Rachel Reeves also backs Lower Thames Crossing, Old Trafford regeneration and East West Rail in speech designed to outline growth plans
The chancellor has confirmed the government’s support for a third runway at Heathrow in a major speech today on economic growth and wants proposals to be brought forward by this summer.
Rachel Reeves’ decision to back the airport scheme had been much trailed as her and prime minister Keir Starmer have sought to put their government on a firmer footing after an autumn budget that weakened market sentiment.
Speaking at the Siemens Healthineers facility in Eynsham, Oxfordshire, she said that the last full length runway in Britain had been built in the 1940s and criticised previous governments for allowing a decision on a third Heathrow runway to “run on for decades”.
“I can confirm today that this government supports a third runway at Heathrow and is inviting proposals to be brought forward by the summer,” she said.
“We will then take forward a full assessment through the airport National Policy Statement. This will ensure that the project is value for money, and our clear expectation is that any associated surface transport costs will be financed through private funding, and it will ensure that a third runway is delivered in line with our legal, environmental and climate objectives.”
As well as Heathrow, Reeves also threw her backing behind the Lower Thames Crossing and plans to redevelop Manchester United’s Old Trafford stadium and the surrounding area.
She also committed to work with Doncaster council and the mayor of South Yorkshire to re-open Doncaster Sheffield airport.
The other major announcement made by Reeves was that the government would revive plans to support a “growth corridor” between Cambridge and Oxford.
“At the moment it takes two and a half hours to travel between Oxford and Cambridge by train [….] and there is a lack of affordable housing across the region,” she said.
“The demand is there, but there are far to many supply side constraints on economic growth here”.
Key announcements in Reeves’ speech
- Backing for Heathrow and Lower Thames Crossing, with private finance options to be explored for the latter
- The Environment Agency has lifted objections to development around Cambridge that could unlock 4,500 new homes and associated amenities
- Water companies will unlock £7.9bn investment for next five years to improve water infrastructure, including nine new reservoirs, such as the Fens Reservoir serving Cambridge and the Abingdon Reservoir near Oxford
- Funding confirmed for East-West Rail with a new East Coast Mainline station in Tempsford and upgrades to the A428 between Milton Keynes and Cambridge
- Former chief scientific adviser Patrick Vallance appointed as Oxford-Cambridge growth corridor champion and a new growth commission to be set up for Oxford
- Commitment to change Green Book rules on investment
- Creation of new designated marine areas, removing barriers to the delivery of 16GW of offshore wind
- Action plan for government regulators to promote economic growth to be published in March
- Infrastructure and planning bill and 10 year infrastructure strategy to be published in the Spring. Refreshed carbon budget delivery plan to be published later in the year
Reeves committed to funding for the East-West Rail scheme and said the government would support greater housing delivery along the line.
“We have already received proposals for new towns along the new railway, with 18 submissions for sizeable new developments,” she said.
At Tempsford, a village sitting on the East Coast Main Line, A1 and East West Rail, Reeves said the government would “move quicker to deliver a main line station, meaning journey times to London of under an hour and to Cambridge in under 30 minutes when East-West Rail is operational”.
She announced that Patrick Vallance, the government’s chief scientific adviser during covid, would be made champion for the Oxford-Cambridge Growth corridor.
He will work with local leaders and with the housing and planning minister and with Peter Freeman , chair of the Cambridge Growth Company, as well as a new growth commission for Oxford.
Reeves also revealed that, after interventions to address water scarcity issues, the Environment Agency had lifted objections to new developments in Cambridge, meaning 4,500 additional homes can now be built.
The rest of Reeves’ speech was focused on solving supply side obstacles to economic growth, which she described as the “number one priority” of the government.
She said that for too long politicians had “lacked the courage” to confront supply side challenges and had chosen not to prioritise growth.
Having met the heads of the largest government regulators earlier this month, and replaced the chair of the Competition and Markets Authority, Reeves said an action plan for cutting red tape would be published in March.
She also promised that an infrastructure and planning bill, to streamline the planning process for major projects, would be published in the Spring, alongside a ten year infrastructure strategy, and that the government would also publish a refreshed carbon budget delivery plan later this year.
Reeves also revealed the Treasury was reviewing the green book, which determines which investment projects are deemed worthy of public support, to ensure more schemes outside of the south-east are backed.
Industry reaction
Marie-Claude Hemming, director of operations for the Civil Engineering Contractors Association
“The Government should be applauded in its commitment to airport expansion, which is an issue that has been kicked into the long grass by successive administrations, but which is vital to the UK’s future as a global trading nation.
