Rachel Reeves’ plan to expand Heathrow airport as a key part of her bid to grow the economy announced today has been fiercely criticised by one of Labour’s biggest donors.
Energy tycoon Dale Vince, who handed Labour £5m in the run up to the election, said building a new runway at Heathrow would be a mistake and provide “an illusion of growth”.
It would take a decade to construct, cost £50bn and would make a nonsense of the government’s commitment to tackle climate change, Mr Vince said.
The green campaigner, who runs the Ecotricity energy company, told BBC Radio 4’s Today programme: “It doesn’t matter how many runways we build - if we don’t get on top of the climate crisis all economies will suffer incredible damage.”
But Downing Street has insisted that its plans for stimulating the economy “go hand in hand” with environmental progress.
Mr Vince’s comments came ahead of a speech by chancellor Ms Reeves today in which she confirmed the government backed plans for a third runway at Heathrow, saying ministers "cannot duck the decision any longer".
She also backed expansions at Gatwick and Luton airports, announced the creation of a new ‘Silicon Valley’ between Oxford and Cambridge, and plans to free up pension funds and slash red tape to boost the economy.
Speaking in Oxford, the Chancellor said that “by backing a third runway at Heathrow we can make Britain the world’s best connected place to do business”.
“That is what it takes to make decisions in the national interest and that is what I mean by going further and faster to kickstart economic growth,” she added.
Later, responding to questions from journalists, Ms Reeves said projects such as backing the third runway “shows that this is a government with ambition that is getting on and delivering”.
She added: “One of the reasons why we need to expand Heathrow is that there are emerging markets and new cities around the world that we aren’t connected to because there aren’t the slots at Heathrow – or indeed any other airport – to fly to.”
But asked what he thought of the proposed new third runway at Heathrow, the energy tycoon said: “I think it’s a mistake. Actually, I think it’s an illusion of growth.
“It’ll take 10 years to build a runway, cost maybe £50bn. It’ll create the wrong kind of growth – we’ll be exporting tourism money abroad, creating a bigger imbalance than we already have, and it will come at the expense of our carbon-cutting effort.
“That cannot make any sense because last year the world suffered £320bn of damage from extreme (weather) events - double what it was the year before.”
Liberal Democrat leader Sir Ed Davey echoed his remarks, telling Sky News that officials are “not sure whether it will bring the growth, and realising that if it brings growth, it may take quite some time”.
However, business minister Jonathan Reynolds defended the chancellor and took issue with those who say her plan will take years to bear fruit.
He made the bold claim that people will feel better off within a year as a result of the government’s policies, arguing that Ms Reeves’ growth blueprint would “release the animal spirits” of enterprise in the UK.
Asked how quickly the government could deliver its promise to grow the economy, Mr Reynolds said: “I think people will feel the difference in their pockets this year because inflation is coming down and wages are rising.”
The government is battling accusations that it has spent too much time talking down Britain’s economy, with Ms Reeves’ upcoming speech expected to take a significantly more positive tone than previous messaging employed by ministers.
The business secretary, who rejected claims that Labour has a “doom message”, said the economic growth plans would generate “excitement and dynamism” in the UK and unleash Britain’s “animal spirits”.
Mr Reynolds rejected the claim that Ms Reeves’ new plan marked a dramatic change in the tone of its economic message and treatment of business in last year’s Budget, including rises in employers national insurance contributions which have led to job losses.
“I’ve always been optimistic. I’ve always been excited about what this government is about when it comes to growth”, he said.
The Treasury has been contacted for comment.
