UK

Chancellor Rachel Reeves announces backing for third Heathrow runway

Chancellor Rachel Reeves announces backing for third Heathrow runway

The government supports a third runway at Heathrow, Chancellor Rachel Reeves has announced.

Ms Reeves said the expansion of Europe’s busiest airport was “badly needed” to connect the UK to the world and open up new opportunities for growth.

A third runway will “unlock further growth, boost investment increase exports and make the UK more open and more connected”, she said.

Politics latest: Reaction to third runway decision

It could increase potential GDP (Gross Domestic Product) by 0.43% by 2050 according to a Frontier Economics study, she said. 60% of that boost would go to areas outside London and the southeast, increasing trade opportunities like Scotch whiskey and Scottish salmon, she added.

Ms Reeves said an expansion could create more than 100,000 jobs.

The announcement has been welcomed by some business groups but has been met with anger from London’s Labour mayor Sadiq Khan, the Lib Dems, the Green Party and environmental groups.

Conservative leader Kemi Badenoch told Sky News over the weekend she supports a third runway.

Read more:
Analysis – The big points in chancellor’s speech that won’t get the headlines

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A plane taking off from Heathrow Airport. Pic: PA

As part of a speech on funding infrastructure across the UK to promote growth, Ms Reeves said: “Persistent delays have caused doubts about our seriousness towards improving our economic prospects.”

She added that business groups like the Confederation of British Industry (CBI), the Federation of Small Businesses (FSB) and the Chambers of Commerce (BCC), as well as trade unions “are clear – a third runway is badly needed”.

‘Britain is a country of huge potential that is untapped’

Speaking afterwards to Sky’s economics and data editor Ed Conway, Ms Reeves said: “I want Britain to be a magnet for foreign investment… we should be welcoming the best businesses and the best talent in the world. I want businesses around the world, investors around the world, to see in Britain, what I see, which is a country of huge potential that is untapped.”

The chancellor also spoke of helping British companies to scale up.

She said: “We are introducing the capital market reforms, particularly around pension reform, unlocking £80bn of long-term patient capital by creating these mega funds, the mergers of defined contribution and local government pension schemes, to create those larger funds that can invest at scale in the exciting opportunities in the UK.

“Building on what countries like Australia and Canada do with their big pension funds, to support British industry, and particularly that stage of a business career when they’ve had the start-up and the seed funding, but now they’re looking to scale up, but they find that the access to finance isn’t available in the UK, and often look, to example, for the United States.”

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Britain has ‘huge potential’

Investments in green aviation fuel

Ms Reeves said in her speech that the UK is “already making great strides in transitioning to cleaner and greener aviation” and announced the government is investing £63m over the next year into the Advanced Fuel Fund grant programme to support the development of sustainable aviation fuel production plants.

The government will be accepting proposals until the summer and will then carry out a “full assessment” through the Airport National Policy Statement to “ensure a third runway is delivered in line with our legal, environmental and climate objectives”.

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Three main points from chancellor’s big speech

Ms Reeves said the government expects any associated surface transport costs to the third runway’s construction to be financed through private funding.

She added a decision on plans to expand Gatwick and Luton, which are currently under way, will be made by the transport secretary “shortly”.

Read more:
A long history of Heathrow’s third runway plans
Green groups criticise Heathrow campaigner’s role in Labour policy creation

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A decades-old debate

The debate around whether Europe’s busiest airport should expand has been circling over British politics for decades.

Ms Reeves’s decision will likely put her at odds with Climate Secretary Ed Miliband, who has said airport expansions will not go ahead if they cannot meet climate targets.

However, he said last week he would not resign if the government approved a third runway despite threatening to resign from Gordon Brown’s cabinet as climate change secretary in 2009 over the plans and in 2018 he said an expansion was “very likely” to make air pollution worse.

He has now said the government can meet both its growth and net zero missions together.

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Labour’s London mayor Sadiq Khan has opposed the government’s plan

London mayor opposes runway

Sadiq Khan said he remained opposed to a third runway “because of the severe impact it will have on noise, air pollution and meeting our climate change targets”.

He said he will carefully scrutinise any new proposals, “including the impact it will have on people living in the area and the huge knock-on effects for our transport infrastructure”.

“Despite the progress that’s been made in the aviation sector to make it more sustainable, I’m simply not convinced that you can have hundreds of thousands of additional flights at Heathrow every year without a hugely damaging impact on our environment,” he added.

File photo dated 4/1/2016 of an Emirates Airbus A380 plane lands over houses near Heathrow Airport, west London. Exposure to aircraft noise could increase the likelihood of suffering heart attacks, according to a study. Researchers at University College London (UCL) found people who live near airports - and are subjected to noise from planes taking off and landing - may be at greater risk of poor heart health. Issue date: Wednesday January 8, 2025.
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Heathrow is right next to large residential areas. Pic: PA

Green Party MP Sian Berry said expanding airports “in the face of a climate emergency is the most irresponsible announcement from any government I have seen since the Liz Truss budget”.

Conservative shadow chancellor Mel Stride accused Ms Reeves and Sir Keir Starmer and “their job-destroying budget” of being “the biggest barriers to growth”.

“What’s worse, the anti-growth chancellor could not rule out coming back with yet more tax rises in March,” he added.

“This is a Labour government run by politicians who do not understand business, or where wealth comes from. Under new leadership, the Conservatives will continue to back businesses and hold this government to account.”