Rachel Reeves has rejected criticism of the Government’s support to expand Heathrow Airport after she set out plans to remove barriers to growth in the hope of kickstarting the UK’s stuttering economy.
The Chancellor said the economy will stagnate if you “always give in” to objections and that the answer to new infrastructure “can’t always be no” as Labour Mayor of London Sir Sadiq Khan said he would seek to halt a third runway going ahead.
Her support for Heathrow will see her face down Labour critics and environmental campaigners, and figures from the aviation industry have voiced scepticism about the plans.
Ms Reeves said in a speech at a medical equipment firm in Oxfordshire that she was prepared to “fight” for new housing, infrastructure and business projects, including tearing up environmental regulations which hamper construction to protect “the bats and the newts”.
She insisted support for the runway would support the economy across the country and showed the Government’s “seriousness”.
Official figures have shown little or no economic growth since Labour took office in July, with Ms Reeves’ Budget imposing national insurance hikes on businesses, hitting confidence and potentially costing 50,000 jobs.
But Ms Reeves gave a notably upbeat assessment of the UK’s economic prospects in her speech, saying the Government had “begun to turn things around”.
“We have fundamental strengths in our history, in our language and in our legal system to compete in a global economy, but for too long that potential has been held back.
“For too long we have accepted low expectations and accepted decline,” she said.
“We no longer have to do that. We can do so much better.
“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 highlighted the long-delayed Heathrow expansion project as an indication of the problems that had beset the UK economy.
“For international investors, persistent delays have cast doubt about our seriousness towards improving our economic prospects,” she said.
She later said she wanted “spades in the ground” on new projects announced today during this Parliament.
“We want that to happen in this Parliament. I want spades in the ground, I want people to see in their areas things happening, growth happening,” she told BBC News.
London Mayor Sir Sadiq said he remains opposed to Heathrow expansion because of its impact on noise, air pollution and meeting the UK’s climate change targets.
He said the last plans for a third runway at Heathrow involved building a tunnel under the M25 motorway and bulldozing a village.
“I will as the Mayor of this great city, as a pro-business Mayor, somebody who takes tackling the climate emergency seriously, but also thinks a green transition is one of the greatest opportunities we have this century, I’ll use any tool in the toolkit to stop a third runway happening,” he told Andrew Marr on LBC.
The Chancellor was asked on the same programme what her message to Sir Sadiq and others opposing Heathrow expansion would be.
She said: “Look, the answer to new infrastructure can’t always be no.
“That’s what happened under the last government.
“And nothing got built and nothing got done and living standards deteriorated.
“So, it does mean having to take on people who are against new developments, whether it is wind farms, airports or new rail lines.
I'll use any tool in the toolkit to stop a third runway happening
“And the problem is, is if you always give in and say, ‘Oh, okay, there some objections to this’, we’ll end up in a situation where the economy continues to stagnate, living standards decline, and will be no further forward than we are now.”
She has declined to put a timeline on when the runway could be operational.
The Government wants proposals for a third runway to be produced by the summer, which will then face a full assessment through the airport national policy statement to ensure it is in line with legal, environmental and climate objectives, she said.
Ryanair boss Michael O’Leary described Heathrow expansion as a “dead cat”, saying it would not happen before the 2040s at the earliest and would not bring any growth.
He urged the Chancellor to instead scrap air passenger duty (APD) during a press conference.
Willie Walsh, director general of the International Air Transport Association, said the hurdles ahead of a third runway were “very significant” and cast doubt on Ms Reeves’ plans for sustainable aviation.
If you always give in and say, ‘Oh, okay, there some objections to this’, we’ll end up in a situation where the economy continues to stagnate
“Sustainable fuel is a real thing, but we need it in significantly greater volumes than are available today … So mandating airlines to use a fuel source that doesn’t exist today doesn’t make an awful lot of sense,” he told LBC.
Environmental campaigners staged a protest against the decision outside the venue for her speech.
Confirmation of support for Heathrow was one of a series of measures outlined by Ms Reeves, including:
– Plans for the Oxford-Cambridge corridor, which she said could become “Europe’s Silicon Valley” and add £78 billion to the UK’s economy by 2035.
– New reservoirs will be built near Abingdon in Oxfordshire and in the Fens near Cambridge. They will be among nine new reservoirs built as the Government has agreed for water companies to invest £7.9 billion to improve infrastructure.
– Funding for the East-West rail link joining Oxford, Cambridge and towns like Bedford and Milton Keynes that sit between them will be confirmed, as well as upgrades to the A428 road.
– A new Cambridge cancer research hospital will be prioritised as part of the new hospitals programme.
– Oxford will get a growth commission, similar to one set up in Cambridge, aimed at helping the city and surrounding region to grow its economy.
– The Government will back the reopening of Doncaster Sheffield Airport as South Yorkshire Airport City.
– A £65 million investment by the National Wealth Fund in expanding electric vehicle charging infrastructure.
– Government guidance on appraising major projects will be reviewed in order to support investments outside of the wealthy and productive South East of England.
– The Trade Secretary will travel to India to restart negotiations on a free trade agreement with the country.
The Chancellor used her speech to defend the decisions she took in her first Budget, saying that taking the right decisions for the economy “does not always mean taking the easy decisions”.
She added: “I accept that there are costs to responsibility, but the costs of irresponsibility would have been far higher.
“Those who oppose my budget know that too.”
A group of farmers angry at the Budget’s inheritance tax changes staged a noisy protest outside the Siemens Healthineers plant in Oxfordshire while Ms Reeves spoke.
The Chancellor also insisted the Government’s package of new employment rights went “hand in hand with a strong economy”, despite concerns from businesses about the economic impacts.
She said having job security gave “ordinary working people the confidence to go out and spend in the economy”.
But other forms of red tape were firmly in the Chancellor’s sights: “The problems in our economy, the lack of bold reform that we have seen over decades, can be summed up by a £100 million bat tunnel built for HS2, the type of decision that has made delivering major infrastructure in our country far too expensive and far too slow.
The biggest barriers to growth in this country are Rachel Reeves, Keir Starmer and their job-destroying budget – and nothing in the Chancellor’s speech proved otherwise
“So we are reducing the environmental requirements placed on developers when they pay into a nature restoration fund that we have created, so they can focus on getting things built and stop worrying about the bats and the newts.”
Suggesting that the major projects set out in her speech could start being built on a faster timetable than previous schemes, she said: “We are systematically, one by one, removing the barriers that held back our growth performance for too long.”
She said the Government wanted to “crack on with things” so people could feel the effects of economic growth “in their own pockets by the time that this Parliament comes to an end”.
But shadow chancellor Mel Stride said: “The biggest barriers to growth in this country are Rachel Reeves, Keir Starmer and their job-destroying budget and nothing in the Chancellor’s speech proved otherwise.”
