Contentious decisions on expanding airport capacity in the south-east of England cannot wait until after the 2015 general election, the man charged with devising Labour‘s strategy on economic growth has declared.
The intervention by former transport secretary Lord Adonis, who is heading Labour’s economic growth review, comes amid suggestions that Tuesday’s interim report by the airports commission chairman, Sir Howard Davies, will downplay the urgency of capacity problems and may look instead to a solution being in place as late as 2030.
Government sources said last night that they expected Davies to say that, while extra capacity will be needed in time, there is no “crisis” yet. Ministers expect Davies to list four or five options for expansion, including new capacity at both Heathrow and Gatwick, but to stress that whatever plan is adopted can wait until “the end of the next decade”.
The Conservatives would be relieved if Davies were to downplay the urgency of the problem, as they are worried about the effect that plans to expand the number of flights into Heathrow would have on key seats in west London that lie underneath the flightpaths. Under current plans Davies is not due to deliver his final report until after the 2015 election.
But in a new Fabian Society booklet on the future of London, Adonis says decisions cannot wait until 2015 and calls on Davies to deliver his final report this summer. He also calls on his own party leader, Ed Miliband, to get together with David Cameron, Nick Clegg and London mayor Boris Johnson to agree a joint approach well before the next election.
Adonis writes: “Whether they succeed or fail, they will then have to tell the voters in 2015 what they intend to do. It will be hard for them to reconcile inaction on airport capacity with any claim to be pro-growth. Equally people who live around airports have a right to know what is being proposed before, not after, the general election.”
The stance adopted by Adonis, who earlier this year appeared to favour Heathrow expansion, shows that Labour as well as the Tories are divided over the issue. Before the last election Ed Miliband, when energy and climate change secretary, made clear he was completely opposed to Heathrow expansion.
Now, however, and since the Tories have abandoned their total opposition to a third Heathrow runway, Labour has shifted too, saying it will wait for the final Davies report. While Adonis seems to favour Heathrow expansion, Jon Cruddas, who is in charge of Labour’s overall policy review, has voted against a third runway at Heathrow.
Government insiders say they still expect Boris Johnson’s plans for a new airport to the east of London to be kept in play by Davies, despite reports saying he had rejected the idea on cost grounds.
Opponents of Heathrow expansion argue that the case put forward by its supporters is based on a PR myth. AirportWatch, an umbrella movement that includes Friends of the Earth, Greenpeace, the Campaign to Protect Rural England and the Campaign for Better Transport, points out that, contrary to the line pushed by pro-expansion politicians and business leaders, Heathrow is not losing out to other European airports. The airport has 990 weekly departures to the world’s key business centres, more than its two closest rivals, Charles de Gaulle and Frankfurt, combined.
And London’s status is not diminished by the state of the UK’s airports. London is still the top European city in which to do business, according to surveys.
“Any suggestion that there is no need to rush into this would be welcome,” said Nic Ferriday, spokesman for AirportWatch. “We’ve been saying for years that there is no shortage of capacity in this country or in the south-east of England in particular. The only airport where there are capacity issues is Heathrow, but the idea there is a crisis is manufactured. Using the Department for Transport’s own forecasts, we can see that, even if no new runway is built up to 2030, no traffic would be lost.”
Ferriday pointed out that Luton and Stansted were operating at only half capacity, [Stansted had only 17.5 million passengers in 2012 compared to its maximum permitted of 35 million link . Luton had around 9.6 million passengers in 2012 but has a planning application now being determined to take it to 18 million per year. link The application may not succeed though ] leaving scope for these to be used as alternatives to Heathrow and Gatwick.
[Nic Ferriday said ]”If people have to use these airports, it might be bad news for Heathrow but it is not going to damage the economy as a whole. We believe the Davies report will recommend the need to use airport capacity across the south east more fully.”
