Britain’s roads and railways will receive an extra £6bn in infrastructure expenditure as the government gave encouragement to backers for a new hub airport in the Thames estuary.
Unveiling a “huge commitment to overhauling the physical infrastructure of our nation”, George Osborne said the government would spend £5bn on infrastructure over the next three years, boosted by a further £1bn from Network Rail. Among the 35 road and rail projects that will go ahead are: the electrification of the Leeds to Manchester rail route; a new rail line linking Oxford to Milton Keynes and Bedford; a revamp of the Tyne & Wear Metro and the widening of the A14 around Kettering. Osborne also gave the blessing to extending London Underground’s Northern Line to Battersea in a move that would create an estimated 25,000 jobs, but he did not commit government funds to it.
Osborne also published a national infrastructure plan that will consider 500 projects to be built over the “next decade and beyond” including “airport capacity” as well as roads, power stations and railways.
Although the Chancellor stressed that the plan will not include a third runway at Heathrow, it creates an opportunity for a new site altogether. This would bring into play Boris Johnson’s much-derided “Boris island”, the London mayor’s pet project for a four-runway airport off the Isle of Sheppey in Kent. Osborne said the government would “explore all options for maintaining the UK’s aviation hub status, with the exception of a third runway at Heathrow.” The announcement represents a full political rehabilitation by the mainstream Conservative party for Johnson’s island airport plan. Only in 2009 the then shadow transport secretary, Theresa Villiers, who is now transport minister, said: “It is not the Conservative policy to build an airport in the estuary. Boris is independent of the Conservatives on this issue.”
Lord Foster, the renowned architect who has submitted his island airport located close to Johnson’s project, said: “We welcome the government’s decision to consider airport capacity as part of the national infrastructure plan. We believe that the economic case for the Thames Hub is compelling as Britain is losing out to expanding European hubs.” Toby Nicol, an aviation industry consultant, said: “The government’s announcement means that it will explicitly consider the construction of a new airport in the Thames Estuary. This is a good first step in the right direction.”
The new airport and the 499 other infrastructure proposals could be backed by a new £20bn infrastructure funding scheme backed by the National Association of Pension Funds and the Pension Protection Fund. Osborne dubbed the move “British savings for British jobs.”
However, one infrastructure expert and former Treasury official said the immediate £5bn spending boost would not have a “huge” impact. Richard Abadie, PwC partner for infrastructure projects, said: “The £5bn [from the government] is an insignificant spend over three years, equal to less than 0.1% of GDP per annum. The benefit will flow over time, but it’s not going to be huge. The Northern Line extension to Battersea has been talked about for twenty years. TFL have asked for the money, and consistently been told no. The announcement is not about additional funds, it’s about allowing London to tax people to pay for the project. It’s not about giving the project approval, and it still faces many hurdles.” Referring to another project given an immediate go-ahead by the chancellor, he said: “The halving of the tolls on the Humber Bridge give you zip in the way of new construction jobs. If this is the quality of the projects being announced, then I’m seriously worried about it.”
But the Association of British Insurers welcomed the creation of a joint government-industry “Insurers’ Infrastructure Investment Forum” which will create investment bonds aimed at pension funds. In Australia, pension funds account for as much as 15% of infrastructure investment compared to just 1% in the UK.
Autumn Statement 2011: Air Passenger Duty rise confirmed
British holidaymakers face sharp increases in the cost of flying following the Government’s confirmation that the rate of Air Passenger Duty (APD) is to rise by around 10 per cent next year.
In today’s Autumn Statement, the Treasury said that the tax would “increase on April 1, 2012, as outlined in the 2011 Budget”. Owners of private aircraft are to be made liable to pay APD for the first time – but not until April 2013.
A further announcement will be made tomorrow week (December 6), when possible changes to APD’s controversial banding system, under which the rate of APD is calculated, will be addressed.
The Government hopes to recoup about £2.6 billion from the tax in 2011/12, up from £2.2 billion during the previous financial year. According to the Office of Budget Responsibility (OBR), the figure will increase to £2.8 billion in 2012/13.
