Airports push Reeves to water down ‘crippling’ tax proposals

Britain’s biggest airports are pressing Rachel Reeves to water down crippling property tax proposals over fears of a £1bn hit to the sector.

Bosses from Heathrow, Gatwick and Manchester have privately warned the Chancellor that a planned rise in business rates would undermine economic growth, stall airport expansion and lead to higher fares for passengers.

One senior source said: “The bills that we are all are facing are eye-watering and potentially crippling. We think they’d also make for some crazy optics in terms of government policy.”

Retailers are separately urging the Chancellor to reconsider the planned changes to business rates, warning that British shops already face the highest tax burden in the G7.

Ms Reeves is planning to change the rate of property tax that UK airports pay, but the move means some face increases of 300pc or 400pc.

This would see Heathrow facing a jump from £121m to £600m. Gatwick is also braced for a bill of about £200m and Manchester Airports Group, which also owns Stansted and East Midlands airports, would see its tax rise to £150m.

Executives from the airports have in recent weeks stepped up their campaign, writing to Ms Reeves on a number of occasions and holding meetings with Treasury officials in an effort to thrash out new terms, industry sources said.

In proposals submitted to the Treasury last month and seen by the Telegraph, trade group AirportsUK urged Ms Reeves to cap the increase at 40pc – well below the four-fold increases proposed by the Government.

The jump is a result of a revaluation based on a rebound in airport profits since the last tax assessment in 2021, when passenger numbers were at an all-time low because of Covid.

Bosses have warned that the tax burden could jeopardise airport expansion plans that the Government itself has been instrumental in pushing forward.

Ken O’Toole, the chief executive of Manchester Airport, wrote to Treasury ministers this week warning that the proposed tax increases could jeopardise £2bn in spending.

A spokesman for the airport group said: “The reality is that tax increases that hugely increase our costs and erode profits will undermine and negatively impact our UK-wide programme of investments and the jobs and global trade that go with them.”

Heathrow has also said that lifting rates would be an “own goal” by the Chancellor after she was instrumental in reviving plans for a £49bn third runway at Europe’s busiest airport.

It said that proposals for a fivefold rise in its bill would be “unacceptable”.

The Treasury said it could not comment on changes to tax policy ahead of the Budget and that business rates valuations were set independently by a separate body.

“We support those hit hardest by revaluation increases and continue to engage with the sector on their concerns,” a spokesman said.

Meanwhile the British Retail Consortium (BRC) has also warned the Chancellor not to “make it even harder” for shops to compete with global rivals by raising their business rates.

It said that some stores already hand over more than half their annual rent in rates, while equivalent property taxes in France, Germany and the US stand at below 40pc. Most G7 peers also do not require retailers to pay full rates if they are unprofitable.

Helen Dickinson, the BRC’s chief executive, said Britain’s retailers were being forced to “compete with one hand tied behind their backs”.

She said that a shake-up of rates for the sector risked making “a challenging situation worse, hurting the very businesses that anchor our town centres, sustain local suppliers, and provide local jobs for millions of people”.

The BRC also warned that higher taxes on retailers would mean price rises for customers and the likelihood of shop closures in town and city centres.

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