Negative impacts of Heathrow expansion to economy and the regions highlighted in new report
A report on Heathrow’s third runway plans has revealed that the impact on the economy is likely to be negative with significant concerns about potential costs falling on taxpayers. Indeed, using the Government’s own methodology the scheme would be rated as either ‘poor’ or ‘low’ value. The report “Flying Low: The True Cost of Heathrow’s Third Runway,” by the New Economics Foundation, was commissioned by the No Third Runway Coalition to examine the Government’s own data and analysis that has been used to justify their position of support for the north west runway at Heathrow. It found that airports outside London would experience a reduction in aviation traffic which would, in turn, at the very least lead to “grow more slowly” and could in fact lead to lead to a reduction in jobs at airports in regions across the UK, through displacing of jobs from other (regional) airports, as well as from other sectors. The report also identified that a ‘more targeted’ approach was needed to support a UK-wide air freight strategy. Chair of the Coalition, Paul McGuinness commented: “Further, it must be unacceptable for Heathrow to claim their proposals will be privately financed whilst seeking protections from the public purse for potential delays in construction and inaccuracies in passenger demand forecasts.”
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Negative impacts of Heathrow expansion to economy and the regions highlighted in new report
26.3.2018 (No 3rd Runway Coalition)
A report on Heathrow’s third runway has revealed that the impact on the economy is likely to be negative with significant concerns about potential costs falling on taxpayers. Indeed, using the Government’s own methodology the scheme would be rated as either ‘poor’ or ‘low’ value.
The report Flying Low: The True Cost of Heathrow’s Third Runway, by the New Economics Foundation, was commissioned by the No Third Runway Coalition to examine the Government’s own data and analysis that has been used to justify their position of support for the north west runway at Heathrow.
It found that airports outside London would experience a reduction in aviation traffic which would, in turn, at the very least lead to “grow more slowly” and could in fact lead to lead to a reduction in jobs at airports in regions across the UK, through displacing of jobs from other (regional) airports, as well as from other sectors (2).
The report also identified that a ‘more targeted’ approach was needed to support a UK-wide air freight strategy, following the stagnation in volume of freight cargo, through ‘miniaturisation’ of high-value products, whilst value continues to increase.
Paul McGuinness, Chair of the No 3rd Runway Coalition, representing MPs, local authorities, community groups, NGOs and trade unions, said:
“Every time the case for expansion is subjected to proper scrutiny, significant holes seem to appear in its proponents’ case.
“Now, this serious piece of work by the New Economics Foundation even demonstrates that the modelling used to produce the GDP growth figures and job numbers fails to conform to the Government’s own guidelines.
“And the fact that it is accepted that passenger numbers at regional airports will fall by 2040, if Heathrow expansion were to proceed, clearly belies any claims that expansion could increase regional growth or connectivity.
“Further, it must be unacceptable for Heathrow to claim their proposals will be privately financed whilst seeking protections from the public purse for potential delays in construction and inaccuracies in passenger demand forecasts.”
The report will be launched in Parliament at a meeting of the All-Party-Parliamentary Group on Heathrow Expansion on Monday 26 March (2).
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Notes:
- Flying Low: The True Cost of Heathrow’s Third Runway, New Economics Foundation. Report here NEF_HEATHROW-report March 2018
- Flying Low: The True Cost of Heathrow’s Third Runway, New Economics Foundation, p. 17, 18, 22
- Report launch: 26/3/18, 5.15pm, Committee Room 19, House of Commons
The NEF report is at NEF_HEATHROW- report March 2018
Key headlines include:
* Economic modelling for the Airport Commission’s ‘strategic case’, which produced some of the big GDP benefits cited in press reports at launch, is now discredited and should not be used.
* Subsequent changes in economic assumptions made in between July 2015 and the publication of the DfT’s updated appraisal report in October 2017 have reduced Heathrow’s projected NPV from £11.8 billion to between minus £2.2 billion and plus £3.3 billion.
* Stripping out the benefits that accrue to I-to-I passengers – which mostly do not accrue in the UK – erodes Heathrow NWR’s cost-benefits by up to a further £5.5 billion.
* A range of other factors, such as if Heathrow’s aeronautical charges increase and are passed through to passengers, could reduce the lower bound of Heathrow’s cost-benefit to an even more significant minus number.
