Expansion of Heathrow ‘will not boost economy’
15.2.2008 (Evening Standard)
The expansion of Heathrow is unlikely to boost the economy of London and the
South-East, a report claims. It says the Government’s projections of a £4.4 billion
windfall are greatly exaggerated and based on flawed assumptions.
It also questions the claim by ministers that the economy will suffer if expansion
does not go ahead.
The study, by consultancy firm CE Delft, was commissioned by anti-expansion group
“It is clear that the money currently spent on aviation would be spent in alternative
ways in other sectors if there had been no aviation … Thus it would also contribute
to GDP and employment, and have indirect and induced effects,” the report says.
It adds that the Government’s prediction of a windfall is based on a report by
Oxford Economic Forecasting which does not factor in the cost to the Treasury
of tax breaks given to the aviation industry each year.
The Oxford projections claim the economy will be boosted by £120 for each extra
passenger using Heathrow. But other studies suggest the benefit will be only £30
per passenger, says the CE Delft report.
A consultation is under way over plans to build a third runway and sixth terminal
at the airport and increase flights to more than 700,000 a year.
Steve Norris, former Conservative candidate for London Mayor, said: “We are often
told that a third runway is essential for the capital’s economy.
But this report shows those benefits have been overstated by the Government and
the aviation lobby.
“How can we compare the cost of valid alternatives, such as high-speed rail,
if we are overestimating the value of more runways?”
Hacan chairman John Stewart said: “What the CE Delft report clearly shows is
that it is essential the Government should not rely on propaganda promoted by
“We need a proper independent study into the economic impacts of airport expansion.
Greater transparency in the consultation process is necessary for the public to
have full confidence in the conclusions – something sadly lacking at the moment.”
According to the Department of Transport, the net benefit of expansion is expected
to be £4.4 billion over 70 years. But £3 billion of this will be money raised
by the Government through aviation duty – leaving a direct boost to the private
economy of about £1.4 billion a year. Also, the figures do not include the environmental
and health costs of expansion.
Justine Greening, Conservative MP for Putney, said: “No wonder the Government didn’t include this
figure for Air Passenger Duty in the public consultation document. The Government
says the business case for Heathrow is compelling – and now we know why: expanding
Heathrow is as much about keeping the Treasury’s coffers full as anything else.”
But business pressure group London First said: “London doesn’t dig coal, bash
metal or make cars – it is a centre for global trade. Our world city status is
at risk if we don’t invest in a world-class Heathrow airport which meets both
its passenger needs and its environmental responsibilities.”