18 Nov

Why more difficult decisions are likely after the Autumn Statement

This column was first published in TTG on 18 November 2022.

The Chancellor, Jeremy Hunt, was very keen to set expectations ahead of yesterday’s Autumn Statement that there would be little to cheer for the public or UK businesses, so it is positive that there was one big win for the industry – with business rates support for eligible retailers (in England) not only extended for the next financial year, but increased to 75% for eligible businesses.

This was one of ABTA’s main asks ahead of the Autumn Statement – and we welcome the acknowledgement that now is simply not the time to reverse all support measures. However, the continued exclusion from business rates relief of tour operators and other travel businesses is disappointing, especially as the overall package of measures will see the cost of doing business increase notably. 

As ever, much of the detail of the statement is not in what is said by the Chancellor at the despatch box, but rather what is contained in the documents published by HM Treasury afterwards. This is where some of the expected pain for businesses emerges – with confirmation of VAT and NIC threshold freezes in future years dragging more businesses into paying tax, as well as the planned revaluation of business rates in April 2023 and CPI-linked inflationary increases for those not part of the available reliefs scheme next year. Employers will also face a rise in the National Minimum Wage, and APD will increase in line with RPI-inflation from 2024-25. While that last measure doesn’t come into effect until 2024, it will further increase the UK’s already uncompetitive aviation tax regime. 

The Chancellor also confirmed that details of future energy support for businesses will be available by the end of the year. The terms of reference for the review says a ‘high bar’ will be set for businesses to continue receiving support beyond April with the Government looking to dramatically reduce the bill for taxpayers.

Meanwhile, there are also a few longer-term policy details and hints – including a decision against pursuing an online sales tax, a commitment to bringing forward the Digital Markets, Competition and Consumer Bill, and perhaps also a narrowing of the focus for the Government’s post-Brexit deregulation drive. The latter, on balance, would likely be welcome given the importance of other challenges currently facing the country and the limited capacity of the UK civil service, although we’re still expecting to see some moves on potential reforms to the Package Travel Regulations and ABTA is engaging officials and Ministers on this front.

With serious geopolitical challenges contributing to high inflation, and the cost of Government borrowing increasing since the financial markets took fright in September, the Chancellor’s statement delivered a mix of public spending cuts and tax increases for pretty much everyone – businesses and consumers alike. But this is only the beginning – with more difficult decisions likely to follow. 

That is why the industry must continue to alert policymakers and MPs to the challenges that we are facing, to ensure our voice is heard when difficult calls are being made. 

ABTA will keep on making the case that travel businesses faced unique constraints during the pandemic – which were maintained long after domestic measures were lifted – and that this needs to be recognised by policymakers when they are setting the tax and policy environment that supports travel businesses to recover and deliver future growth.

It’s also important the industry continues to demonstrate the value we bring to the economy. ABTA recently published our joint report with UKinbound, International Travel: Powering the UK Economy, which evidences this point. Alongside the report, we published a dashboard on what travel means to every area of the country (Westminster constituency level) and template letters to help the industry put our case to politicians. I would encourage everyone to use the evidence within the report to contact your own MPs, share your own stories, and ensure the voice of UK travel is heard.

I’ll be talking about these findings at ABTA’s flagship Travel Matters event on 6 December, which will see industry leaders come together in Westminster to discuss what is needed from Government to rebuild travel in the long term.

Luke Petherbridge, Director of Public Affairs, ABTA – The Travel Association