NEWS / Infrastructure Intelligence / Chancellor confirms backing for third Heathrow runway

Image: Kirsty O’Connor/Treasury

29 JAN 2025

CHANCELLOR CONFIRMS BACKING FOR THIRD HEATHROW RUNWAY

Chancellor Rachel Reeves has announced government backing for a third runway at Heathrow in a major speech on economic growth.

Reeves said the plan could create more than 100,000 direct jobs and boost a better-connected British economy by billions.

The government will now move “at speed” to review the Airports National Policy Statement (ANPS).

This provides the basis for decision making on granting development consent for a new runway at Heathrow, to ensure that any scheme is delivered in line with legal, environmental and climate obligations. Proposals are 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 as part of our Plan for Change.

“And now the case is stronger than ever because our reforms to the economy - like speeding up our planning system, and our strengthened plans to modernise UK airspace - mean the delivery of this project is set up for success.”

Heathrow CEO Thomas Woldbye welcomed the announcement which he said was recognition of the “critical role” the airport plays in delivering growth across the UK.

“Heathrow is the UK’s gateway to growth and prosperity. A third runway and the infrastructure that comes with it would unlock billions of pounds of private money to stimulate the UK supply chain during construction,” he added.

Heathrow will now work with the government on the expected planning reform and support ministers to deliver the changes which will set the airport on track to securing planning permission before the end of this Parliament.

During her speech to business chiefs at Siemens in North Oxfordshire, Reeves also announced transport secretary Heidi Alexander is expected to take decisions on expansion plans at Gatwick and Luton shortly.

The government will also work with Doncaster Council and the mayor of South Yorkshire to support their efforts to reopen Doncaster Sheffield Airport as a thriving regional airport.

A new partnership between global logistics giant Prologis and East Midlands Airport to build a new advanced manufacturing park within the East Midlands Freeport zone to unlock £1bn of investment and 2,000 jobs was announced. 

The government also said it is also assessing options for privately financing the Lower Thames Crossing.

A new approach is to be taken to the Oxford-Cambridge Growth Corridor - a centre of innovation which Reeves said could become “Europe’s answer to Silicon Valley”. It will be spearheaded by Sir Patrick Vallance as a ministerial champion.

The chancellor set out the government’s plans to increase investment across the whole of the UK. She stressed government would do more to support city regions and local leaders outside of London and the South-east, in recognition that bringing the productivity of major cities like Manchester, Birmingham and Leeds to the national average would deliver an extra £33bn in output for the UK economy.

Reeves confirmed backing of the mayor of Greater Manchester’s plans for the regeneration of the area around Old Trafford, including new housing and commercial development, and the new approach to planning decisions on land around stations, changing the default to yes.

Reeves also announced the Treasury will review the 'Green Book' and how it is being used to provide objective, transparent advice on public investment across the country, including outside London and the South-east.

There were also further details announced on Investment Zones, with the Wrexham and Flintshire Investment Zone to focus on the area’s strengths in advanced manufacturing.

Reaction from industry has been positive.

Kate Jennings, chief executive officer of the Association for Consultancy and Engineering (ACE), said: “We welcome the chancellor’s commitment to infrastructure – the proof will be in the pace of decisions and delivery.

“We look forward to supporting the government on this critical agenda.”

Marie-Claude Hemming, director of operations for the Civil Engineering Contractors Association (CECA), said: “The government should be applauded in its commitment to airport expansion, which is an issue that has been kicked into the long grass by successive administrations, but which is vital to the UK’s future as a global trading nation.

“In addition, the chancellor’s decision to amend HM Treasury’s ‘Green Book’ rules to further distribute the benefits of investment across the UK reflects a long-held CECA policy and will lead to a wider distribution of economic growth across all parts of the country.

“We welcome the fact that the UK government has committed to unleashing the full potential of the UK economy through public and private investment in infrastructure.

“Industry is keenly awaiting the publication of this Spring’s Planning and Infrastructure Bill, but the chancellor’s commitment to speeding up planning and removing blockers to growth, such as excessive use of judicial review, are positive signs that the UK Government has listened to industry and will act accordingly.

“Heathrow expansion will be the largest privately funded infrastructure project in Europe and will be central to ensuring the UK remains an attractive place to live and do business in - it is exactly the sort of ambitious scheme we need to drive connectivity and kick-start economic growth.

“CECA members are poised and willing to work with the UK Government to accelerate project delivery so that businesses and communities across the UK can feel the benefits of investment as soon as possible, raising living standards in all parts of the country, as well as building the foundation of a stronger economy for the future.”

Colin Wood, chief executive of AECOM's Europe and India region, said: “The government’s support for an expanded Heathrow Airport is a welcome move.

“Expansion is a vital step forward in securing growth and the UK’s ability to maintain its position on the global stage, while also addressing the need for increased capacity that will follow.

“Alongside development of the 10-year infrastructure strategy, this will provide the infrastructure sector with some certainty around project pipeline and delivery.

“Recent updates to the National Planning Policy Framework and the chancellor’s reforms to the planning system should fast-track much-needed infrastructure projects across all sectors, including housing developments, transport and energy systems.

“This significant overhaul of the UK’s planning system and a commitment to delivering the ten-year infrastructure strategy will be key to spurring investment and growth in the years to come.”

Iain Painting, national discipline director, planning and development at Stantec, said: “What is particularly promising is the acknowledgement in this speech that a holistic approach to development, connectivity and growth is essential – bringing forward infrastructure, housing, utilities and employment together in a coordinated way. 

“The chancellor is also not letting the scale of this ambition get in the way of clarifying support for key projects that can be prioritised first.  The onus is now on the sector and local authorities to work together across boundaries and siloes in a strategic way to set out how they will make the most of this opportunity for all.

“It will be crucial to see how the ongoing reforms to local government will play into this.  We can’t let any uncertainty brought by those changes get in the way of moving quickly and establishing approaches to viable, sustainable growth for communities throughout the corridor.

“These are ambitious goals which require flexibility, agility, and collaboration from every corner of the built environment.”

Thomas Knight, transport market lead for UK and Europe at Mott MacDonald, said:  

“The chancellor’s announcement is an important step forward in providing clarity about key investment decisions which will drive economic growth and improve connectivity across the UK.

"Mention of crucial projects such as East West Rail, West Yorkshire Mass Transit, and the A428; which we are proudly helping to plan and deliver, demonstrates the government’s understanding of the need for infrastructure investment to support growth. These schemes are vital for improving regional connectivity, reducing congestion, and supporting sustainable development.

“The government presenting a clear path from planning to delivery with commitment to cutting down red tape will mean these projects can be delivered more quickly, while still prioritising community and environmental needs.

“The chancellor's support for a third runway at Heathrow Airport and investing in new and upgraded airport facilities in Doncaster and Manchester is also encouraging. It is essential that new airport infrastructure is built and operated in line with the Government’s Airport National Policy Statement (ANPS) and the associated environmental, noise and sustainability obligations.

“Mott MacDonald continues to work with Heathrow Airport to deliver these obligations, including carbon reduction ambitions. We look forward to supporting Heathrow and the UK government in addressing these challenges through a review of the current ANPS.

“By prioritising infrastructure projects, the government is demonstrating a clear commitment to creating a more connected, resilient and sustainable future. We’re pleased to continue our collaboration with the government and other stakeholders to deliver these transformative projects that will benefit communities across the country."

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