Airports Join Budget Backlash with Warning of Business Rates Catastrophe

Britain’s largest airports are warning that a planned £1bn increase in business rates, stemming from revaluations announced in Rachel Reeves’s recent budget, could have severe consequences for the aviation sector.

Airports UK, which represents over 50 airports nationwide, has drafted a letter describing the proposed hike as "catastrophic" and calling for an urgent meeting with the Chancellor to discuss the issue.

The revaluation, set to take effect in April 2026, represents a fivefold increase in rates, with some airports facing rate hikes of up to 12 times their current payments.

The letter argues that this is equivalent to doubling the sector’s corporation tax and would undermine the government’s commitments to stable taxation and policy designed to foster business confidence.

Key Concerns Highlighted in the Letter:

• Increased Costs and Reduced Investment: The letter claims the new rates will lead to reduced investments in airport infrastructure, higher passenger costs, and the cancellation of routes to and from the UK.
• Impact on the Economy: Airports UK warns that the rate hike could harm trade, reduce consumer choices, and threaten regional connectivity, particularly for smaller airports.
• Contradiction to Growth Goals: The proposed changes, according to Airports UK, would jeopardise the government’s ambitions for economic growth and its efforts to make the UK a global hub for aviation and trade.

The letter points to similar struggles in Germany, where rising taxes have resulted in the loss of airline routes, as a cautionary example.

Wider Backlash

This critique from the aviation sector adds to mounting private sector opposition to the budget. Other industries, including hospitality and retail, have also voiced concerns over new tax measures, warning of potential job losses, business closures, and price hikes due to increased employer national insurance contributions.

The letter comes at a time of significant corporate activity in the aviation sector, including speculation about a potential £10bn deal involving London City and Bristol airports, and recent changes in Heathrow's shareholder structure.

Airports UK, led by Karen Dee and chaired by Baroness McGregor-Smith, declined to comment on the draft letter.

However, its stark warnings echo broader dissatisfaction across industries regarding the budget's perceived impact on economic growth and competitiveness.
Source: Sky news