Chancellor Rachel Reeves outlined details of the UK Government’s long-anticipated autumn budget in Westminster.
Some key takeaways for the travel industry include, support for high street businesses, air passenger duty rates, and tourism levy powers granted to regional leaders.
Outlined in the budget, Chancellor Reeves highlighted plans to reduce business rates for “750,000” retail, hospitality, and leisure businesses, a move which is set to include travel agencies. Full details were not outlined within today’s budget but Reeves relayed that these reduced business rates would be the “lowest rates since 1991.”
However, it is unclear if the NI Executive will follow the UK Government on the reduction of business rates for the retail, hospitality, and leisure sector. With Neil Johnson from the Northern Ireland Retail Consortium highlighting, “Retailers in England at least have the prospect of reduced business rates bills following the Chancellor’s announcements today. Retailers in Northern Ireland do not. We await with interest to see what the Executive’s reaction will be. NIRC is clear – we need to cut business rates here in Northern Ireland too.”
Changes in Air Passenger Duty were announced, with the UK Government planning to increase all rates of APD in line with inflation, commencing 1 April 2027.
In response to this announcement, Belfast International Airport Chief Executive Officer, Dan Owens highlighted, “For a Chancellor and Government that talks about growth, today’s budget will likely damage the UK’s tourism and aviation sector with its increase in Air Passenger Duty. As an island off an island, NI needs air travel, as we do not have the option of rail connectivity that the rest of the UK has.”
“This is an additional tax on air travel that the Irish Republic does not have and therefore it makes NI less attractive to airlines considering introducing new routes. This is a harmful tax that suffocates economic growth.”
Calling upon NI’s local government, Owens continued “The failure of the UK Government to act means we will now ask the NI Executive to step in. If the Executive is committed to meeting its target of increasing the value of tourism in NI to £2bn by 2030, then it needs to look at reducing APD as it is a proven way to deliver greater international connectivity and economic growth.”
As earlier revealed, the UK Government has granted regional and local leaders in England the powers to implement a tourism levy on overnight visitors. The introduction of these tourism fees will be at the discretion of local and regional bodies, who can if the overnight fee is required for investment within their local area.
In response to the budget, ABTA’s Chief Executive Mark Tanzer highlighted, “Against a difficult economic and fiscal backdrop, it will take some time to assess the impact of today’s Budget. But what is clear, is that the success of the travel industry has never been more critical to the overall health of the UK economy.”
“As such, the move to support high street businesses, including travel agencies, through a permanently lower level of business rates, is very welcome. However, ABTA remains concerned about the cumulative impact of taxes and levies on travel businesses and consumers.”
Shining further focus on changes to employment, and tax increases, Tanzer continued, “The introduction of a wide range of new taxes and tax increases, largely targeted at middle- and higher-income earners, is something that will need to be monitored carefully. With travel powering the UK economy over recent years, any negative impact on consumer demand for holidays would directly contradict the Chancellor’s own growth agenda.
Similarly, changes to employment and business taxes, including further increases in the National Living Wage, especially for younger workers, will increase the cost of employment. The government must be careful not to deter businesses from hiring staff, especially those younger people who are looking to start their careers in travel. However, there were also some positive moves in this area, including enhanced access to apprenticeships for SMEs.”
