Flying Schools — [Sir Robert Syms in the Chair]

Part of the debate – in Westminster Hall at 3:33 pm on 12 September 2023.

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Photo of Jesse Norman Jesse Norman Minister of State (Department for Transport) 3:33, 12 September 2023

It is a delight to see you in the Chair, Sir Robert. I thank everyone who has spoken in the debate, and I congratulate Mike Kane on retaining his place in the shadow Transport team. It has been an interesting debate, and I am grateful to colleagues for their contributions. Aviation is a very important sector and is a matter of local importance in the constituencies involved.

Let me start by reiterating the apology that my noble Friend Baroness Vere gave to my hon. Friend Tim Loughton. I know that she and he are to meet in a matter of days, and I look forward to that being a constructive and engaging conversation. I am delighted to respond to his concerns in this debate. As he will know, the Government regard the aviation sector as an important strategic asset. It contributes at least £14 billion to our GDP every year and supports some 230,000 jobs across all regions of the country. We recognise the sector’s importance both geographically and economically.

It is important to focus, as hon. Friends have done, on the dire impact of training operators’ failures on the students involved. There is a tremendous human cost, which has been brought out well during this debate. I have a particular sense of identification with it because I have a pilot’s licence myself, although tragically it has long since fallen out of use. It was paid for not by the bank of mum and dad but out of my own earnings, in case Opposition Members were wondering. I am the son of a pilot, the brother of pilots, the nephew of a pilot and the grandson of a pilot, so I have a very considerable personal understanding of the issues involved, as well as the ambition, inspiration and joy that flight gives young men and women across this country, as it has done for generations. I fully recognise the point that the hon. Member for Wythenshawe and Sale East made about the increasing importance of a relentless focus on improving diversity in the sector. He is absolutely right about that, in every dimension.

Having said that, what we have here, as far as I can tell, is the disorderly liquidation of three local aviation training operators. That carries with it tremendous disruption and difficulty, and it exacerbates the impact because an individual can literally turn up one day or—as colleagues’ constituents have done—receive an email saying that the institution to which they have confided their hopes, their dreams and a lot of money has gone, completely unexpectedly and without any notice, into liquidation. They may, and in many cases will, receive back none of the money that they have already contributed.

When we think about the wider picture, however, it is important to put things into perspective. May I offer the Chamber a correction to a number that has been used? In 2023—I am advised by civil servants that this is true—there were 11,675 applications for training across all licences in aviation. We are talking about terrible local impacts on a relatively small number of people so far and three failures of ATOs among some 270 registered flight schools across the UK. That is not to derogate for a second from the tremendous importance and extreme sadness and in some cases grief that has been inflicted; it is only to say that making general rules on the basis of a relatively small portion of the whole sector is something that one needs to bear in mind. When we think about the enormous sums that have been lost in some cases, we are talking about people who are in commercial licences at the very top of the pyramid and are therefore as close as one could be to potential long-term gainful employment.

I will come on later to what the CAA is doing and the suggestions that have been made, but let me just pick up on a couple of points that, rightly and importantly, have been made by my hon. Friend the Member for East Worthing and Shoreham. He is right that the pandemic had a difficult impact on the aviation industry generally and on the training sector. As he will recall, the Government made every effort, at considerable cost to the taxpayer, to support institutions, companies and individuals throughout the air transport sector. That amounted to something like £8 billion of pandemic-related support and included support through loan guarantees; support for exporters; the Bank of England’s covid corporate financing facility; the coronavirus job retention scheme, for which I was responsible; the Treasury’s furlough scheme; and the airport and ground operations support scheme. A tremendous amount of specific support for the sector was given during what was a completely unexpected and dramatic change in our business, social, personal and economic arrangements. My hon. Friend is absolutely right to focus on that; he is also right that fuel prices have gone up, which will have had the effect of driving prices upwards.

However, as a former Financial Secretary to the Treasury, I do not share my hon. Friend’s view that a cut to VAT would be the answer to the problem. There is a very simple reason for that. There are many cases of sectors in the UK economy that have called for VAT cuts. In a very small number of cases, because VAT is by design a broad-based tax, reductions have been made to levels of VAT. Very often, they have not been passed on as any kind of saving to the end user; they have gone to support the margins of the company. In the training operator business there may be some value in that, but it is the normal course of things that in a competitive private sector industry there will inevitably be organisations that for various reasons do not manage themselves effectively, or go bust for other reasons.