”.
He added that “for information about Covid-19 testing requirements abroad”, the Foreign Office recommended “an Internet search of the words ‘Covid testing near me’.” This produced helpful links to Chicago, Mumbai, Cheltenham and San Francisco.
The new regulations have also quietly taken away some of the exemptions from quarantining introduced for business travellers, those involved in advertising productions, the arts, television production, the National Lottery and journalists.
If these rules are to be effective with impending legitimate travel, more than reliance upon airlines and the occasional random check by an immigration officer is required. The current online Public Health Passenger Locator Form’ (PLF) works seamlessly, because it is linked to passports which are checked at eGates on returning to the UK. Passengers without the form are not allowed through.
It would make more sense to add a requirement to attach the Covid Test Certificate to the PLF and enter its details at the same time. This would offer several advantages. It would deter the temptation to submit a fraudulent certificate; it would make it considerably easier for airlines to carry out the necessary check; and the UK authorities would have a record that the appropriate certificate had been obtained.
Over the next few days, it will become apparent whether the Government, in reducing the risk of transmission, has stranded many British citizens abroad who have legitimately travelled for business purposes.
Matt Smith was the Parliamentary candidate for Cardiff West in the 2017 General Election and has stood for the Welsh Assembly.
Sir Thomas Hopkinson, co-founder of Cardiff University’s Centre for Journalism Studies, said the media is the “The most watchful sentry of the state”, for a “‘yes’ press is fatal to good government”.
With Covid-19 generating 115 pieces of Welsh legislation in six months and laws drafted within “a couple of hours”, Wales needs its fourth estate more than ever.
There are years in which nothing happened and days in which years happen. The “disappointing” decision by Mark Drakeford, the First Minister, to impose a ‘hard Covid border’ preventing travel into Wales from ‘high Covid areas’ of England, Scotland’s central belt and Northern Ireland’ is in effect one of the latter.
Police Federation Wales has called the ban “unenforceable”. Simon Hart deplores the suggestion West Walians are “on the lookout for people who shouldn’t be in those areas” for stirring ‘division and confusion’. The ban triggered a round of competitive restrictions with Nicola Sturgeon eying up a Wales-style cross border travel ban for Scotland.
Drakeford told the Welsh Government’s press conference last Friday that his cabinet was still discussing the best way forward. Later that afternoon, Bubble Wales published a leaked letter from the Confederation for Public Transport’s Welsh lead revealing ‘behind closed doors meetings’with officials about a “circuit breaker” beginning at 18:00hrs on Friday 23 October through to 00:01hrs on Monday 9 November.
Leaking continued into Saturday, with The Prydain Review reporting discussions with Welsh business leaders over closing clothing retail. Paul Davies, the Conservative leader, criticised confusion “handling of this announcement is causing… especially to the most lonely in our society and businesses who are struggling to recover”.
Monday saw the most dramatic divergence between the UK nations, with the announcement of a two-week ‘firebreak’ lockdown from this coming Friday until 9th November, known as a ‘circuit breaker’ everywhere else. Drakeford’s “short, sharp, shock” to civil society will see pubs, restaurants, hotels and non-essential shops closing. Years Seven and Eight can return to school after the half term break. Gatherings outside of households are banned.
Avoiding this malady was why exiting lockdown was slower in Wales. Many wonder why the Welsh Government hasn’t gone for hyper-local ward by ward lockdowns. If the Welsh ministers can “firebreak” for 17 days, what is to stop them extending this? They have already declined to rule out a New Year “firebreak”.
The WHO Europe, the UK Government’s SAGE and Dr Roland Salmon, a former head of Public Health Wales, have cast doubt on the merits of this approach. Public Health Wales admits it doesn’t hold or received data on transmission rates – which begs the question: how is the pandemic response measured? And with claims of critical care being at capacity and ICU units reaching breaking point unraveling, many question the proportionality and rationale of the firebreak.
In a classic Cardiff Bay gaffe, Vaughan Gething, the Health Minister, let on that firms may be eligible for UK Government support during lockdown. Welsh Government finances are better at locking down than helping businesses stay open. The Welsh firebreak seems like a lockdown made in Westminster.
Drakeford will now blame Downing Street for an economic crisis he has exacerbated. Wielding the visible hand of the state comes easily to the lockdown left, which believes that the gentleman in Cathays Park knows better. The First Minister also wants to consolidate the institutions of Welsh Government though “assertive devolution” – posturing to be different to Downing Street for the sake of it.
