Heathrow: a growth disruption

Yesterday, the Chancellor, Rachael Reeves gave us yet another reason to doubt her ability or judgment. With all the modesty of President Trump, she announced that expanding Heathrow Airport by adding a third runway, building two new car parks, burying the M25 motorway, and upgrading two of the five terminals would kickstart the UK's economic growth. Her moral compass is skew-whiff.

She asked the owners of the airport to bring forward revised plans for the expansion by the summer. If the plans were approved the expansion is expected to take more than 10 years to complete. She claims it will create 100,000 jobs, an inflated consultant's projection that is as unlikely as the KPMG estimate that HS2 would make £15bn of savings by improving connectivity between London and Birmingham. This was later admitted to be unrealistic. She also claimed it would enable a significant increase in the export of goods and that whisky and salmon are two of Heathrow's biggest exports. This has been rubbished by Scottish companies who have pointed out that almost all the whisky exports are by shipping containers through ports and salmon goes from Scottish airports.

The new owners of the airport, FGO Topco, is a consortium of French, Qatari and Saudi Arabian investors. The previous owners, Heathrow Airports Holdings, estimated that the expansion would cost £14bn. The new owners will no doubt significantly revise these costs because of inflation over the past few years. These costs will be paid for by charging airlines. The charges at Heathrow are already two and a half times higher than Gatwick and other European hub airports. According to the travel journalist Simon Calder and Willie Walsh, the former British Airways chief executive, there are severe doubts about whether these could be afforded or sustained. There are then the direct costs to the UK government from M25 tunnelling, upgrading rail connections, infrastructure costs resulting from a massive increase in traffic and ameliorating the environmental issues. 

This discussion on the pros and cons of this LBC video is a useful primer to the debate.

Heathrow's expansion plans are an ill-conceived proposal that the Labour Government and Rachel Reeves will come to regret. The patina of her brassy boast that she would be the first Green Chancellor has already been polished off. It is her London roots and Oxford education that has taken over with her so-called big growth agenda focused on London and the Oxford to Cambridge corridor. The abandonment of decarbonisation targets along with the deregulation of Planning and continued austerity suggests that Labour is performing a volte-face on the very issues that enabled it to gain power. It has not taken long for Reeves to be scammed by advice from private investment companies and hoodwinked by Treasury shibboleths.  

There are many reasons why reviving the Heathrow Expansion Plan is a mission too far.

First, the environmental impact and increased carbon emissions that she claims can be overcome do not accord with the substantial body of evidence that is outlined in this briefing paper on the environmental impact of  Heathrow Expansion.

Second, is the impact on London residents. The number of flights would increase from 480,000 a year to 720,000 a year, a 50% increase to almost 2000 flights per day. The flight paths into Heathrow in prevailing winds are directly over central London with 750,000 people subjected to excessive noise levels. This does not include other communities with landings starting at 4:30 am and certainly disturbing residents as far away as Lambeth. I am regularly awakened by the early morning aircraft landings when I stay there.

Third, the congestion in the vicinity of Heathrow, including the M25 adds cost delays to many businesses and extends travel times for road users. Congestion will only increase, diminish the efficiency and halt the growth of many businesses.

Fourth, the effect of further increasing the capacity of one of the world's busiest airports will reinforce the primacy (the ratio of the size of the largest city to the next largest cities) of London and divert funding from other regions which are in desperate need of investment and levelling up. The years of London-centric investment by the Tory government are being replicated. All the evidence is that countries with a high level of primacy of their largest cities like the UK, France, Mexico and Thailand are less successful in achieving economic growth than countries that have greater parity in the size of city regions.

Finally, there are better hub airports like Frankfurt, Schiphol, Amsterdam, Charles de Gaul, Paris, Vienna and Zurich. They have been designed as fully integrated airports with excellent transport links and suffer few of the delays that are endemic at Heathrow. Nor do they have flight paths over the city. 

On my last three transfers at Heathrow Airport, admittedly the last one was in 2016, I missed my connecting flights. I no longer use it as a matter of principle, even Gatwick works better. The UK seems obsessed with building and expanding oversized infrastructure projects like airports, power stations and hospitals. They become too big to be either effective or efficient. Heathrow is already a case in point, why make it worse and divert much-needed investment that will not reap any highly dubious benefits for at least ten years.