This equates to a double inflation rise in the rate of APD, meaning that a family of four travelling to the United States, for example, will be taxed a further £24 on top of the £240 they already pay. However, owing to falling passenger numbers, the rise could be even steeper.
Further increases are planned beyond next year. The OBR forecasts that APD will earn the Government £3.2 billion by 2014/15 and £3.8 billion by 2016/17.
As well as holidaymakers, the decision to increase the tax will anger airlines and tour operators, who are already facing increasing uncertainty owing to the financial climate – as evidenced by Thomas Cook’s recent woes.
In a joint statement, Carolyn McCall, Michael O’Leary and Willie Walsh, the chief executives of easyJet, Ryanair and IAG, respectively, condemned the Government’s announcement.
“In the cause of UK economic recovery, APD is an own goal – and the Chancellor has just scored another one,” they said. “By increasing this tax by double the rate of inflation, he is further deterring inbound tourism and foreign investment, and choking off yet more job opportunities for young people.”
The statement went on: “APD has no international parallel and has already cost the UK economy 25,000 jobs – that is what the Government should focus on.
“We call for the Chancellor to commission an independent study of APD’s overall economic value. We have no doubt this would confirm that APD’s negative impact on UK GDP significantly outweighs its revenue benefit for the Treasury. This tax must be abolished.”
One aviation source criticised the Government for “burying” the news about increases to APD, and suggested that consultations on the issue between the Government and the travel industry, which have been continuing since April, have been “a waste of time”.
APD was not mentioned in the Chancellor’s speech to the Commons – confirmation of the proposed rises came only on page 51 of a 98-page document on the Treasury’s website.
Mark Tanzer, CEO of Abta, the travel association, said: “The Chancellor said he wants to support British companies and not tax them out of business or the global economy but his actions on flight taxes do not match his words. The Chancellor’s decision is bad for jobs, bad for growth and bad for passengers – ABTA will continue to lobby against these damaging tax hikes.”
Estimated increases in rate of APD paid by a family of four
|2011 Economy||2011 Premium||2012 Economy||2012 Premium|
Estimated increases in rate of APD paid by an individual
|2011 Economy||2011 Premium||2012 Economy||2012 Premium|
Airline CEOs respond to the Chancellor’s Autumn Statement
Responding to the Chancellor’s Autumn Statement, Carolyn McCall from easyJet, Willie Walsh from IAG, Michael O’Leary from Ryanair and Steve Ridgway from Virgin Atlantic jointly said: “In the cause of UK economic recovery, Air Passenger Duty (APD) is an own goal – and the Chancellor has just scored another one. By increasing this tax by double the rate of inflation, he is further deterring inbound tourism and foreign investment, and choking off yet more job opportunities for young people.
APD has no international parallel and has already cost the UK economy 25,000 jobs – that is what the Government should focus on.
We call for the Chancellor to commission an independent study of APD’s overall economic value. We have no doubt this would confirm that APD’s negative impact on UK GDP significantly outweighs its revenue benefit for the Treasury.
This tax must be abolished.”
George Osborne’s false economy is the death of ‘greenest government ever’
The government’s green ambition is dead, choked by the exhaust fumes and chimneystack smog belched out by the Chancellor’s desperate and wrong-headed attempt to restart the economy’s engine
It’s official: the government’s ambition to be the greenest ever is dead, choked by the exhaust fumes and chimneystack smog belched out in the desperate attempt to restart the economy’s engine.
In rhetoric of unprecedented contempt, the chancellor George Osborne cast aside the last of the pretence that permitted him to claim just two years’ ago that he would be a green ally, not a foe.”
How utterly empty that sentiment is now, and how damaging is that which replaces it: cutting carbon kills jobs; endless social and environmental goals lead to poverty; protecting the countryside is a ridiculous cost on business. And what a false economy. On a finite planet, the eventual coming of a sustainable economy is a certainty: what we can choose is how we get there.
Osborne has chosen the slash-and-burn route, bloating our environmental debt, just as his failure to create growth has bloated our economic debt, and rejecting the industrial opportunities of green leadership. He threw yet more taxpayers’ cash at the carbon fat cats in the highly polluting steel, cement and other energy intensive industries, a sector that has perfected the dark art of special pleading.