‘Devolve and forget’ renders devolved affairs into a province of the Welsh media. Yet BBC Wales is in the process of cutting 60 roles, while uncertainty hangs over dozens of posts at Media Wales, the publisher of the Western Mail, Wales on Sunday and South Wales Echo heritage titles and WalesOnline.
‘Team Wales’ groupthink makes it harder to question to many Welsh establishment sacred cows. Yet this is no time for shrinking violets. At one point, nearly all media in Wales reported Bubble Wales’ leaky government special except BBC Wales. Welsh Conservative demands for a Senedd recall were overlooked. BBC Wales’ Politics Wales starmshow focused on Starmer and Gething, with only five minutes for Paul Davies.
Andrew RT Davies, the Shadow Health Minister, has called out the “down-right breathtaking arrogance” of Welsh ministers bypassing the Senedd. Welsh Labour MSs seem more interested in tweeting congratulations to Jacinda Ardern than scrutinising the liberticidal decisions of their own administration.
Daran Hill , a veteran Cardiff Bay Watcher, observed that Siambr-dodging ministers prefer government by briefing as it boosts the profiles and reach of hitherto unrecognisable politicians. Welsh ministers get soft-soaped while UK Government ministers face the full rigors of the national media.
They lack the openness or transparency to provide infection statistics on a ward-by-ward basis that are available in England. Only local authority figures are thought to be ‘sensibly used’, treating the public like children when information is important to sustain confidence in rules.
Weak scrutiny lowers the bar. An anomaly in Welsh coronavirus law allows people from countries with high infection rates to visit low coronavirus parts of Wales (including via the Welsh Government-owned Cardiff Airport) while UK visitors are banned. Welsh students studying in England will be unable to return home and potentially miss Christmas.
Yet residents living near porous borders are not the playthings of politicians. Nor are livelihoods. The New Statesman has suggested ‘restrictions will only work if they are self-policed’. If the exhausted majority can’t afford to follow rules, compliance and civil obedience will become another casualty of the lockdown.
The hard man of devolution should savour the plaudits of the Cardiff condescendi and the nationalist comentariate. Drakeford now owns a legacy including 30,000 jobs lost in the first lockdown and the losses of those who will fall short before November.
A lacuna of scrutiny makes for bad policy. With power-gaming devocrats in control of the administrative state, governing by leak and pushing dodgy dossiers, Wales needs its ‘watchful sentries’ more than ever.
Lord Vaizey of Didcot is a Conservative Life peer who has sat under this title in the Lords since 10 September 2020. Prior to joining the Lords, he sat in the Commons as an MP, and was first elected in 2005.
I bow to no one in my admiration for Rishi Sunak. Taking up the toughest of jobs at the toughest of times, he has played a blinder. Job Support Scheme, Bounce Back Loans, Eat Out to Help Out. Even though I’m not an MP any more, I know from talking to my former constituents how much this help has been needed and welcomed.
But with the Government having to make so many decisions so quickly, it’s unlikely everyone will be bang on the money. Even in normal times (remember those?) we occasionally saw unintended consequences.
I’m afraid to say that the Treasury decision to end tax-free shopping for international visitors at the end of December is one of those decisions. At the moment, visitors can reclaim the VAT on stuff they buy here. From January, this will be stopped.
I can see why the Treasury thought it was a clever wheeze. They think it will only affect a small group of very wealthy people. If it hits anywhere, it will hit Bond Street and Bicester village – not exactly marginal vote territory.
But there’s a problem. These wealthy visitors don’t just shop – they eat out, they go to museums and the theatre, stay in hotels. They also travel outside London, visiting places like York and the Lake District.
Also, the posh stuff they buy is often actually made here. Yes folks, those Burberry suits are made in Yorkshire. And those French Chanel jumpers are actually made in Scotland. Which is why we are now in the weird position of the SNP Finance Minister calling out a Tory Chancellor for not backing British business.
The Treasury assumptions, which I have seen, act as if the vast majority of visitors will still come, so the Treasury will make a net gain from them paying VAT. But why should they when we will be the only country in Europe not offering VAT-free shopping?
As a result of this decision, they are likely to go to Paris, Milan or any other European city instead of London. In fact, a recent poll of these visitors showed that if the UK ends tax-free shopping 93 per cent would not buy goods here and 60 per cent wouldn’t even bother visiting post the pandemic. Maybe that’s why the French are giving them a nudge by lowering their VAT free threshold the day after the Treasury took the decision.
