22 January 2025

Heathrow airport: an allegory of our decline

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Having spent more of my life than is natural arguing in favour of airport expansion, I can tell you that Rachel Reeves is right to pick the cause up, as she is reportedly doing. But she has chosen a mouthful which it is unusually difficult to chew on.

The proposal I helped put forward – based on a report by the Centre for Policy Studies – was to extend the Northern Runway at Heathrow, rather than build an expensive and complicated third runway. It was the brainchild of Jock Lowe, the longest serving Concorde pilot and one of the country’s most distinguished aviators, and Mark Bostock, now sadly no longer with us, but who was the brains behind HS1, the link to the Channel Tunnel via Stratford.

A group of investors put in some money. The proposal was developed properly by expert consultants, patented and submitted to the Airports Commission. It came second in that process on the basis that Heathrow’s third runway cost more and therefore delivered more economic benefit (an oddly circular argument, but there we are).

Then the politicians and civil servants and the courts got involved. To cut a long story short, Heathrow’s proposal – which is ludicrously expensive at some £35 billion in 2014 prices, to be paid up for up front in higher passenger fees while it is built – got bogged down in the internal politics and incompetence of the Conservative Party (the names Chris Grayling, Grant Shapps, Theresa May and Boris Johnson did occasionally come up).

Amid fierce political opposition from West London MPs, London Mayor Sadiq Khan, environmental activists and British Airways (which opposed the steep passenger fees), it was blocked by the Court of Appeal, approved by the Supreme Court and then Covid intervened and the Conservatives let the National Policy Statement (the legislative device to approve it) lapse anyway.

Despite all that, we comforted ourselves that we had basically won the argument. An extended runway is cheaper (£10bn in 2014 prices); can be built in phases; reduces risk; lowers carbon emissions in the first instance due to shorter taxiing times and less stacking of aircraft; and limits noise to narrow corridors rather than bringing thousands of new households under the flightpath. You can see more details on the website, which is still up, even though the team has stood down.

As we learnt to our cost, with airport expansion, the sensible thing to do is to take a gradual, incremental and pragmatic approach. First at Gatwick, which has a relief runway which should be approved for full use in April, and then at Heathrow.

The reason for this is there two different markets. Gatwick and smaller airports (like Stansted, Luton etc) are mostly for holiday and short haul traffic. Heathrow is a major hub serving premium long-distance routes (partly made economic by the one third of passengers who transfer there) and also air cargo. Some 48% of the UK’s air cargo – usually high value items or fresh food – goes through belly holds at Heathrow.

If you try to book a long distance flight these days, you will see how the lack of spare capacity at Heathrow has made long distance travel astronomically expensive.

The trouble is that, certainly in the last decade, we have not been sensible. With the exception of both the Elizabeth Line and the Thames Tideway super sewer, infrastructure has become hopelessly bogged down by politics.

The most obvious political barrier has been new environmental regulation, including the legal Net Zero emissions target, which has not only made everything incredibly complicated, it is a litigants’ charter to object to just about everything unless it is loaded with ludicrously expensive safeguards, like HS2 (see £100 million bat tunnel).

The second political barrier has been finance. George Osborne effectively axed the Private Finance Initiative. This means that almost every project (though not airport expansion) theoretically has to be brought on to the government balance sheet to be picked over and delayed by the Treasury which, not inaccurately, says the taxpayer cannot afford it. But private finance, with regulatory and other support by the state, has always been the best way to finance new infrastructure because this transfers risk. If you don’t believe me, just ask the Victorians. It was private investment which financed our canals, railways and ports.

The third barrier has been a lack of approved, executable projects. Instead of getting on with things and making tough, practical decisions to push through projects, the previous Conservative governments were hopelessly indecisive, changing their minds with every change of minister, repeatedly putting things out to consultation or just letting them lapse.

Now they are in Opposition, I am sure they would concede this was not sensible.

If Rachel Reeves can show some resolve in solving these problems and managing the trade-offs which effectively block new infrastructure in Britain, she might well deliver the growth she is promising, even if Heathrow expansion remains forever on the drawing board. But it will require real determination, including responsible cutting back or adaptation of environmental regulation, some of which is actually popular among her own party. The politics of infrastructure are not easy to navigate on a densely populated island with strained public finances. Still, I say good luck to her.

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George Trefgarne is Chief Executive Officer and Founder at Boscobel & Partners.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.