The £1bn that was on offer to boost the nascent technology of capturing carbon pollution from power stations and burying it has now effectively disappeared, available only at some unspecified future date. Energy secretary Chris Huhne had guaranteed “absolutely no backsliding“.
Osborne’s infrastructure plan reads like a traffic report, namechecking new roads in every corner of the land. He performed a U-turn on possible expansion of Gatwick and Stansted airports, previously ruled out, and waved a starting flag for new airports elsewhere. In an astonishing and telling decision, he has postponed the application of air passenger duty to private jets.
Perhaps most shocking of all was Osborne’s derision of the protection provided to the countryside as a “ridiculous cost” on business, though it chimed perfectly with the Treasury’s war on planning. He must have missed environment secretary Caroline Spelman’s speech at the Conservative party conference: “Going green is both a moral and economic imperative.”
The rest of the much-vaunted infrastructure plan is in reality an insipid reheat of existing policies. There is no new investment to transform our ageing energy infrastructure into a secure, sustainable system fit for the 21st century, only the bailout for polluters. There is no new investment for flood defences, which this government has so scandalously slashed in the face of rising risk.
No new green measure merited mention in Osborne’s speech, but then there was only one. The Green deal programme to refit the UK’s draughty homes and cut energy bills got a welcome £200m to encourage homeowners to welcome the workmen in.
This exception that proves the rule reveals the opportunity being tragically abandoned by this government. Outside of the dark corridors of the Treasury, the green economy is seen as a shining growth opportunity, at home and for export. Already, the low-carbon and environmental sector employs 910,000 people, six times more than the heavy polluters, and policies like the Green deal and the reform of the energy market could create many more.
Yet Osborne chooses to incinerate the good work of his cabinet colleagues because of his ideological inability to accept green action as real growth. Ironically, he even accepted the damage caused to the economy by soaring fossil fuel prices, while damning measures to get the UK off the oil hook. With his incendiary words, Osborne has torched the flickering confidence that investors in the low-carbon economy were sheltering.
Ministers who truly get green, such as Greg Barker, may valiantly argue that it is action not words that counts. But that dictum does not apply to the man running the UK’s £1.6 trillion economy.
Words matter. Osborne says burn, baby, burn. The only words that can douse these flames are from the prime minister. Speak now, David Cameron, or you will forever regret your silence.
The Chancellor’s autumn statement (29th Nov) in full is at
It states (page 51)
2.31 Air Passenger Duty
– Air Passenger Duty (APD) rates will increase from 1 April 2012, as set out at Budget 2011. The Government will also proceed with the extension of APD to flights taken aboard business jets, effective from 1 April 2013. Details will be set out in the Government’s response to the APD consultation on 6 December 2011. As announced on 27 September 2011, APD will be cut for passengers travelling on direct long-haul routes departing from airports in Northern Ireland, effective from 1 November 2011. The direct long-haul rates will fall to the prevailing band A rate of APD. To provide a lasting solution, the Government has launched a parallel process to devolve aspects of APD to the Northern Ireland Assembly. (4, 11)
also (page 53)
A.7 Access to Manchester Airport
– The Government will invest approximately £165 million in a new dual carriageway road linking the M56 at Manchester Airport to the A6 south of Stockport.
A.8 A453 widening
– The Government will invest £160 million for widening of the A453 between Nottingham, the M1 and East Midlands Airport.
The text of the Chancellor’s speech (29th Nov) is at: http://www.hm-treasury.gov.uk/press_136_11.htm
On aviation he said: “For the first time we are identifying over 500 infrastructure projects we want to see built over the next decade and beyond. Roads, railways, airport capacity, power stations, waste facilities, broadband networks.” and
“And we will explore all the options for maintaining the UK’s aviation hub status, with the exception of a third runway at Heathrow.”
The National Infrastructure Plan 2011 (29th Nov) is at
Section on airports is on pages 38,39 and 40
also on pages 47, 48, 49 and 50
3.3 Airports and ports are the gateways to international trade and the Government will work to improve the road and rail connectivity to major ports and airports. The Government wants to see a successful aviation sector and will develop a sustainable framework for UK aviation and continue to promote a successful and sustainable maritime sector.