Chancellor confirms government's support for Heathrow third runway in speech on growth

In a significant address on economic growth, Chancellor Rachel Reeves has reaffirmed the government's support for the expansion of Heathrow with a third runway.

Speaking to an audience of journalists, business leaders, and cabinet ministers at Siemens Healthineers in Oxfordshire on Wednesday morning, she underscored Heathrow's crucial role in the UK’s global connectivity, as reported by City AM.

"Heathrow is at the heart of the UK’s openness as a country, it connects us to emerging markets all over the world, opening up new opportunities for growth," the chancellor commented.

She also emphasized the airport's distinctive status, remarking, "As our only hub airport Heathrow is in a unique position, and we cannot duck the decision any longer."

She then confirmed the government's stance: "So I can confirm today that this government supports a third runway, and is inviting proposals to be brought forward by the summer."

The ambitious infrastructure project, pegged to cost tens of billions and expected to surpass a decade in execution time, has been long-contested. Reeves acknowledged the drawn-out process and the environmentalists' opposition rooted in concerns over aviation's carbon footprint.

Nevertheless, the Chancellor was clear in her expectations: "our clear expectation is that any associated service transport costs will be financed through private funding" while asserting that the runway would be developed to comply with the nation's stringent environmental and climate commitments.

Shadow business secretary Andrew Griffiths expressed scepticism, stating "no one should be fooled" by Reeve’s speech. He added: "Future investment is welcome but businesses need action today on reversing Labour’s jobs tax, their red tape Employment Bill, high energy costs and the family business death tax."

When pressed by journalists, the Chancellor did not dismiss the possibility of further tax increases on businesses during this parliament.

In other announcements made by Reeves, she was keen to highlight the UK’s economic prospects, referencing the International Monetary Fund (IMF’s) 2025 upgrade, which predicts the UK will experience the fastest growth among major European countries. She also mentioned that the government would collaborate closely with the private sector to deliver projects such as the Lower Thames Crossing and various rail initiatives across the north of England.

Over the next five years, Britain would invest an average of 2.6 per cent of GDP, "compared to 1.9 per cent planned by the previous government", she said.

Reeves unveiled a revised carbon budget delivery plan, including investment by the National Wealth Fund into electric vehicle charging and £28m into Cornish metals, "providing the raw materials to be used in solar panels, wind turbines and electric vehicles". She asserted: "There is no trade off between economic growth and net zero. "

She added, "Quite the opposite. Net zero is the industrial opportunity of the 21st century, and Britain must lead the way."

The Chancellor has made a bold statement, urging the UK to "stop worrying about the bats and the newts" in reference to planning and major infrastructure projects. She highlighted that new homes will be granted automatic approval near railway stations under new zoning proposals.

Emphasising the need for decisive action, she pointed out that the economy's issues and the absence of significant reform over many years are epitomised by the £100m build-up delay for HS2.

Asserting the government's commitment, she assured that efforts would be made "tirelessly" to pass the Planning and Infrastructure Bill this spring to simplify the system. Following discussions with regulators to promote her pro-growth agenda, Reeves confirmed that a definitive action plan is set to be announced also this spring.

In her address, Reeves was clear about her strategy, which aims to "grow the supply side of our economy". Despite facing criticism from the business sector due to her tax-increasing Budget in October, she maintained: "First and foremost, it is businesses, investors and entrepreneurs who drive economic growth."

The Chancellor identified three fundamental aspects of her focus: stability, reform, and investment. She underscored the necessity of acting in the national interest and elaborated: "That means building on our special relationship with the United States and President Trump."

Reeves concluded with anticipation, saying: "I look forward to working with the new Treasury Secretary, Scott Besant, to deepen our economic relationship in the months and years ahead."

However, she also underscored the government's planned EU reset and her recent trip to China. In other developments, Reeves expressed her satisfaction in confirming that Business Secretary Jonathan Reynolds would soon visit India to recommence discussions on a free trade agreement (FTA).