Remarkable thing I've discovered: NI is spending millions subsidising long haul air travel despite not having a single route since 2018. Last week's NI budget committed 2.3 mn to pay the cost of air tax for flights that don't exist. Why? (THREAD)

In 2011 the @niexecutive was trying to protect a single route between Belfast and the US. @hmtreasury agreed to devolve long haul APD (tax on flights) and the exec promptly reduced the rate to zero. At the time finance minister Sammy Wilson was and remains a major champion:

BUT the condition was that the cost of zero long haul APD had to come out of the block grant. NI had to pay HMRC the expected cost of foregone air tax on long haul flights (the tax on short haul flights was unchanged). Its in the assembly legislation here: http://www.niassembly.gov.uk/assembly-business/legislation/2011-2016-mandate/primary-legislation-current-bills/air-passenger-duty-setting-of-rate-bill/air-passenger-duty--setting-of-rate-bill---explanatory-and-financial-memorandum/

Btw, this didn't have any effect on the cost of flying to GB, the most important air connectivity for NI (as I'm sure the DUP would agree) but it did reduce the the tax on long haul to lower than that in Dublin, which the DUP was very keen on. And for a time, some routes stayed..

But the United route ended at the beginning of 2017 and the only other long haul carrier, Norwegian, pulled put the following year. BUT on the basis of the deal struck with Treasury in 2012, we still have to pay the imaginary cost of foregone tax. £5m plus over the past 2 yrs..

Last week's NI Budget doc confirmed that 2.3m is being centrally held this year to pay for flights that do not exist and are unlikely to exist in the foreseeable future...

I thought this had to be wrong - but it isnt. I submitted a written question and here is the answer... we are spending money paying for non-existent flights.

This cant be right with so many other pressures in the middle of COVID 19 - not least the preservation of our short haul connectivity. I would hope the Treasury can give the @niexecutive flexibility on not paying this money. A state aid claim seems unlikely in the circumstances.

But more broadly, it shows the perils of basing economic policy on an unfortunate mix of Ulster nationalism and client capitalism. We had a decade of that and it didnt work. We are - quite literally - still paying for it. As we come out of this crisis, we need to do much better.

We need an entirely fresh economic approach as move out of this crisis, joined up properly with our fiscal policies. We desperately need short haul connectivity. We do not need boondoggles like this.