Chancellor backs third runway at Heathrow
By Abigail Townsend
Date: Wednesday 29 Jan 2025
(Sharecast News) - The chancellor has backed a third runway at Heathrow, claiming on Wednesday that the controversial expansion will boost the economy and create 1000s of jobs.
Speaking at a new Siemens plant in Oxfordshire, Rachel Reeves confirmed the government support for the project, and invited proposals to be brought forward by the summer.
She said the west London airport "badly needed" the runway, because "for decades its growth has been constrained".
The last new runway in the UK was built in the 1940s, she noted, adding: "No progress in 80 years. Why is this so damaging? It's because Heathrow is at the heart of the UK's openness as a country."
The expansion, which will take several years to build and will include a new terminal, could create up to 100,000 new jobs, she claimed.
Heathrow first received parliamentary approval to build a third runway in June 2018. But since then it has been delayed by legal challenges, changing political positions and the pandemic. Around 700 houses will need to be demolished, and the M25 diverted into a tunnel.
There has also been vocal opposition from environmental groups.
However, Reeves insisted the expansion was compatible with the government's target of achieving net zero by 2050. In particular, she pointed to the development of "sustainable" aviation fuels, which would mean "cleaner and greener flying".
Heathrow chief executive Thomas Woldbye said: "A third runway and the infrastructure that comes with it would unlock billions of pounds of private money to stimulate the UK supply chain during construction.
"Once built it would create jobs and drive trade, tourism and inwards investment."
He told the Financial Times that the project could be completed by 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."
However, the project is expected to continue facing considerable opposition and criticism
Sadiq Khan, the mayor of London, said he remained opposed, citing the "severe impact it will have on noise, air pollution and meeting our climate change targets".
Willie Walsh, the former head of British Airways and now director general IATA, the airlines lobby group, also warned: "Heathrow's decline in status is not about capacity, it's about cost. Regulators will need to be extremely firm on cost and efficiency matters.
"Unfortunately, past performances gives airlines little confidence in this area."
The expansion plans were last costed at £14bn in 2014, and would now be far higher.
The announcement on Heathrow was part of wide-ranging speech, which the chancellor used to detail the government's growth plans.
Reeves said she would go "further and faster" to kick-start the economy, and wanted the UK to be at "the forefront of some of the most exciting developments in the world, like artificial intelligence and life sciences".
Other projects to receive government backing include a regeneration scheme around Manchester United's Old Trafford stadium and the Oxford-Cambridge Arc.
The 70-mile "growth corridor" will connect the two university towns, and will include new transport links, housing developments and water infrastructure.
Reeves also told the audience that the government was already seeing "encouraging signs" in the economy, despite significant structural problems.
She continued: "We have fundamental strengths - in our history, our language and our legal system - to compete in a global economy.
"But for too long, that potential has been held back. For too long we have accepted low expectations, accepted stagnation and accepted the risk of decline. We can do so much better.
"Low growth is not our destiny. But growth will not come without a fight."
The London-listed shares of BA's Spanish owner, International Consolidated Airlines Group, were up 3% at 332.02p as at noon GMT.
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