Airports join budget crisis, warning of ‘catastrophe’ for business rates | Money news

On November 27, 2024By Pranco

Britain’s biggest airports are joining growing private sector opposition to Rachel Reeves’ budget, warning that a £1 billion bill for the industry will lead to the cancellation of routes to and from Britain and to higher costs for passengers.

Sky News has received a draft letter from Airports UK, which represents more than 50 airports across the country, claiming that revaluations of business rates will result in the sector being forced to pay more than £1 billion – a fivefold increase compared to the current level.

It describes the impact as ‘catastrophic’ and demands an urgent meeting with the Chancellor to discuss the measures that will impact the sector from April 2026.

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“Airports are already among the largest fare payers in the country,” the report said.

“These revaluations will increase average airport charges in England by more than 450%, with some airports facing multiples of twelve times.”

It is believed the draft letter, which is addressed to Ms Reeves and intended to be copied to Sir Keir Starmer and other Cabinet ministers, is nearing completion.

One industry source said it could ship in the coming days.

In the version seen by Sky News, the industry body says the rising rates bill ‘is equivalent to a doubling of the corporate tax levied on the sector, at a time when the government has committed to stable tax and policy regimes to boost business confidence and stimulate the private sector’. sector investments”.

“However, these rate hikes would destroy any chance of this happening and cause enormous damage to the economy,” the report said.

“Investment in airport assets will decline, routes to and from Britain will be lost (as already seen in Germany where taxes are rising), trade will be damaged and British travelers will be hit by higher costs and less choice. ”

Airports UK also said the tax changes were announced in the budget would jeopardize the government’s entire growth agenda.

“Without our sector as a key partner, the government’s ambition to secure the highest growth rate in the G7 and unlock an investment-led approach to transforming the economy will be materially damaged,” the report said.

“The revaluation of the Valuation Office Agency (to determine future business rates obligations) will threaten Britain’s status as a leader in aviation and a hub for global connectivity and trade.

‘Airports cannot be expected to withstand a rise of this magnitude without scaling back investment or cutting routes.

“These increases are punishing for airports of all sizes and threaten the viability of several airports, without which crucial regional connectivity would be lost.”

“This would jeopardize your growth mission before it even gets started, and we request an urgent meeting in December to resolve this matter.”

The letter makes airports the latest in a series of sectors to issue stark warnings to the Treasury about the likely impact of the budget.

In recent weeks, Sky News has revealed similar letters from the hospitality and retail sectors, telling the Chancellor that job losses, business closures and price rises will be inevitable when employers’ national insurance increases come into effect in April.

The airport industry’s warning comes amid a slew of business activity in the sector, with The Sunday Times reporting last weekend that London City and Bristol airports could soon change hands in a £10 billion deal.

Heathrow’s shareholder base has also changed in recent months, with Paris-based investor Ardian and Saudi Arabia’s sovereign wealth fund seeking a 38% stake.

A spokesperson for Airports UK declined to comment on the letter.

The trade body is led by Karen Dee and chaired by Baroness McGregor-Smith, a leading businesswoman.