ADT Stakeholder Forum minutes: November 2017

Attendees and apologies

• Derek Mackay MSP, Cabinet Secretary for Finance and the Constitution
• Julia Ogiehor, ABTA
• Brian McClean, AGS Airports Limited
• Neal Weston, Airlines UK
• Henk van Klaveren, Airport Operators’ Association
• Joanne Walker, Chartered Institute of Taxation
• Simon McNamara, Flybe
• Andrew Miller, Glasgow Prestwick Airport
• Gordon Robertson, Global Infrastructure Partners (for Edinburgh Airport)
• Inglis Lyon, Highlands and Islands Airports Limited
• Alan Campbell, International Airlines Group
• Evelin Horvath, Ryanair
• Gareth Williams, Scottish Council for Development and Industry
• Ken McNab, Scottish Passenger Agents’ Association
• Richard Bassford, Virgin Atlantic Airways
• Alan Martin, Revenue Scotland
• James McLellan, Scottish Government
• Sacha Rawlence, Scottish Government
• Gary Cox, Transport Scotland

Apologies:

• Board of Airline Representatives (BAR) UK
• easyJet
• Institute of Chartered Accountants of Scotland
• Scottish Chambers of Commerce
• Thomson Airways
• Law Society of Scotland
• Loganair
• Scottish Environment LINK
• Stop Climate Chaos Scotland

Items and actions

1. Welcome and introductions (Cabinet Secretary)

The Cabinet Secretary for Finance and the Constitution (CSFC) welcomed members to the sixth meeting of the Scottish Government’s Air Departure Tax (ADT) stakeholder forum.

2. Update on policy and legislation since last meeting

CSFC updated members on policy an legislation since the previous meeting (12 Jan 2017) and made the following points:

• it remains the policy of the Scottish Government (SG) to reduce the burden of ADT by 50% by the end of this parliamentary term, and abolish it when public finances allow
• the SG strongly supports retaining a Highlands and Islands (H&I) exemption under ADT given the importance aviation plays in supporting residents, businesses and tourism in the area
• however, during the passage of the Bill it emerged that before introducing an H&I exemption under ADT this would first have to be notified to and approved by the European Commission under State Aid rules. This is because the SG is legislating for the first time on this matter and under the Scotland Act (1998), the SG and Scottish Parliament cannot act in a way which is contrary to EU law
• since first notifying the Scottish Parliament of this position at Stage 1 of the ADT Bill on 25 April 2017, there have been a series of discussions and exchanges of correspondence with UK Treasury Ministers on how to resolve this issue
• given the importance of the issue, the potential impact on the H&I and the need to give certainty over the devolution of the power, a further statement to Parliament was provided on 5 October 2017
• despite intensive engagement with the UKG at Ministerial and official levels, a legally compliant solution could not be found that provides the full benefits of the current H&I exemption in time for 1 April 2018. The SG has agreed with the UKG that the introduction of ADT in Scotland will be deferred until the issues raised in relation to the H&I exemption have been resolved to ensure that the devolved powers are not compromised
• SG and UKG will work closely in order to achieve this as early as possible. In the interim the UKG will maintain the application of APD in Scotland

A wide range of views were expressed by members. Issues discussed included:

• what members could do to help support SG and UKG in progressing the issues. It was agreed that a smaller forum could be convened to explore potential solutions and the State Aid considerations in more detail, and members suggested inviting UKG. It was also noted that there were restrictions on sharing the SG’s legal advice on the matter
• the SG’s approach to notification and the types of alternative options which had been considered. It was noted that the SG strongly supports retaining an H&I exemption under ADT given the importance aviation plays in supporting residents, businesses and tourism in the area, but was also exploring other options which could deliver similar outcomes
• the other support provided for route development. It was confirmed that Transport Scotland and Visit Scotland do enhance marketing support where a route needs extra support, so long as that route is important for business connectivity or inbound tourism. A package of support had already been put in place to help one airline operate a key route for summer 2018
• the need for clarity around future policy and a timetable for introduction of ADT. SG restated their determination to work with the UKG to resolve this as soon as possible and the importance of lead-time for airlines with regards to ticket sales and capital investment was noted

Actions

• SG to contact members about convening a smaller group to explore options State Aid considerations in more detail
• SG to keep Forum updated on next steps and timescales as these are developed and agreed with UKG

3. Update on publication of consultation report, and economic and noise impact assessments

James McLellan explained that during the Bill process, SG had committed to undertaking and publishing a range of impact assessments on its policy to reduce ADT by 50% by the autumn. James summarised the aims of the three reports:

1. The consultation on the 50% reduction and SEA Environmental Reports: This outlines the findings of the assessment of the plan against a wide range of environmental topics such as climatic factors, air quality, material assets and biodiversity. The consultation closed on 15 September and Craigforth were appointed to analyse the responses from the consultation. Alongside this the Government has published an updated greenhouse gas emissions impact assessment of the overall 50% ADT reduction plan.

2. The economic impact assessment: includes assessment of impact through projected changes in GVA, and includes an outline evaluation framework for when the distribution of the cut has been decided.

3. The noise impact report was commissioned separately, but draws on the data from the economic report to model the noise impacts. To follow a short time after the other two publications, to allow for final work in presenting the data on a consistent basis with the economic report.

Actions

• SG to share embargoed copies of the consultation and economic reports with Forum members in advance of their publication on 8 December. [Complete]
• Links to published versions are: http://www.gov.scot/Publications/2017/12/9975; http://www.gov.scot/Publications/2017/12/2270

4. Revenue Scotland Update

Alan Martin, Revenue Scotland, made the following points:

• summarised the findings of the latest Gateway Review of Revenue Scotland’s operational readiness which had concluded with a green rating for the programme
• guidance and IT were ready for user testing when required
• following the decision to defer in the introduction of ADT, Revenue Scotland were closing down their programme. In the meantime Revenue Scotland would continue working with SG officials and attending the Forum meetings, to stay in touch with progress towards implementation

Alan thanked all who had contributed to the development of Revenue Scotland’s systems.

Actions

• Revenue Scotland to pick up conversation with Virgin Atlantic Airways. [Complete]

5. Any other business

James thanked all delegates for their participation, and confirmed we would send out notes and actions from the meeting.