Business anger at rises in the costs of employing staff announced in the Budget shows no sign of abating, but industry leaders have been warned against continually “shouting” about the impacts.
Ministers “see the value” of travel and aviation and are “eager to please” the sector, according to a senior figure at business association the CBI.
Chancellor Rachel Reeves announced increases in employers’ national insurance contributions (NICs) and the national living wage in October, both to kick in from April
Jordan Cummins, CBI director for UK competitiveness, told the Airports UK conference in London: “There is no shortage of people like us shouting at the government. [But] you don’t want to have this [criticism] on the front pages for the next four years. It will make things really difficult.”
He told aviation leaders: “This government sees a big role for aviation. Global connectivity is big for it. This is not a government that doesn’t see the value of the sector.
“Other sectors need you and the government knows that. It’s committed to making its industrial strategy international. That might open doors. You should push them wide open.”
Cummins argued Labour leaders “boxed themselves in on the Budget”, saying: “They didn’t want to go after income tax and no one in government fully understood the impact of increasing employers’ NICs. But a U-turn would be embarrassing so they are entrenched on it.”
He advised: “When you go into meetings with government, say ‘This [NICs increase] is going to cost us money but we know you’re not going to row back’, [and] if you have 10 things you want, get it down to two or three.”
Airports UK chief executive Karen Dee agreed the government “accepts when we say airports drive growth”. But she added: “We see a lot of downsides in the fiscal [tax] environment and not a lot positive.”
Leeds Bradford airport chief executive Vincent Hodder said: “I fundamentally don’t think the government is going to do anything for the industry. They look at aviation as a bucket of cash that is going to deliver growth without having to do anything.”
George Parker, political editor of business newspaper the Financial Times, told the conference: “The Treasury understands why people are angry about the £25 billion bill slapped on business. But their view is it had to be done.”
He warned: “More tax rises will be required despite what Reeves says. But for the next six to nine months the government focus will be on growth. The government understands it’s key.”
Speaking at Abta’s Travel Matters conference last week, Abta director of public affairs Luke Petherbridge suggested “we’re doing reasonably well” in dealing with the new government, “getting engagement from [aviation minister] Mike Kane and tourism minister Chris Bryant, who has spoken about the importance of outbound travel”.
Petherbridge noted: “The early results have been pretty positive on sustainable aviation fuel. We’ve seen them start the process of business rates reform. They’ve heard us pretty clearly on training. The elephant in the room is the Budget. That’s had a massive impact on business. We’ll be monitoring that carefully.”