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Get Britain building again! In any conversation about the UK’s ability to construct large, growth-boosting infrastructure projects — or not — a third runway at Heathrow tops the list of missed opportunities. Efforts to expand the west London hub date back decades.
That makes it an obvious target for UK chancellor Rachel Reeves, who wants to persuade investors and businesses that her government is pro-growth. The difficulty is convincing them that a third runway can actually be delivered.
On paper, there are some sound economic arguments to support expansion. Heathrow is not only the UK’s busiest airport, catering to an estimated 83.8mn passengers in 2024, it is also the country’s largest port by value.
Even with its current two runways it has kept increasing passenger numbers, breaking a fresh record in November. Yet further growth, through small changes such as persuading airlines to switch to bigger jets, will have limits. Flights are capped at 480,000 annually. Slots to launch new routes are constrained; the airport is running at 99 per cent capacity.
There are soft benefits, too. Almost any traveller will have a story about delays or flight cancellations at Heathrow — in part a symptom of its capacity constraints.
True, there are five other “London” airports that airlines can choose from, if Southend in Essex is included. But Heathrow is a favourite for long-haul carriers as transfer traffic makes certain routes economically viable.
In reality, though, the barriers remain huge. A previous Labour administration approved a third runway at the airport in 2009. A shovel is yet to hit the ground.
Even if the weighty concerns of environment campaigners and west London residents could be swept aside, the cost and how it can be funded without making passengers and airlines balk are still big unknowns. Even in 2014, when Heathrow forecast the cost at close to £14bn, others reckoned this was an underestimation. Airlines are wary of how much charges — passed on to passengers — would have to rise to fund the returns private investors would demand.
Of course impasses over big, tricky projects have been broken before. Nuclear power plants in the UK had a similar stop-start history, which ended in 2016 when Theresa May’s government gave the go-ahead for the Hinkley Point C plant in south-west England. But now over-time and over-budget, it may not be a comparison the government is keen to make.
What’s obvious, though, is this isn’t really about near-term growth at all — rather the perception of growth. With UK businesses deeply gloomy about the consequences of Budget tax changes this year, it is little wonder the chancellor is grasping for any levers she can to get the endorphins going.
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