Airport chiefs urge government to tackle business rates

The UK’s airports have renewed calls for the government to take action on business rates, with Baroness Ruby McGregor-Smith warning that the tax is becoming a barrier to investment.

Her comments come as airports continue to raise concerns about rising business rate liabilities and the impact they could have on long-term investment plans.

Speaking at the AirportsUK annual conference earlier this week, she said the government must “ensure that we have a tax and regulatory framework that delivers a world-class aviation sector by encouraging and rewarding investment in the UK, particularly business rates, which are proving such a brake on investment.”

Why are UK airports concerned about business rates?

Business rates are a major cost for airport operators because of the scale and value of airport estates and infrastructure.

Earlier this year, Heathrow chief executive Thomas Woldbye told City AM that Heathrow was “the biggest payer of business rates in the country”. He said the airport’s annual bill had risen by around £50 million.

According to Heathrow, its business rates charge for the first half of the year increased to £129 million from £62 million a year earlier, despite benefiting from transitional relief. The airport has said that, without that relief, it would have faced business rates costs of more than £1.5 billion over three years.

AirportsUK, which represents airports including Heathrow, Gatwick and Manchester, has previously warned that significant increases in business rates could place financial pressure on airport operators and affect investment decisions.

The trade body has said some airports may need to review major investment plans if costs continue to rise.

In her address at this year’s conference, Baroness McGregor-Smith said: “Aviation continues to be one of the UK’s genuine success stories – we remain one of the largest markets in Europe and the world. We have a great opportunity to ensure we consolidate and improve that position.”

Industry focus on delivering economic growth

McGregor-Smith told delegates the conference was an opportunity to look beyond recent challenges and focus on the role aviation can play in supporting economic growth.

“The conference provides an opportunity to reflect on the challenges that we have faced, but more importantly, how we move forward so that we can deliver the economic growth the UK needs and the excellent service that passengers expect from us.”