DfT air passenger forecasts, January 2013
Their forecast for air passenger numbers by 2030 are 7% lower than the DfT forecast in August 2011.
The DfT says, of constrained demand: …”passenger numbers are forecast to rise from 219 million passengers in 2011, reaching 315 million passengers by 2030 and 445 million by 2050 in the central case.”
“In the central forecasts, airport capacity constrains national throughput by 5mppa in 2030 (of a total of 315 m) rising to 35mppa by 2050 (of a total of 445 m) ”
“As airports fill up and become constrained passengers either re-allocate to a less preferred airport or are deterred by the increased prices at the constrained airports from travelling altogether.”
“The central forecasts suggest that all the South East airports would be at capacity at around 2030 and the larger airports outside the South East from about 2040. At the low end of the forecast range, the South East airports in total are at capacity by 2040. The high range forecast is that the South East airports are full by 2025.”
Airport capacity crisis? What crisis?
Briefing by the Aviation Environment Federation (AEF)
Since the Government announced its policy of opposition to new runways at Heathrow, Gatwick and Stansted, the aviation industry has been working hard to put out the message that there is a crisis in airport capacity in the South East.
Perhaps as a result, much of the recent reporting and political discussion about airports has started from the assumption that we need new runways, asking “if not at Heathrow, then where?”
In fact, there is no evidence of a crisis in capacity and no urgent need for new runways.
New forecasts of passenger demand were published by the Government in August 2011. These forecasts show a massive reduction in expected future levels of demand compared with the heady forecasts produced in 2003. Those forecasts led to the Government’s ‘white paper’ which supported new runways at Heathrow and Stansted as well as a new runway in the Midlands and one in Scotland. Even in 2007 demand was predicted to be 495 million passengers per year (mppa) at 2030, but by 2011 the forecast had fallen to 343 mppa.
Even the latest forecasts are probably still too high because they assume:
- A resumption in economic growth at around 2% pa or above and continuing indefinitely, which is very uncertain
- No increase in oil prices (despite evidence of increasing demand and increasingly difficult and expensive approaches to extraction), and
- A continuation of aviation’s tax exemptions (including no fuel tax and no VAT)
More detail on the forecasts is given on our website (http://www.aef.org.uk/uploads/AEF_Passenger_Forecasts_analysis_1.pdf , where there is a link to a detailed report by AEF of 24pp).
The only airport in the entire country where there is a gap between demand and supply in terms of runway capacity, either now or any time soon, is Heathrow. And despite the recent hysteria about constraints at Heathrow, there is sufficient runway capacity serving London and SE England to continue to meet demand.
The Government forecasts show that passenger demand could be almost entirely met with existing infrastructure until 2030. Even if no new runways were built anywhere in the UK, less than 3% of potential air traffic would be squeezed out. (‘Constrained demand at 2030 is 335mppa, compared with unconstrained demand of 345mppa.)
Do we need to cater for more business travellers?
A key question is whether business travel would be squeezed out. The answer is almost certainly no.
CAA statistics indicate that only about 23% of air travel is for business. The great majority of the growth in demand is for leisure.
Business travel is very ‘inelastic’. This is entirely explicable – a highly paid business person wanting to travel to China to negotiate a multi-million pound deal is not going to be put off because he or she has to take a flight from one airport rather than another or because it is slightly more expensive.
Leisure travel is, by contrast, widely accepted as discretionary and highly ‘elastic’. If a particular trip is not convenient or becomes more expensive, people may chose to spend their money on something else.
For these reasons, the 3% of traffic that would be squeezed out by 2030 if no runways were built would be almost entirely leisure. There would be virtually no loss of business travel and therefore no loss of trade or loss to the UK economy.
There may well be benefit to certain airlines or airport operators if certain airports were expanded (eg Heathrow) or a new airport was built (eg Thames estuary). However, this is a completely different matter to benefits for UK passengers or economic benefits arising from business travel.
Can Government forecasts be trusted?
