A Third Runway for Heathrow: The Ups and Downs
Third runway at Heathrow Airport granted green light for operation; however, the question remains whether it will spur economic growth.
The long-debated plan to build a third runway at Heathrow Airport might finally become a reality. Chancellor Rachel Reeves confirmed this week that the government would back the project, revealing other plans aimed at boosting growth. Reeves emphasized the importance of making bold decisions as the UK can't afford to "duck" difficult choices. Heathrow, Reeves said, connects to markets everywhere, offering promising opportunities for growth. However, she did not clarify the expansion proposals for Gatwick and Luton airports.
Familiar Ground: The Heathrow Expansion Saga
This isn't the first time we hear about Heathrow's expansion. The issue can be traced back to the 1960s and has seen a continuous stream of studies, investigations, and political wrangling. Detailed plans for a third runway were first proposed in 2003, with cautious approval from the Blair government. The project received full government backing in 2009 under Brown but was later scrapped by the Cameron government in 2010, only to be re-embraced in 2012. The project was once again official government policy under Theresa May, with the Commons voting in favor in 2018. However, the Court of Appeal blocked expansion as incompatible with the UK's emissions-cutting commitments in 2020. The Supreme Court reversed this decision, but the Covid pandemic paused progress on the aviation sector, making the expansion question irrelevant for a while.
The Political Landscape: friend or foe?
The path to a third runway is not a smooth one politically. Many members of the Labour Party oppose the expansion, with energy secretary Ed Miliband being a long-time critic. Miliband advocated for expansion to meet the UK's emissions targets, contrasting Reeves' recent stance. London Mayor Sadiq Khan and Manchester's Andy Burnham are also firmly against the expansion. The government's Climate Change Committee has urged for no net airport expansion without a clear plan to reduce emissions from the aviation industry and manage passenger capacity. The committee is due to publish the next carbon budget soon. Reeves may be enthusiastic, but the political waters promise to remain choppy.
Heathrow's Desire for Growth
Heathrow Airport remains adamant about the third runway. The airport's CEO, Thomas Woldbye, expressed gratitude towards the government and the chancellor for their leadership, praising their "bold and responsible vision." The government aims to secure planning permission by the end of the current parliament, a goal Woldbye described as "ambitious, but not unrealistic." Heathrow intends to submit detailed proposals to the government by summer, and if everything goes according to plan, the earliest completion date would be the mid-2030s. However, some industry analysts estimate that planning and completion might take 8–10 years.
Can we anticipate a third runway at Heathrow?
The future remains uncertain as the political and legal intricacies will determine whether the expansion will materialize. However, what can be foreseen are the even greater challenges concerning cost and construction, as pre-pandemic estimates projected a multi-billion-pound megaproject requiring the diversion of the M25 into a tunnel beneath the new runway, the demolition of 750 homes, and a primary school. There are concerns about the UK's ability to deliver a project of this size, considering competitions for resources like construction workforce, infrastructure necessities, and funding. The current expansion plans were initially estimated at £14 billion in 2014, but costs have skyrocketed since then. Heathrow has discreetly informed airlines that the expansion bill could range between £42 billion and £63 billion. Financing the expansion and adjusting the framework governing Heathrow's "regulated asset base" model will be critical challenges.
Would a third runway inject growth into the UK?
Expansion is projected to raise GDP by 0.43% by 2050 and create 100,000 jobs, according to a study by Frontier Economics. While this isn't insignificant, it's not a game-changer. The UK needs more air capacity, but Liam Halligan in The Telegraph argues that expanding Heathrow isn't the answer. Halligan suggests focusing on expanding Gatwick and Stansted, as well as regional airports such as East Midlands, Manchester, and Glasgow, instead. Expanding Heathrow, Halligan asserts, is a costly solution that burdens the public sector and finances, with little impact on the UK's growth. Halligan advocates for a lower tax burden, smarter regulations, and political courage to allow the UK's economy to thrive.
- The chancellor's recent announcements have highlighted the government's focus on personal finance and industry, mentioning plans to boost the economy and bold decisions in the face of political challenges.
- In the realm of general-news, the expansion of Heathrow Airport, an ongoing saga since the 1960s, has garnered attention from the aerospace industry and transportation sector, as well as numerous political figures.
- On a global scale, the approval of Heathrow's third runway could potentially impact finance and business opportunities, as the airport plays a significant role in connecting the UK to various markets.
- As the debate on Heathrow's expansion continues, concerns regarding the cost and construction of the project have been raised, with some critical voices in politics and the finance industry questioning its long-term benefits for the UK's growth and economy.
