LABOUR MPs in the region broke ranks to demand lower passenger duty at North airports after Scotland was given the power to cut the tax in a move that was labelled a "slap in the face for North-East business."

They went further than official party policy by arguing Scottish airports must not be allowed to undercut Newcastle and Durham Tees Valley – grabbing airlines and passengers.

Most called for regional rates of air passenger duty (APD), allowing a future Chancellor to slash rates in the North in response to any tax cut by the Holyrood Parliament.

But Ed Balls, the Shadow Chancellor, was far more cautious – calling only on George Osborne to consider a “mechanism” to ensure English airports do not lose out.

It was clear some North-East MPs expected Mr Balls to go further, but a Labour source pointed out the Conservatives were in Government, saying: “The ball is in George Osborne’s court.”

Mark Stephenson, at the North East Chamber of Commerce (NECC) said handing the Scottish parliament powers over APD would be a “slap in the face” for North-East business.

He added: “Reaching a fair deal for Scotland as well as in UK regions is crucial, but it makes no sense to rob Peter to pay Paul.

“If we in the North-East are to realize our economic ambitions and overcome our challenges then at some point the welfare of our economy must factor in decision making on Scottish, as well as English regional devolution."

Dave Laws, Newcastle Airport chief executive said he was “extremely concerned” about the proposals, which he predicts will mean 1,000 fewer new jobs and the loss of £400m Gross Value Added (GVA) across the North-East by 2025.

“If Scotland were to stop applying a tax on passengers, it would penalise people from the North-East that want to fly from their local airport.

"We are now seeking a signal from the Chancellor in next week’s Autumn Statement that the Government is going to do something to address any future distortions,” said Mr Laws.

Labour had opposed devolving APD to Holyrood – because of “the risk of tax competition” – but did a U-turn on Wednesday, to avoid SNP anger with the general election looming.

One North-East MP privately described that decision as “bonkers”, saying: “The North gets shafted.”

Sedgefield MP Phil Wilson said: “I have been calling for regional variations in APD rates for some time and I have now written to George Osborne saying our airports must not be disadvantaged.”

Mr Wilson pointed out the Scottish devolution package was not meant to cause “detriment to the UK as a whole, nor to any of its constituent parts”, adding: “As it stands, I think it probably does.”

That message was echoed by Kevan Jones, the North Durham MP, who said: “We need regional rates of APD, as part of a wider strategy to increase growth at regional airports.

“If we don’t do that, there will be an impact at Newcastle Airport and there are other regional airports that are concerned about it as well.”

Hartlepool MP Iain Wright also backed regional APD, saying “Absolutely. It’s needed for the good of the region’s airports, to keep them competitive and ensure business doesn’t move from the North to Scotland.”

And Alex Cunningham, the Stockton North MP, said: “It would be a major boost to our airports if we could vary APD and encourage growth particularly for Durham Tees Valley.”

Ian Swales, Liberal Democrat MP for Redcar, went further again, suggesting local enterprise partnerships (LEPs) could set APD rates.

He explained: “If the LEP decided lower duty was important for the economic development of their area, they should have the power to redirect other funds or bid for central funding.”

Two years ago, The Northern Echo revealed the Government was examining whether “congested" airports – such as Heathrow and Gatwick - would pay higher APD to persuade airlines to use less busy regional airports.