We must make the chancellor understand that healthy growth in business travel is a vital part of economic recovery
DOES ANYONE REMEMBER the riots? The last Westminster Watch column in this publication wondered whether the riots would dominate the politics going into the party conferences and beyond. “Not particularly”, appears to be the answer, with Bill Clinton’s old adage, “it’s the economy, stupid”, true once again.
Growth, or the lack of it, continues to dominate our politics and that means the chancellor squats at the centre of everything the government does.
The current chancellor used the recent conference to communicate the continued primacy of debt and deficit reduction, while finding money down the back of the government sofa to embark on some limited stimulus projects.
Now the next set-piece beckons: the Pre-Budget Report (PBR).
In contrast to the broad strokes of the conference speech, the PBR needs to be crammed with detail: the progress made since the budget; updates on the state of the national economy and the government’s finances; and announcements of proposed new tax measures and consultation papers.
What should we expect? In terms of spending, not much. The purse strings are drawn tight and to slacken them would not only compromise deficit reduction but, perhaps more important politically, the argument that underpins it.
That means the attention of political colleagues, business and the media will be on taxation. The chancellor has a number of tax levers in front of him – but the question is, dare he pull on any of them?
The VAT rise has already taken place and been justified at length. The chances of this being changed remain slim.
The Conservative right wing is chafing to see the symbolic 50p income tax rate fall by the wayside.
The chancellor has kicked this into the long grass by waiting for the independent report into how much it raises to be published, but the review is due to be completed prior to 2012’s budget and a decision will need to be made at that time. Labour will be licking their lips in anticipation that they can claim the Tories are cutting tax for their rich supporters, but the real roadblock will be the Lib Dem coalition partners – if any tax gets cut in the foreseeable future, they will be insisting on raising the income tax starting point so that the poorest in society benefit.
But if income tax and VAT are unlikely to change, what does this mean for our sector? For example, what happens to air passenger duty (APD)? The 2011 budget featured the dropping of the per-plane option, inclusion of private aircraft and a renewed look at the banding, but most attention was on the delay to the inflation-linked rise. It remains to be seen what influence the Fair Tax on Flying campaign has on a chancellor who appears to have factored a future rise into his sums.
Ultimately, the situation stresses how much we need to communicate the reach and impact of the business travel industry to the government.
Growth must run through everything the industry says about itself. Good quality highly skilled jobs, new routes into the BRIC countries, competitiveness with other countries, private-sector funded infrastructure investment ... all these aspects of business travel need to underpin what we say in reaction to each and every one of the chancellor’s decisions.