* The stated benefits to UK connectivity may be significantly overstated, with regions outside of London actually experiencing an overall reduction in aviation traffic.
* Using the government’s own formula for assessing the value for money of transport schemes, Heathrow expansion along proposed lines would be rated as either ‘poor’ or ‘low’ value.
On the basis of these findings, we question whether a planned Parliamentary vote on the scheme this spring should even go ahead. It seems clear to us that Heathrow’s proposed NWR is no longer economically viable in net terms and indeed the DfT’s own method for scoring such projects would seem to rule it out.
If the NPS does proceed into Parliament, then in considering whether to approve it or not, MPs should take all these factors into account.
Heathrow third runway may lead to economic loss of £2bn
By Graeme Paton, Transport Correspondent (Times)
March 22 2018,
A report has suggested that a second runway at Gatwick would be better value
The construction of Heathrow’s third runway could leave the country billions of pounds worse off, a study claims.
The benefits of building the £14 billion runway have been exaggerated and may lead to a net economic loss of £2.2 billion, research by the New Economic Foundation think tank found. The study, which was commissioned by the No Third Runway Coalition, is based on government data. The report suggests that the loss would be borne by the airport’s shareholders or, more likely, airline passengers and even the government, and argues that plans for a second runway at Gatwick offer better value for money.
A spokeswoman for Heathrow said the report was “fundamentally flawed” because it used an analysis for publicly funded projects, adding: “Heathrow is not one of those.”
The new runway, which is due to be built by 2025, will eventually allow Heathrow to accommodate 740,000 flights a year.
https://www.thetimes.co.uk/article/heathrow-third-runway-may-lead-to-economic-loss-of-2bn-58sj5mkkk
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Costs of Heathrow’s third runway could outweigh benefits by £2.2bn, says thinktank
By Alexandra Rogers (City AM)
NEF said that the £2.2bn net costs could be shouldered by passengers and government.
The costs of Heathrow’s controversial third runway could outweigh the economic benefits by at least £2.2bn, according to a thinktank.
The New Economics Foundation (NEF) warns that the third runway may no longer be “financially viable” and that the best-case scenario may only deliver £3.3bn of benefits, a significant scale-down from the Independent Airports Commission’s projection of £11.8bn in 2015.
According to the government’s own formula for assessing value for money, Heathrow expansion would be rated as “poor” or “low” value, it said. Even a second runway at Gatwick, which is estimated to offer value for money of between £1bn and £2.4bn would still be rated low value, according to the report.
NEF said that the £2.2bn net costs could be shouldered by passengers, or even government. It said this figure could rise to a cost of £5.5bn if the benefits of increased passengers are not taken into account, as recommended by the Department for Transport (DfT).
A Dft spokesperson said: “This report makes a number of deliberately misleading claims that do not stack up against the evidence we have set out in two comprehensive reports.
“Our analysis shows that the Heathrow north west runway scheme will result in up to 114,000 local jobs, passenger benefits totalling up to £74 billion, and can be delivered and funded privately at no cost to the taxpayer.” [This is , of course, nonsenses. First, any claims such as these should come with the number of years to which they refer ….. AW comment]
The NEF also said that the third runway could deplete passenger numbers at regional airports in the South East if there was no corresponding expansion, and that Heathrow’s expansion could hurt economies in poorer areas as a result.
Andrew Pendleton, Director of Policy and Advocacy at New Economics Foundation said:
“This report clearly shows that a new runway at Heathrow is not only bad for the environment but also poor value for money. And it threatens to further entrench the regional imbalances in our economy.
“Based on this report, we question whether the planned Parliamentary vote on the scheme this Spring should go ahead. It seems clear that Heathrow’s third runway project is no longer financially viable, and indeed the Government’s own method for appraising such projects should rule it out.
“If the vote does go ahead, we urge MPs to consider carefully the poor value for money that Heathrow now offers and whether other schemes would bring much greater benefit top passengers across the UK at much less cost.”
A Heathrow spokesperson said:
“This analysis, paid for by a group opposed to Heathrow expansion, is fundamentally flawed, using a methodology designed to assess publicly funded projects and their values. Heathrow is not one of those and will not be paid for by public money. Unlike this research, the independent Airports Commission and the Government have been clear – not expanding Heathrow will mean higher airfares, less competition, fewer jobs and lost trade.”
http://www.cityam.com/282720/costs-heathrows-third-runway-could-outweigh-benefits
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