Rachel Reeves finally declared her support for a third runway at Heathrow airport as part of a mega-package of plans to boost the economy.
The Chancellor faced down critics to end the long-running political saga over the west London airport expansion. In a wide-ranging 45-minute speech on Wednesday, she hit out at decades of indecision as she said low economic growth does not have to be Britain’s “destiny”.
She set out a raft of eye-catching housing, infrastructure and business projects, green-lighting plans for new transport links and multiple airport projects across the country. The Cabinet minister said she was backing a 100,000-seat Manchester United stadium to create a “Wembley of the North” and backed the reopening of Doncaster Sheffield Airport as South Yorkshire Airport City.
She also announced a new 70-mile growth corridor between Oxford and Cambridge in a bid to create “Europe’s Silicon Valley” – a move that could add up to £78billion to the UK economy by 2035. And Ms Reeves reiterated plans to take on blockers of major projects with new rules coming in the spring to speed up the planning system, with decisions having previously been too slow and “ridiculous”.
In a highly anticipated moment, Ms Reeves confirmed the government supports a third runway at Heathrow airport and is inviting proposals to be brought forward by the summer.
She said: “I have always been clear that a third runway at Heathrow would unlock further growth, boost investment, increase exports and make the UK more open and more connected. By backing a third runway at Heathrow, we can make Britain the world ’s best connected place to do business.”
She vowed that any plans will be delivered in line with the UK’s legal, environmental and climate obligations. Energy Secretary Ed Miliband has long opposed the plans and was not in attendance at Ms Reeves’ speech, nor at Wednesday’s Prime Minister’s Questions. Other Cabinet ministers including Business Secretary Jonathan Reynolds, DWP Secretary Liz Kendall and Transport Secretary Heidi Alexander sat front row for Ms Reeves’ speech.
London Mayor Sir Sadiq Khan said he remains “opposed” to a third runway at Heathrow because of the impact it will have on noise, air pollution and meeting our climate change targets. He vowed to use “whatever means we can” to challenge the airport expansion, including possible legal challenges. Environmental campaigners showed up outside Ms Reeves’ in protest at her announcement.
The Chancellor acknowledged she has had to make difficult decisions, admitting that hiking national insurance contributions for employers has had “consequences on business and beyond”. “I accept that there are costs to responsibility,” she said. “But the costs of irresponsibility would have been far higher.”
Speaking to an audience of business chiefs at a Siemens plant in North Oxfordshire, Ms Reeves said: “For too long, politicians have lacked the courage or the strength to confront these challenges. When presented with a choice, they have not prioritised growth. Instead, they have accepted the status quo and they have been the barrier – not the enablers – of change.”
But she went on: “We no longer have to do that. We can do so much better. Low growth is not our destiny, but 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 was upbeat about the future of Britain as she vowed to end “the era of low expectations” and “systematically” remove barriers to growth. It marked a noticeable shift from Labour ’s gloomy first six months in power after she discovered a £22billion black hole in the public finances left behind by the Tories.
Ms Reeves said Britain’s growth prospects have been upgraded for this year by the International Monetary Fund. “This gives us the fastest growth of any major European economy this year,” she said.
Elsewhere in her speech Ms Reeves raised Donald Trump ’s return to the White House after he threatened to impose trade tariffs on countries around the world. She said we “stand at a moment of global change” but that she will be guided by “the national interest” of British people. “That means building on our special relationship with the United States under President Trump,” she added.
She celebrated her recent trip to China to build “stronger relationships with fast-growing economies all around the world”. And she announced that Mr Reynolds will soon visit India to restart talks on a free trade agreement after the former Tory government failed to deliver on one.
Sam Richards, chief executive of pro-growth campaign group Britain Remade, said: “For too long, Britain has failed to build the new homes, clean energy infrastructure, and transport links we desperately need. Today’s speech contained concrete steps towards changing that. The Chancellor is absolutely right to argue that by making it easier to build we can both get richer and reach net zero carbon emissions.”
Mike Clancy, general secretary of Prospect union, said: “For too long the UK has failed to fully commit to the critical infrastructure it needs – it is right the Chancellor recognises this must change. The UK is already losing out with passengers choosing to connect in Amsterdam, Frankfurt, or Paris due to lack of runway capacity in South East England, with knock-on effects on jobs and skills.”
But Dr Alex Chapman, a senior economist at the New Economics Foundation, said: ” Rachel Reeves ’ commitment to Heathrow expansion relies on flawed economics. By the government’s own metrics, airport expansion won’t deliver serious economic growth. Business air travel peaked two decades ago and a new runway won’t change that.”
Major announcements in Rachel Reeves’ speech:
Heathrow Airport expansion: Ms Reeves announced the Government would back a third runway at Heathrow. This would bring billions to the economy, but require hundreds of nearby homes to be demolished.
Old Trafford: Manchester United wants to either redevelop its current stadium to increase capacity to 87,000, or build a new ground which could hold 100,000 fans. The project would also involve a major regeneration of the area around Old Trafford, with residential, transport and entertainment developments.
Doncaster Sheffield Airport (DSA): The Chancellor said the Government will support the reopening of Doncaster Sheffield Airport, which closed in 2022 with around 800 jobs lost. Ms Reeves said she would support “efforts to recreate South Yorkshire Airport City as a thriving regional airport”.
East Midlands Airport: A new “advanced manufacturing and logistics park” will be created at East Midlands Airport. Ms Reeves said it will create 2,000 jobs and unlock up to £1billion of investment.
East West Rail: The long-planned East West Rail would link Oxford and Cambridge by rail with new and upgraded lines. The scheme has three stages, with initial services from Oxford to Bletchley and Milton Keynes scheduled to begin this year. The other two stages are reliant on Government funding and approval. These involve services being extended from Oxford to Bedford, and then from Oxford to Cambridge via Bedford and Bletchley.
Tempsford station: A new railway station at Tempsford, Bedfordshire, would provide connections between the East Coast Main Line and East West Rail.
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‘Europe’s Silicon Valley’: New rail links across the region between Oxford and Cambridge are part of wider plans to pave the way for economic growth in the region. The Chancellor said backing for housing, transport and other investment in the Oxford-Cambridge corridor could help it become “Europe’s Silicon Valley” and add £78billion to the UK’s economy by 2035.
Nine new reservoirs: New reservoirs will be built near Abingdon in Oxfordshire and in the Fens near Cambridge to quash fears of a water shortage as new homes are built. They will be among nine new reservoirs built as the Government has agreed for water companies to invest £7.9 billion to improve infrastructure.
Lower Thames Crossing: The £9billion road crossing between Kent and Essex would connect the A2 and M2 in Kent to the A13 and M25 in Essex via a 2.6-mile long tunnel under the Thames. This is aimed at reducing congestion on the Dartford Crossing.
New cancer research hospital: As part of the troubled new hospitals programme which was started by the Tories in power, the Government will now prioritise a new Cambridge cancer research hospital. The hospital will bring together Cambridge University, Addenbrookes Hospital and Cancer Research UK.
Green projects: The Chancellor announced that two projects – electric vehicle charging network Connected Kerb and Cornish Metals – would receive a combined £93million. The first will expand its electric vehicle charging network across the UK, while the metal company will provide materials to be used in solar panels, wind turbines and electric vehicles.
Offshore wind: Ms Reeves said that barriers standing in the way of offshore wind projects in areas like East Anglia and Yorkshire would be removed. The Chancellor said these could bring in upto £30billion in homegrown clean power.
