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UK chancellor Rachel Reeves has urged Heathrow to fast track proposals to build a third runway, in a much-trailed speech that sought to reinvigorate the Labour government’s growth agenda.
Reeves said the government hoped to grant planning permission to Heathrow’s expansion by the end of the current parliament in 2029, a target the airport’s boss told the Financial Times was “ambitious, but not undoable”.
The chancellor said expanding Heathrow would “unlock further growth, boost investment, increase exports and make the UK more open and more connected” in a speech on her plans to boost the flatlining UK economy.
“I can confirm today that this government supports a third runway at Heathrow and is inviting proposals to be brought forward by the summer,” Reeves said.
Thomas Woldbye, chief executive of Heathrow, told the FT he was confident the airport would put forward detailed proposals on that timeline. He added that the earliest the third runway could be completed would be the mid-2030s if everything went to plan.
“The target is to have planning permission by the end of this parliament. That is ambitious, but not undoable, seen from our point of view,” he said.
Woldbye added: “We are standing on, if you like, a huge body of work that has been done in the past 10 years. If we didn’t have that, we wouldn’t be able to do that, because this is a huge and complicated project.”
Heathrow’s pre-pandemic blueprint was for a multibillion-pound megaproject that would include diverting the M25 motorway into a tunnel to make room for the new runway. In the process, 750 homes and a primary school would be demolished.
Reeves said airport expansion is compatible with the government’s legally binding net zero 2050 target, pointing to “cleaner and greener flying” through so-called sustainable aviation fuels.
Sir Sadiq Khan, the Labour Mayor of London, said he “remained opposed” to a new runway.
“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 said.
The government’s push for airport expansion has also alarmed local residents and environmental groups.
“Instead of picking up any old polluting project from the discard pile, the chancellor should focus on industries that can attract investment and bring wider economic and social benefits,” said Greenpeace UK’s policy director Dr Doug Parr.
Expansion plans at London’s Gatwick and Luton airports are further ahead in the planning process than Heathrow. Transport secretary Heidi Alexander is expected to greenlight their proposals by spring.
In her speech in Oxfordshire on Wednesday, Reeves stressed her determination to “grow the supply side of our economy”, outlining a three-pillar approach built on stability, reform and investment.
“Growth will not come without a fight, without a government willing to take the right decisions now to change our country’s future for the better,” she said.
Reeves also confirmed plans to make Oxford and Cambridge “Europe’s Silicon Valley”, with new transport links between the university towns, as well as support for a proposed regeneration scheme around Manchester United’s stadium at Old Trafford.
Business leaders have previously criticised the Labour government for introducing measures that executives say will hit growth, including a £25bn national insurance increase on employers and new labour laws.
Reeves defended the tax rises as necessary given the government’s fiscal inheritance and declined to answer a question on whether she was ruling out further taxes on businesses.
Reacting to the speech, Stephen Phipson, chief executive of manufacturers organisation Make UK, warned the government needed to resolve the contradiction between the Budget tax rises and the ambitions set out by the chancellor.
“There is a clear contradiction between implementing laudable measures such as planning reform and infrastructure investment whilst, at the same time, applying a handbrake through measures which will inevitably reduce investment and freeze recruitment. This is a clear dichotomy that government needs to resolve internally,” he said.
The chancellor also stood by Labour’s flagship workers’ rights package.
The measures could cost businesses up to £5bn a year, according to the government’s own analysis and have been heavily opposed by industry, but Reeves argued they will bolster growth.
“A secure workforce is a more confident, more productive workforce and also more confident to spend in the economy,” she said.
She insisted that deputy prime minister Angela Rayner and business secretary Jonathan Reynolds have “worked closely with business to understand their concerns”, including on probation periods and the flexibility to take on workers during busy times, such as school holidays.
In a bid to reassure industry, she said the bill that the government takes through parliament “will reflect those concerns so that we get the balance right, supporting working people and supporting businesses”.
Additional reporting by Peter Foster in London and Jennifer Williams in Manchester
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