Airports join budget backlash with warning of business rates 'catastrophe'

Britain’s biggest airports are joining the growing private sector backlash against Rachel Reeves’s budget, warning that a £1bn business rates bill for the industry will trigger the cancellation of routes to and from the UK and higher costs for passengers.

Sky News has obtained a draft letter from Airports UK, which represents more than 50 airports across the country, which claims that business rates revaluations will result in the industry being forced to pay more than £1bn - a fivefold increase from the current level.

It describes the impact as "catastrophic", and demands an urgent meeting with the chancellor to discuss the measures, which would affect the sector from April 2026.

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"Airports are already some of the largest rates payers in the country," it said.

"These revaluations will increase average rates bills for airports in England by more than 450%, with some airports facing multiples of 12 times."

The draft letter, which is addressed to Ms Reeves and intended to be copied to Sir Keir Starmer and other cabinet ministers, is understood to be close to being finalised.

One industry source said it could be sent in the coming days.

In the version seen by Sky News, the industry body says the soaring rates bill "is equivalent to doubling the corporation tax levied on the sector, at a time when the government has committed to stable tax and policy regimes to drive business confidence and stimulate private sector investment".

"These increases in rates, however, would destroy any chance of this and cause huge damage to the economy," it said.

"Investment in airport assets will decrease, routes to and from the UK will be lost (as can already be seen in Germany where taxes are rising), trade will be hurt, and British travellers will be hit with higher costs and less choice."

Airports UK also said that the tax changes announced in the budget would jeopardise the government's entire growth agenda.

"Without our sector as a major 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," it said.

"The [Valuation Office Agency's] revaluation [to determine future business rates liabilities] will threaten the UK's status as a leader in aviation and a hub for global connectivity and trade.

"Airports cannot be expected to sustain increases of this magnitude without having to scale back investment or to cut routes.

"These increases are punitive against all sizes of airports and threaten the very viability of several airports, without which critical regional connectivity would be lost."

"This would imperil 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 string of industries to deliver stark warnings to the Treasury about the Budget's likely impact.

In recent weeks, Sky News has revealed similar letters from the hospitality and retail sectors, in which they have told the chancellor that job losses, business closures and price rises will be unavoidable when rises to employers' national insurance come into effect next April.

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

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

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

The trade association is run by Karen Dee and chaired by Baroness McGregor-Smith, a prominent businesswoman.