Airports join budget backlash with warning of business rates ‘catastrophe’
Britain’s biggest airports are joining the growing private sector backlash against Rachel Reeves’s budget, warning that a £1bn business rates bill for the industry will trigger the cancellation of routes to and from the UK and higher costs for passengers.
Sky News has obtained a draft letter from Airports UK, which represents more than 50 airports across the country, which claims that business rates revaluations will result in the industry being forced to pay more than £1bn – a fivefold increase from the current level.
It describes the impact as “catastrophic”, and demands an urgent meeting with the chancellor to discuss the measures, which would affect the sector from April 2026.
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“Airports are already some of the largest rates payers in the country,” it said.
“These revaluations will increase average rates bills for airports in England by more than 450%, with some airports facing multiples of 12 times.”
The draft letter, which is addressed to Ms Reeves and intended to be copied to Sir Keir Starmer and other cabinet ministers, is understood to be close to being finalised.
One industry source said it could be sent in the coming days.
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In the version seen by Sky News, the industry body says the soaring rates bill “is equivalent to doubling the corporation tax levied on the sector, at a time when the government has committed to stable tax and policy regimes to drive business confidence and stimulate private sector investment”.
“These increases in rates, however, would destroy any chance of this and cause huge damage to the economy,” it said.
“Investment in airport assets will decrease, routes to and from the UK will be lost (as can already be seen in Germany where taxes are rising), trade will be hurt, and British travellers will be hit with higher costs and less choice.”
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Airports UK also said that the tax changes announced in the budget would jeopardise the government’s entire growth agenda.
“Without our sector as a major partner, the government’s ambition to secure the highest growth rate in the G7 and unlock an investment-led approach to transforming the economy will be materially damaged,” it said.
“The [Valuation Office Agency’s] revaluation [to determine future business rates liabilities] will threaten the UK’s status as a leader in aviation and a hub for global connectivity and trade.
“Airports cannot be expected to sustain increases of this magnitude without having to scale back investment or to cut routes.
“These increases are punitive against all sizes of airports and threaten the very viability of several airports, without which critical regional connectivity would be lost.”
“This would imperil your growth mission before it even gets started, and we request an urgent meeting in December to resolve this matter.”
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The letter makes airports the latest in a string of industries to deliver stark warnings to the Treasury about the Budget’s likely impact.
In recent weeks, Sky News has revealed similar letters from the hospitality and retail sectors, in which they have told the chancellor that job losses, business closures and price rises will be unavoidable when rises to employers’ national insurance come into effect next April.
The warning from the airports industry comes amid a slew of corporate activity in the sector, with The Sunday Times reporting last weekend that London City and Bristol airports could soon change hands in a £10bn deal.
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Heathrow’s shareholder base has also changed in recent months, with Paris-based investor Ardian and Saudi Arabia’s sovereign wealth fund swooping for a 38% stake.
A spokesman for Airports UK declined to comment on the letter.
The trade association is run by Karen Dee and chaired by Baroness McGregor-Smith, a prominent businesswoman.
OpenAI has signed its first major licensing deal to bring well-known characters to life on its Sora video generation tool.
The company said the agreement with Walt Disney was part of a push to ensure the rights of creators in the generative artificial intelligence (AI) space amid growing concerns over copyright, fakes and misinformation.
It forms part of a $1bn Disney investment in OpenAI, that will see the entertainment firm roll out ChatGPT to its staff and grow its AI capabilities.
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The initial three-year licensing deal will allow Sora users to generate and share videos based on more than 200 Disney, Marvel, Pixar and Star Wars characters.
These include Mickey Mouse, Cinderella and Luke Skywalker.
Sora allows people to quickly create realistic clips based merely on text prompts.
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Disney and OpenAI said they were committed to responsible use of AI amid the backlash from critics who have pointed to widespread misuse of generative AI in the social media space – a practice known as AI slop.
Some have depicted fake messages from celebrities and even used the dead.
OpenAI CEO Sam Altman said: “This agreement shows how AI companies and creative leaders can work together responsibly to promote innovation that benefits society, respect the importance of creativity, and help works reach vast new audiences.
His counterpart at Disney, Bob Iger, added that the partnership would “extend the reach of our storytelling through generative AI, while respecting and protecting creators and their works”.
As part of the deal, some user-generated Sora videos will be made available on the Disney+ streaming service.
Dan Coatsworth, head of markets at AJ Bell, said of the tie-up: “It’s a win-win situation for Disney and OpenAI. Disney gets to deploy its beloved brands in the world of AI while keeping control of the intellectual property.
“Fans can use Disney characters to make videos and take social media content to another level. That could drive significant traffic to OpenAI’s Sora social media platform, turning a relatively unknown entity into a household name in a flash.
“As part owner of the business, Disney will be able to use the equity stake in OpenAI to ensure its characters are used in a controlled environment.
“It’s a significant step forward for the concept of fan fiction”, he concluded.
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