“In addition, the Chancellor’s decision to amend HM Treasury’s ‘Green Book’ rules to further distribute the benefits of investment across the UK reflects a long-held CECA policy, and will lead to a wider distribution of economic growth across all parts of the country.
“We welcome the fact that the UK Government has committed to unleashing the full potential of the UK economy through public and private investment in infrastructure.
“Industry is keenly awaiting the publication of this Spring’s Planning and Infrastructure Bill, but the Chancellor’s commitment to speeding up planning and removing blockers to growth, such as excessive use of judicial review, are positive signs that the UK Government has listened to industry, and will act accordingly.
“Heathrow expansion will be the largest privately-funded infrastructure project in Europe and will be central to ensuring the UK remains an attractive place to live and do business in - it is exactly the sort of ambitious scheme we need to drive connectivity and kick-start economic growth.
“CECA members are poised and willing to work with the UK Government to accelerate project delivery so that businesses and communities across the UK can feel the benefits of investment as soon as possible, raising living standards in all parts of the country, as well as building the foundation of a stronger economy for the future.”
Melanie Leech, chief executive, British Property Federation
“We fully support the Chancellor’s focus on removing the barriers to growth and welcome today’s speech as a necessary re-affirmation of the Government’s commitment to action.
“Investors need certainty and a reason to put their money into the UK – the planning system has been an investment deterrent for too long. The Government is absolutely right to remove barriers to the delivery of new homes and essential infrastructure by streamlining decision-making, encouraging development by transport hubs, simplifying the planning regime through a greater use of Local Development Orders and re-focusing the role of statutory consultees.
“The property sector strongly supports the introduction of more strategic planning. Such ‘larger than local’ planning will enable both housing and employment uses to be holistically planned across local boundaries, which will be hugely beneficial to local and national economies. However, while these intentions are good, without adequate resourcing of planning departments, these ambitions will falter. The Government needs to plan for more than 300 planners and allow planning departments to fully recover their costs while ring-fencing the income to protect the service.
“We welcome the new mandate for the National Wealth Fund and Office for Investment to work with local leaders to develop tailored investment strategies and deliver a pipeline of incoming projects linked to regional growth priorities.
“The BPF has long argued for pension reform that would enable pension schemes to more easily invest in real estate. Increased flexibility on how defined benefit pension funds can invest is welcome and will enable this huge pool of capital to be more readily deployed into renewing the UK’s built environment.”
Lord Hutton, chair, Association of Infrastructure Investors in Public Private Partnerships
“The Chancellor is right, but it’s impossible to plug the maintenance hole or build new infrastructure without bringing in the private sector.
“Every other western country uses a similar approach to public private partnerships , which the UK pioneered, but then cancelled in 2018.
“We’re now a low investment nation: since 2000 investment has averaged 2.5% of GDP, less than two-thirds of the OECD average. If we are to go for growth, we need a new vision for private investment in our social infrastructure.”
Justin Sullivan, president, RICS
“Rachel Reeves is correcting the course of Labour’s growth journey. The tough decisions have been made; now it’s time to press ahead with much-needed reforms.
“Since the Budget confidence amongst companies in the built environment has tailed off spelling bad news for housing and infrastructure delivery – particularly among SMEs, the backbone of construction supply chains, whose ability to borrow, grow and deliver disproportionately relies on sentiment across the economy. These have combined to undermine the positive impact of changes to the National Planning Policy Framework, announced in December. But Rachel Reeves’ speech today will help reset the mood.
“By streamlining decisions on critical infrastructure projects and slashing red tape, policymakers should achieve their ultimate aim of economic growth by capturing the potential of high-growth, knowledge-intensive ecosystems like the Oxford-Cambridge Arc.
“While Reeves is focusing on the biggest, most newsworthy projects – like the East-West Rail link – her department must work with MHCLG and local councils to realise the strategic benefit of improving more local, smaller scale infrastructure projects – like local road networks, water utilities, and public transport links. Part of this focus must be on addressing the skills crisis that affects every corner of the built environment.”
Colin Wood, chief executive, Aecom Europe and India
“The Government’s support for an expanded Heathrow Airport is a welcome move. Expansion is a vital step forward in securing growth and the UK’s ability to maintain its position on the global stage, while also addressing the need for increased capacity that will follow.
“Alongside development of the ten-year infrastructure strategy, this will provide the infrastructure sector with some certainty around project pipeline and delivery.
“Recent updates to the National Planning Policy Framework and the Chancellor’s reforms to the planning system should fast-track much-needed infrastructure projects across all sectors, including housing developments, transport and energy systems.
“This significant overhaul of the UK’s planning system and a commitment to delivering the 10-year infrastructure strategy will be key to spurring investment and growth in the years to come.”
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