It doesn’t take many visitors to change their plans. 13 per cent of all-tax free shoppers account for 44 per cent of all tax-free sales. All it takes is for a small proportion of high-spending international tourists to go elsewhere before the impact is felt. The end result is an increase in job losses.
Retailers, hoteliers and airport chiefs from all over the country have warned that scrapping tax-free shopping for international tourists has put 70,000 jobs in jeopardy. The decision is a big blow to the regions. Tax-free shopping supports 1,800 jobs in Edinburgh and 1,200 jobs in Manchester alone, and the money spent in London stores helps high streets throughout the UK.
Most flights from the UK’s regional airports are to and from Europe. Stores in Birmingham and Manchester had hoped to double sales to EU visitors on the understanding that tax-free shopping would be extended to EU countries once we’d left the bloc. Now the likes of Selfridges and Marks & Spencer are warning the impact it will have on jobs across the country instead. This is not what those workers voted for.
If allowed to go ahead, the decision to end tax-free shopping for international visitors will put Global Britain at a competitive disadvantage and result in thousands of jobs losses. I hope our pragmatic Chancellor will think again.
It is becoming clear that the Covid-l9 crisis will lead to substantial changes in the British lifestyle.
First of all, a significant part of the workforce will be working from home on line. People have learnt from current experience that board and other meetings can be conducted quite satisfactorily on Zoom or Teams. Employees will not need to travel, at great expense in discomfort with no seats, and can live away from London and the South East, where good houses are cheaper.
The knock on effects of Zoom and Teams are also going to reduce the demand for office space in London and other major cities. Office space could be converted into residential use – so reducing the cost of residential property. Much of the massive increase in office space over the last three years may end up to being converted into accommodation.
The Office for National Statistics (ONS) has found some surprising results from its recent surveys. The impact of lockdown on people’s lives has been revealed in official figures, showing that more than a quarter are considering changes to their relationships (divorce), job or home.
For the first time, the ONS has focused on aspects of life that are the cause of unhappiness. Big life changes after recovery from the Coronavarius are being planned by 28 per cent of adults and, of these, 42 per cent want to make a change to their work; 38 per cent are looking to move on from relationships and 35 per cent are inclined to move home. Family lawyers have already reported an increase in the number of divorce cases exacerbated by financial problems.
Researchers have also found that 40 per cent of adults feel that some parts of their lives have changed for the better. Of those who reported positive lifestyle changes, 56 per cent said they were able to spend more time with their family and close friends. The ONS also found that nearly half of those aged between 60 and 69 had experienced positive lifestyle changes compared with only 24 per cent of respondents aged over 70. Exactly half said they were enjoying a slower pace of live.
It remains to be seen how many of these intentions will be carried through, albeit that a lot of people will need to change jobs as there their previous jobs will no longer be available.
There are four related territories which are exposed to massive change for survival: the high street, travel, hospitality and culture.
The high street is still threatened by online shopping in an unfair tax regime. The Government has permitted the online shopping industry to enjoy substantial tax advantages, undercutting the high street. It pays no business rates and is maybe registered abroad, so saving on VAT and corporation tax. What is needed overall is a level tax playing field.
Travel is probably the biggest area effected by Covid-19. The total value of cancelled flights amounts to £8 billion for the last four months. Liability for this will be fought over for a long time to come, where there are now two key legal principals – in the UK “Acts of God” and, imported from Europe, “Force majeure”. The industry cannot afford to refund the £8 billion total, and it is governments that have insisted on the closure of air travel.
Restaurants, pubs and hotels have had mixed and an often interlinked experience – overall, a negative one caused by Government lockdown requirements. Some opening up is now occurring, and local authorities are encouraging and supporting the provision out outside restaurant facilities There is an economic need for restaurants..
The territory which the Government has now announced a £1.5 billion package for us the performing arts. The individual performers have had all their bookings cancelled, through to Christmas with no compensation and no future bookings. It should be remembered that the arts contributes more to Britain’s international earnings, in aggregate, than does the City of London.
The Government seems to be waking up to the importance of Britain’s musical industry. One of our friends who is an internationally recognised opera singer is trying to set up a major outdoor performance in Hyde Park, similar to the Pavarotti Concert over ten years ago. This, however, will require the Government to provide the insurance cover against the risk of Covid-l9 infection. There are three historic precedents where the Government had to put up such cover – and, ironically, made a good profit from so doing.