Environmental Audit Committee says Heathrow must fund the infrastructure improvements necessary
One of the conditions that the Airports Commission suggested should imposed on a Heathrow runway was that the airport should pay most of the cost of the additional surface transport infrastructure. Heathrow has repeatedly said it is not willing to pay more than about £1 billion, though the costs are estimated by Transport for London to be £15 – 20 billion. The Environmental Audit Committee report says: “Before the Government decides to go ahead with Heathrow expansion it should set out its assessment of what would be required in terms of infrastructure improvements, agreed responsibilities for funding and milestones for completion. This should be part of a wider transport strategy for West London to minimise the risk of unintended consequences. The Government must make a binding commitment that Heathrow will fund the infrastructure improvements necessary to accommodate an expanded Heathrow.” The government has said it will not pay, with Richard Goodwill stating in October that: “…. the Government has been clear that it expects the scheme promoter to meet the costs of any surface access proposals that are required as a direct result of airport expansion and from which they will directly benefit.”
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Environmental Audit Committee report
1 December 2015
REPORT: Airports Commission: Carbon Emissions, Air Quality & Noise
The report’s Conclusions and recommendations
5 Conclusion (Page 26)
89. The Government should not approve Heathrow expansion until Heathrow ltd. can demonstrate that it accepts and will comply with the Airports Commission conditions, including a night flight ban, that it is committed to covering the costs of surface transport improvements; that it is possible to reconcile Heathrow expansion with legal air pollution limits, and that an expanded Heathrow would be less noisy than a two runway Heathrow. In each case – climate change, air quality and noise – it needs to set out concrete proposals for mitigation alongside clear responsibilities and milestones against which performance can be measured. It should report regularly to Parliament, through this Committee and others, on progress. The Government should not avoid or defer these issues. To do so would increase the risks of the project: delay through legal challenge, unquantifiable costs resulting from unclear responsibilities, economic risks through constraint of other sectors to meet increased aviation emissions and longterm costs to public health from the impact of air pollution and noise.
Looking at just the section on Heathrow having to pay for surface access improvements
Costs and Funding
58. There was further disagreement about the costs of public transport improvements that would be needed to achieve the levels of modal shift which all sides agreed was desirable. The Commission found: It is clear that with or without airport expansion, the Government will need to take decisive action to address long-term capacity issues arising from background demand growth. This may involve the provision of new infrastructure, demand management, or a combination of the two. The additional challenges presented by airport expansion are not a transformative factor that would significantly change the scale of these challenges. [81 Airports Commission Final Report, para. 8.25 ]
59. Heathrow ltd. told us they were willing to pay a proportionate share of the costs – as they had for previous schemes – and had set aside over £1 billion in funding as their contribution towards public transport improvements. [82. Oral evidence, John Holland Kaye, Q 117] The Airports Commission estimated around £5 billion in total capital costs for surface access. [83. Airports Commission, Final Report, Table 11.2] TfL told us it would cost £15-£20 billion to fund the total transport infrastructure required. [84 Oral evidence, Richard di Cani, Q 53]
60. Heathrow ltd. disputed the TfL figure in our evidence session, saying the figure included the whole of Crossrail 2 and other projects not immediately arising from Heathrow expansion. [85. Oral evidence, Matt Gorman ] TfL subsequently wrote to the Committee to say that the figure did indeed reflect their estimate of the surface access infrastructure “required” by an expansion of Heathrow. They did not, however, deny that the improvements would have benefits for non-airport users or claim that the costs should be entirely borne by the airport. [86. Transport for London, supplementary written evidence]
61. The aspiration of moving the majority of journeys to public transport with no increase in road traffic is shared by all. Transport for London told us this would require large-scale modal shift of the scale seen in central London over the last 15 years. [87. Richard di Cani, Oral evidence, 14 October 2015, Q 55] However, there is no agreement between them and the Commission over the extent of infrastructure improvements required to achieve this, the resulting costs or, by implication, the extent to which individual parties would meet those costs. Before the Government decides to go ahead with Heathrow expansion it should set out its assessment of what would be required in terms of infrastructure improvements, agreed responsibilities for funding and milestones for completion. This should be part of a wider transport strategy for West London to minimise the risk of unintended consequences. The Government must make a binding commitment that Heathrow will fund the infrastructure improvements necessary to accommodate an expanded Heathrow
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This is what the Airports Commission actually said in its Final Report, on the funding of the necessary surface access improvements:
Page 328
16.33 The Government will therefore need to agree the nature, scale and financing of the
surface transport improvements associated with expansion. As part of this process,
it would be appropriate for Government to seek contributions from the scheme
promoter, both for schemes specific to the expansion proposal and for some of the
schemes within the extended baseline. A contribution to works from the airport and
its airline community would demonstrate a recognition of the benefits that those
businesses were deriving from surface transport investments. Government should
enter into these negotiations with the intention of securing the best deal for the
taxpayer while complying with European rules on State aids. The commercial
analysis undertaken suggests that the airport should be able to take on a significant
proportion, if not all, of the surface access costs directly associated with expansion.
See earlier:
Aviation Minister Robert Goodwill says Heathrow has to pay for surface access work resulting from a 3rd runway
Adam Afriyie has reported that, in response to a question he asked the government’s aviation minister, Robert Goodwill, the Government ruled out spending public money for the related surface access costs of a Heathrow 3rd runway. If correct, this is a huge blow to Heathrow, as their surface access costs could be £5 billion just to tunnel the M25 and perhaps up to £10 -15 billion more, for other road and rail improvements, according to Transport for London. In response to the parliamentary question Robert Goodwill said: “In terms of surface access proposals, the Government has been clear that it expects the scheme promoter to meet the costs of any surface access proposals that are required as a direct result of airport expansion and from which they will directly benefit.” Adam Afriyie said: “It is welcome news that the Government has ruled out paying the costs of upgrading the railways and local roads or moving or tunnelling the M25. If Heathrow won’t pay and the Government won’t pay, then the 3rd runway is already dead in the water …It is quite right that the public should not be made to fork out up to £20 billion of subsidies to a private company which refuses to pay its own costs of expansion.” In July John Holland-Kaye said Heathrow would not pay.
and
Heathrow boss rules out footing the £5 billion bill for road and rail works – wants taxpayer to pay
The Airports Commission left the matter of who would pay for the approximately £5 billion needed to tunnel a section of the M25, and other surface access improvements, vague. The assumption has been made that the taxpayer would have to fund this, though the Airports Commission suggested that Heathrow would be able to find the funding from its investors for this. Now the CEO of Heathrow has dismissed the suggestion that the airport foots the £5 billion bill for road and rail work if a 3rd runway is built. Huge motorway engineering would be needed, to have the runway going over the motorway. John Holland-Kaye has ruled out paying for the surface access work. Though the government funds road and rail improvements under normal circumstances, tunnelling the M25 and dealing with hugely increased road traffic using an airport 50% larger than at present are not normal circumstances. Especially in times of huge economic savings being necessary in public finances. The Commission’s final report said it considered the runway was commercially viable “without a requirement for direct government support. This remains the case even in a situation where the airport is required to fund 100% of the surface access costs.” This would be by Heathrow “raising both debt and equity finance. This finance is then serviced through subsequent revenues and refinancing by the airport operator.”
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