The Chancellor delivered a Budget today that offered little relief to hard-pressed travel businesses.
A 50% cut in the domestic rate of Air Passenger Duty (APD) had been expected but will merely remove the current double rate on domestic flights from April 2023 and was accompanied by a new higher rate of APD on ‘ultra’ long-haul flights.
Rishi Sunak made no mention of targeted financial aid or relief for the international travel sector other than an extension of the current financial support for English airports for a further six months.
He announced a new 50% discount on business rates for companies in the retail, hospitality and leisure sectors for one year.
But many travel businesses have been denied business rates relief throughout the pandemic and others have had to fight with local authorities to prove their entitlement.
Abta chief executive Mark Tanzer noted: “Today’s Budget offers some help to retail travel companies, but does not go far enough to support the recovery of the international travel industry – the sector hit hardest by the pandemic.
“It’s good the Government has responded to our calls to continue business rates relief by cutting rates by 50%; this should help high-street travel agents.
“However, this is a sector that has faced tighter Government-imposed constraints on trade than almost any other.”
Tanzer argued: “The Chancellor could have done more to recognise this fact – by providing tailored recovery grants to travel agents, tour operators and travel management companies.
“Instead, while other struggling sectors will get additional tax reliefs and duty cuts, there is very little in the Budget to support many travel businesses.”
Gary Lewis, chief executive of The Travel Network Group, said the Budget demonstrated “a complete disregard for the outbound tourism industry”
He said: “The Chancellor has extended further business rate discounts for retail, hospitality and leisure businesses but once again overlooked travel agents and tour operators, despite being one of the few remaining sectors still under restrictions because of the Covid-19 pandemic. The Chancellor’s statement has shown that there is funding available for sector-specific support so why is it not forthcoming for the outbound travel sector?”
UKHospitality chief executive Kate Nicholls welcomed the rates discount, saying: “We’ve been lobbying hard for significant reform of the outdated business rates system and very much welcome the move to extend the 50% business rates relief for the hospitality and leisure sector for the next financial year.”
Yet Nicholls added: “The devil will be in the detail. We look forward to learning to what extent it will benefit businesses.”
She also welcomed the announcement of a simplification and, in some cases, reduction of alcohol duties as “great news for pubs, bars and restaurants”.
But Nicholls warned hospitality “remains incredibly fragile” amid rising costs, “severe supply chain issues and chronic staff shortages” and called on the government “to maintain” the current VAT rate of 12.5% on the sector.
UKinbound head of public affairs Lauren Broughton likewise welcomed the 50% reduction in business rates, along with new funding for local cultural and heritage sites and promised investment in transport infrastructure.
Airport Operators Association chief executive Karen Dee welcomed the six month extension of the Airport and Ground Operations Support Scheme (AGOSS) “which will provide some much needed financial relief for airports in England”, saying: “We’re pleased the government has listened.”
However, she noted: “This will not be very much help to our largest airports as it is capped at a level far below their business rates bills.”
Martin Chalk, acting general secretary of pilots’ union BALPA, said: “British aviation and the many people who rely on the industry for a livelihood have once again been overlooked.
“This Budget needed to invest in the recovery of what was once the world’s third largest aviation industry and supported 1.5 million jobs. This Budget provides no support.”
Chalk suggested: “The Chancellor seemed drunk on promoting prosecco and pubs rather than on the sober need to support airlines [which] have haemorrhaged money for 18 months.”
In his Budget speech, Sunak acknowledged the September inflation rate of 3.1% provided a “challenging backdrop” and warned “Inflation is likely to rise further” and “to average 4% over next year”.
However, he reported the Office for Budget Responsibility (OBR) has revised up its forecasts for UK economic growth and now expects UK GDP to expand by 6.5% this year compared to a 4% forecast in March.
Sunak forecast the UK economy would to return to its pre-Covid level “by the start of next year”, with annual growth in 2022 forecast at 6%
He noted the unemployment rate is now expected to peak at 5.2% next year, well down on the 11.9% rate forecast at the height of the pandemic.