Rachel Reeves backs Heathrow expansion to boost UK growth
2025-01-29
Category: economic

Chancellor Rachel Reeves has backed a third runway at London's Heathrow Airport as part of a fresh plan to get the UK's sluggish economy growing.She said Heathrow expansion, which has been delayed for decades over environmental concerns, would "make Britain the world's best connected place to do business".In a wide-ranging speech to business leaders, she also backed expansions at Luton and Gatwick airports, as well as a "growth corridor" between Oxford and Cambridge, which she claimed could be "Europe's Silicon Valley".Conservative leader Kemi Badenoch said the plans had mostly been stolen from her party but claimed that Labour's new employment laws would destroy any prospect of growth. 
In her speech, Reeves sought to inject optimism and confidence into the economy, which has taken a battering in recent months as growth has flatlined.She hit back at Conservative claims that her "job destroying" Budget was to blame, insisting she had "no alternative" but to increase employers' National Insurance to restore stability.She did not explicitly rule out further tax increases in the spring - but insisted the government had "begun to turn things round" and was determined to go "further and faster" to boost growth.She described the UK as a country of "huge potential" which had been "held back" for "too long" because politicians lacked the "courage" to challenge the status quo."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 added.The government has made growth its top priority because so many of its other plans - to improve public services and living standards, as well as its chances of winning the next election - depend on it.Other projects announced today include a major redevelopment of Old Trafford, the area around a new stadium for Manchester United, and a plan to bring Doncaster/Sheffield airport back into use and boost industry at East Midlands airport.The government also promised better rail and road links to cut the journey time between Oxford and Cambridge, as well as new reservoirs to address water shortages in the area and investment in high tech industries.Reeves claimed the new "growth corridor" would add up to £78bn to the UK economy by 2035.Many of the projects are unlikely to be completed before the next general election.Reeves acknowledged that today's announcements were the start of a long process.But Labour is hoping they will send a signal to business and consumers that the government is serious about growth - and that voters will notice signs work is under way.New powers in the Planning and Infrastructure Bill would cut years off the length periods it has taken to get major infrastructure projects off the ground, according to Reeves.She said she has been "genuinely shocked" at how slow planning system is - adding developers should be able to stop worrying about "the bats and the newts".And Sir Keir Starmer has vowed to get rid of a "thicket of red tape" that he claimed was deterring foreign investment, in an article for The Times.The government is also relaxing restrictions on big pension funds to encourage them to invest more in UK businesses.
The government will also review the so-called Green Book rules - guidance issued by the Treasury on how to appraise policies, programmes and projects - which it said have in the past biased infrastructure spending to already fast growing areas, mainly in the south.The third runway at Heathrow has yet to receive planning permission and is likely to face fierce opposition from environmental campaigners, as well as some senior Labour figures such as London mayor Sir Sadiq Khan.But Reeves said she wanted to see a full proposal for expanding the airport by the summer and was determined to see it built.Sir Sadiq said he would study the proposals but added: "I'm simply not convinced that you can have hundreds of thousands of additional flights at Heathrow every year without a hugely damaging impact on our environment."Heathrow chief executive Thomas Woldbye described the chancellor's speech as "the bold, responsible vision the UK needs to thrive in the 21st century".Downing Street said a new runway at Heathrow was already part of the government's "carbon budget assumptions".The PM's official spokesman told reporters the aviation industry had made "great strides" to boost its green credentials including the use of sustainable fuel.At prime minister's questions, Kemi Badenoch took aim at the government's Employment Rights Bill, which aims to strengthen workers' rights.The Conservatives claimed it would "hammer" businesses and destroy growth, and urged the PM to scrap the parts that will extend entitlement to statutory sick pay."Government itself, his government itself, estimates that these changes will increase business costs from £600m to £1bn in sick pay," she told Sir Keir."That will mean higher prices, fewer jobs, less growth."The prime minister insisted the new laws would be "good for workers and good for growth" and accused the Tories of being "a coalition of blockers".Lib Dem leader Sir Ed Davey called on Sir Keir to drop his objections to a UK-EU customs union and other "growth damaging trade barriers" on an upcoming trip to Brussels.