Government forecasts have recently come in for something of a battering. The aviation forecasts are certainly fallible and have been revised 4 times since 2003 – each time downwards. But they are rigorously produced and improvements to the assumptions have been made over time so the official figures can serve as a useful check against the often wildly exaggerated forecasts by airports, produced to support business plans and please shareholders.
AEF considers that ultimately airports policy should not be determined solely by individuals’ demand for travel but also by society’s demands both for protection from unacceptable noise and air pollution, and for political action to tackle climate change. But even if the Government imposed no new constraints on aviation for environmental reasons, there would be sufficient airport capacity to cater for all aviation demand until nearly 2030.
For more information, please contact:
firstname.lastname@example.org 0207 248 2223
Aviation Environment Federation, Broken Wharf House, 2 Broken Wharf, London EC4V 3DT
Adonis was a key figure in the aftermath of the 2010 general election, which produced a hung parliament with the Conservative/Lib Dem coalition. Adonis then stepped down from front line politics. He later returned to active politics in 2012 as part of Ed Miliband’s Shadow Cabinet reshuffle. He is currently working with Shadow Business Secretary Chuka Umunna on crafting Labour’s industrial strategy, and has also taken up roles as Shadow Minister for Infrastructure in the House of Lords, and overseeing the Armitt Review, which is looking at future infrastructure plans for the Labour Party.
Ed Miliband launches Adonis Growth Review
Ed Miliband launches Adonis Growth Review
“There will be less money around so we need new ideas to reform our economy and rebuild Britain.”
Ed Miliband MP, Leader of the Labour Party, and Lord Adonis, Labour’s Shadow Infrastructure Minister, will today launch an independent growth review which is due to be published in spring 2014.
The Adonis Growth Review, which is jointly supported by the Institute of Public Policy Research (IPPR) and Policy Network, will set out a radical agenda for change to revitalise the British economy by supporting business innovation and growth across the country. Raising the quality and rate of job creation is crucial to enabling Britain to compete more effectively in the 21st century.
Over the next few months, Lord Adonis will be touring the country to hear the views of local businesses, colleges and communities taking into account the diverse challenges to innovation and growth faced by the different regions.
Speaking at a visit to Crossrail in London, Mr Miliband said:
“The last Labour government rebuilt our schools and rescued our NHS so that these key services worked better for the people of Britain.
“The next Labour government will need the same level of ambition in rebuilding our economy to secure a recovery made by many which is built to last.
“That is why I am delighted that Andrew Adonis has agreed to lead this independent review on growth.
“Having played such a key role reforming our public services before, he will now be applying similar radical thinking to industrial policy so that we can rebuild our economy, equip Britain with the skills and better jobs we need to pay our way in the world.
“There will be less money around so we need new ideas. And that is where the hard work comes in to make the economic reforms needed to create a more responsible capitalism. This is one of the key ways we can make a huge difference to people’s lives while also demonstrating the discipline required to get the deficit down.
“A One Nation Labour government will work with business to deliver more youth apprenticeships and promote long term growth, work with entrepreneurs to encourage innovation, and work with local government to build the infrastructure Britain needs in the future, like Crossrail.
“But none of this will happen without new ideas, careful planning and consistency. This is an important review and I will be looking forward to reading its conclusions as part of the preparations we undertake for the next Labour government.”
Lord Adonis said:
“We need to promote more and better jobs by radically improving skills, the national infrastructure, levels of business innovation, and the strength of key industrial sectors. Government needs to be far more engaged and hands-on to make this happen.
“The status quo is dire: youth unemployment of a million, Britain with one of the worst infrastructures in the developed world, including a massive housing shortage, pitiful levels of investment and R & D across much of the economy, and lacklustre export performance. Britain is stagnant, with 2.5 million unemployed and a squeeze on real living standards, and all this needs to change. I hope to chart a credible strategy for change in all these key areas.”