Rachel Reeves backs Heathrow third runway in growth push

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, 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 Labour’s new employment laws would destroy any prospect of growth.

In her speech, Reeves sought to inject some 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.

Ministers insist advances in aviation mean a third runway would not break its carbon reduction rules – but it is still being fiercely resisted by environmental campaigners and Labour’s London Mayor Sadiq Khan.

Reeves told the BBC’s economics editor Faisal Islam she wants to get a planning application for a third runway at Heathrow “signed off” before the next election, which must happen by 2029.

She said she wanted to “get going sooner than that” on the next phase of an East-West rail project that will eventually connect Oxford directly to Cambridge, via Milton Keynes and Bedford.

“I want spades in the ground. I want people to see in their areas, things happening, growth happening, their children and their grandchildren in the future having the opportunity to work in high-skilled high-paid jobs contributing to the economy with more money in their pockets,” she told the BBC.

Earlier she claimed the new Oxford and Cambridge “growth corridor”, which includes new reservoirs to address water shortages in the area and investment in high tech industries, would add up to £78bn to the UK economy by 2035.

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.

Trade unions welcomed the Heathrow announcement and the airport’s chief executive Thomas Woldbye described the chancellor’s speech as “the bold, responsible vision the UK needs to thrive in the 21st century”.

But Sir Sadiq Khan said: “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.”

Reeves she has been “genuinely shocked” at how slow the planning system is – adding developers should be able to stop worrying about “the bats and the newts”.

She claims new powers in the Planning and Infrastructure Bill would cut years off the lengthy periods it has taken to get major infrastructure projects off the ground.

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.

At prime minister’s questions, Kemi Badenoch took aim at the government’s Employment Rights Bill, which aims to strengthen workers’ rights.

The Conservative leader claimed it would “hammer” businesses and destroy growth, and urged the PM to scrap the parts that will extend entitlement to statutory sick pay.

She said extra sick pay will increase business costs by between £600m to £1bn in sick pay, according to the government’s own estimates.

“That will mean higher prices, fewer jobs, less growth,” she told Sir Keir.

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.

The SNP’s economy spokesman Dave Doogan said the chancellor’s speech “offered nothing for Scotland”, adding: “Instead of fixing broken Brexit Britain, Rachel Reeves has taken the UK economy in the wrong direction.”