Expansion of London Luton Airport threatened by Labor taxes

A £2.5 billion proposal to expand one of London’s leading airports risks being delayed due to tax costs, AM City it can be said, as the aviation sector is feeling the brunt of Rachel Reeves’ business rates crackdown.

Luton Airport’s owners, Labour-run Luton Council, have drawn up plans to build a new terminal and increase capacity from 18m to 32m per year by 2043.

But the proposal, which has already been approved by the government, could be threatened by changes to business rates announced in last year’s state budget, and a revaluation due to come into effect in April.

The airport is projected to see its business rates bill more than double by 2029, with payments to HMRC set to increase from just under £7 million this year to £14.5 million in three years, according to new analysis.

The rollback of investment plans from major airports would deal a major blow to Reeves, as the Labor government relies on major infrastructure projects to boost productivity.

A statement from Luton Airport said the additional tax burden “will likely have an impact” on investment decisions as officials urge the government to align policy with its mission to support airport expansion.

The statement added that it would continue to work with the government on its ongoing review of business rates for airports along with other industry representatives. The consultation will end next month.

Gatwick Airport officials said they were still analyzing the impact of a doubling of business rates to £140 million by 2029 after saying at the end of October that a rise above 40 per cent would affect investment plans.

The group said the consultation was “vital” to ensure the airport avoided the worst impacts of Reeves’ tax policies when the next revaluation was carried out.

A Manchester Airport spokesman last month said it would “reconsider” plans to invest £2 billion in its airport over the next five years.

Airports will be hit with huge tax bills

Analysis carried out by the Conservative Party and verified by AM City suggests that major airports will more than double business rates in three years.

Heathrow will see the biggest increase from just under £117 million in the current financial year to £244 million in 2029.

Industry group AirportsUK also found that increases in business rates bills across the sector will more than double unless the Labor government reneges on its Budget measures.

“The Chancellor has bet UK growth on the airports sector, and while the changes to transition support announced in the Budget are very welcome, increasing their business levels by more than 100 per cent could still force some to review billions of pounds of transformational investment across the UK and potentially put thousands of jobs at risk in the long term,” said Karen Dee, chief executive of AirportsUK.

“This will clearly have a devastating impact on businesses that depend on airport connectivity across the UK, negatively impacting local economies that depend on supply chains, tourists and the connections provided by their airports.

Shadow transport secretary Richard Holden said: “It tells you all you need to know that Labor is imposing a half-billion pound tax increase on airports just as they are being asked to invest, expand and compete globally.

“You can’t build a pro-growth economy while taxing the infrastructure that keeps the economy flying. Labor’s tax policies are risking jobs and making flights more expensive, all to plug the holes in their economic disaster.”

A government spokesman said: “We are delivering a £4.3 billion support package to cap business rates rises at 30 per cent before other help for the largest properties, including airports. Without intervention, the rise would be 500 per cent.”