For the last decade, the Labour government under Tony Blair has emphasised the importance of investment as the only (and certainly the best) way to raise standards, improve quality and deliver world-class productivity.

This has been the government’s mantra for 10 years and now that Gordon Brown is the new prime minister, it’s likely to remain government policy for the next few years, at least.

Of course, both Gordon Brown, when he was Chancellor, and the government in general were correct in identifying investment as the key to future prosperity: that is investment in facilities, investment in staff and investment in training.

So it seems all the more strange, therefore, that the Chancellor decided to withdraw one of the instruments through which the hotel industry has so successfully followed government policy.

Since 2001, when foot-and-mouth disease caused so much damage to the British hotel industry, about 150 hotels have opened every year in an annual investment worth some £3bn.

In an industry largely made up of independent owner operators, with a small number of major groups, this is an extraordinary achievement, which had every sign of continuing well beyond the 2012 Olympic Games.

But the decision in the last Budget to scrap the Hotel Buildings Allowance, and to renege on all agreements currently in place, flies in the face of both fairness and good sense.

At a stroke, removing the HBA, which has encouraged so much of this investment, will have damaged many current and future hotel construction and refurbishment plans. One estimate is that the loss of HBA will cost the industry £500m a year – no small beer.

Without the HBA, many plans will not now come to fruition, and even large groups are affected. I quote one:

“It will make us less competitive when vying for sites where margins are tight. We will now lose more opportunities to residential and retail as they can attract a better yield.

“There’s no doubt that the loss of HBA will make life more difficult. How can the DCMS push us to regenerate for the Olympics while the Treasury removes any possible advantage that we had?”

That’s a question to which the entire industry would like an answer.

Combined with the increased tax on small businesses introduced this year - estimated to take £60m out of the hotel industry alone – there will be a growing reluctance to invest in new hotels and new facilities. Investment in provincial towns and rural locations is particularly at risk. Unfortunately, these are the very areas of the country where the government wants us to generate job opportunities.

It is mystifying that the withdrawal of the HBA was made without any discussion with the industry - yet it will affect developments which, in many cases need to be financed over a period of many years – in some cases, 25-years. What is worse, it will affect agreements that have already been signed.

The Chancellor’s decision was not honourable. This is not good government.

Bob Cotton

BHA chief executive