Backing Heathrow expansion suggests Labour is serious about boosting growth

Few THINGS symbolise Britain’s lackadaisical attitude towards economic growth better than the collection of fields, ditches and semi-detached homes just north of Heathrow Airport. Building over them to give London’s main aviation hub a third runway first became government policy in 2003. After that, the project was approved, cancelled, reapproved and then put on hold again. The issue has divided Britain’s main parties, animated a generation of environmentalists and radicalised the NIMBYs of west London.

Heathrow, meanwhile, has lost its status as the busiest airport outside America to Dubai, which had a third as many passengers when the scheme was first proposed. The failure to expand London’s biggest airport has been, above all, a political one. Yet opponents have been emboldened by Britain’s burdensome planning rules. In a speech on January 29th Rachel Reeves, the chancellor, took aim at both problems. Declaring that “growth will not come without a fight”, she said that the government would back airport expansion and offered more clues about plans to unshackle housebuilding. The Heathrow decision is the surest sign yet of the government prioritising growth, even if getting anything built will still test its steel.

The case for the third runway has often not been well understood. Heathrow is the largest gateway to London and Britain’s main international hub, connecting passengers on long-haul journeys without direct routes. The fastest route between Oslo and Ningbo, or Edinburgh and Cincinnati, often runs through Heathrow. That itself is valuable business; Britain has the geographical fortune to sit conveniently between North America, Asia and the rest of Europe. Smoother and cheaper connections between Britain and the rest of the world would also spur business and tourism at home.

Hub airports have peculiar economics. They display increasing returns to scale: each flight makes every other flight more valuable by widening the range of possible connections. And competition has heated up. While take-offs and landings at Heathrow have been flat for decades, European rivals like Amsterdam’s six-runway Schiphol Airport have caught up (see chart). So have airports in Turkey and the Gulf. Planes got bigger in that time, so Heathrow now processes a quarter more passengers than in the 2000s. But that trend is stopping. Tim Leunig, an economist, points out that many routes are shifting to smaller aircraft, meaning Heathrow may need to expand to avoid shrinking.

Along with investors and tour groups, planes also bring air pollution, carbon emissions and noise. Hence the protracted fight. The project was first nixed in 2010 by David Cameron’s coalition in a bid to beef up its green credentials. As recently as 2018, when Theresa May’s government put the third runway to a vote, nearly half the Labour MPs voted “no”, including Sir Keir Starmer, now the prime minister, and Ed Miliband, the energy secretary. Successive London mayors have also opposed the project. Boris Johnson once pledged to lie down in front of bulldozers to stop it. Today, Sir Sadiq Khan is the most senior Labour politician still hostile.

The arguments against expansion are especially weak now. Take noise pollution. For a major airport, Heathrow is unusually close to built-up areas. The parts of west London that jets noisily fly over include well-heeled suburbs whose residents are adept at kicking up a fuss. But those areas owe some of that prosperity to economic spillovers from Heathrow. If London were rebuilt from scratch, it would make much more sense to put its main airport to the north of the city, notes Becrom Basu of L.E.K. Consulting. That way, planes landing and taking off on the east-west axis of London’s prevailing winds would fly over a much less populated zone.

But Heathrow isn’t going anywhere. Thankfully, new jets are helping. The noisiest models, like Boeing’s 747, are on the way out. Heathrow has also tested getting planes to approach the airport at a steeper angle, cutting time near the ground. More runway capacity would give Heathrow better options to limit overnight noise, the most disruptive sort. Air pollution is a similar story. Newer engines are cleaner. Nearly 40% of Heathrow’s air pollution comes from ground vehicles. Many will be electric before long.

For Labour, the sharpest objections are climate-related. Certainly, more flights would mean higher emissions, at least in the short- to medium-term. But politicians have to decide where it makes sense to cut emissions fastest. UK Day One, a think-tank, argues that because Britain lacks carbon-intensive heavy industry, it is well-placed to allocate more emissions to aviation. Moreover, the actual impact on global emissions will probably be lower than commonly assumed. Much of Heathrow’s competition is with hubs like Dubai or Doha, which have a far more relaxed approach to climate commitments. By opening up more direct long-haul routes, fewer passengers will need to take stopping flights with fuel-burning diversions. Aviation should be cleaner in the 2040s, when the full benefits of the project get realised.

These arguments have persuaded many Labour MPs, including the prime minister. That reflects a shift in the party. The government has always said that growth is its number-one mission. But the focus on it has risen dramatically since Britain’s latest bout of bond-market turmoil. A third runway at Heathrow will still take a decade or more to get built; there will be legal challenges and thorny questions about financing. Broader planning reforms will face opposition in Parliament, including from Labour benches. Ministers have signalled that they are up for the fight. Now they must roll their sleeves up. ■

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