Rachel Reeves has confirmed the government will throw its weight behind a third runway at Heathrow, in an upbeat speech setting out her plans for kickstarting the stalling UK economy.
Brushing aside doubts about the project’s compatibility with the UK’s climate commitments – including within government – Reeves said a third runway would make the UK “the world’s best-connected place to do business”.
She said: “We cannot duck the decision any longer. The last full-length runway in Britain was built in the 1940s: no progress for 80 years.”
Reeves claimed the case for expansion at Europe’s busiest airport was “stronger than ever”. She insisted expansion would be achieved within the government’s carbon targets, saying: “We are already making great strides towards cleaner and greener aviation.”
Confirmation of the government’s plans for Heathrow prompted fury among environmental campaigners, however.
Rosie Downes, the head of campaigns at Friends of the Earth, called Reeves’s growth-first approach “the kind of dangerously shortsighted thinking that has helped cause the climate crisis and left the UK one of the most nature-depleted countries in the world”.
After the chancellor’s speech, the London mayor, Sadiq Khan, reiterated his objections to the idea. “Despite the progress that’s been made in the aviation sector to make it more sustainable, I’m simply not convinced that you can have hundreds of thousands of additional flights at Heathrow every year without a hugely damaging impact on our environment,” he said.
Reeves said the government was “inviting proposals to move forward by the summer”, emphasising she would expect the private sector to fund any additional transport connections needed as part of the project.
Reeves hopes the government will grant planning permission to the project by the end of the parliament in 2029. The chief executive of Heathrow, Thomas Woldbye, told the Financial Times the target was “ambitious, but not undoable”. He said the runway could be completed by the mid-2030s at the earliest.
Alongside the Heathrow announcement, the half-hour-long speech set out the clearest explanation Reeves has given of her approach to the economy.
The chancellor listed a range of “supply-side” policies the government hopes will boost the UK’s capacity to grow – from sweeping away environmental regulation to bankrolling transport projects.
She also underlined the importance of establishing a smoother trading relationship with the EU, which she said would be in the “national interest”.
Reeves promised to work closely with the new US administration. She also announced that the business secretary, Jonathan Reynolds, present at Wednesday’s speech, would soon travel to India in pursuit of a new trade and investment deal.
The chancellor defended her controversial decision to impose a £25bn increase in employer national insurance contributions in the October budget.
There had been knock-on effects for British businesses, she conceded – but her critics had not put forward an alternative. “I accept that there are costs to responsibility. But the costs of irresponsibility would have been far higher: those who opposed my budget know that, too.”
A small group of farmers in tractors held a noisy protest outside the venue for Reeves’s speech, against changes to inheritance tax for family farms.
She rejected the idea that she and the prime minister talked down the economy with a string of gloomy statements in their first weeks and months in power, insisting it was necessary to deal with a “black hole” in the public finances.
Reeves said she had been left with “a number of difficulties, on welfare, on spending and taxation”, which she had confronted, and had now “drawn a line” under the Conservatives’ legacy.
The chancellor’s speech was given to an audience of business leaders at a vast factory in Oxfordshire operated by the German company Siemens, which makes the magnets for use in medical scanners.
As well as Reynolds, several other cabinet ministers were in the audience, including the environment secretary, Steve Reed, the work and pensions secretary, Liz Kendall, and the transport secretary, Heidi Alexander.
Reeves was keen to highlight the possibilities of creating a “growth corridor” between the research hubs of Oxford and Cambridge – including reopening a rail line between the two university cities, via Bedford. The project was first conceived in 2003 but was shelved by the Conservatives in 2022.
“At the moment, it takes two and a half hours to travel from Oxford to Cambridge by train,” she said, adding that there was also a lack of affordable housing across the region. “We are going to fix that.
“This is the government’s modern industrial strategy in action, with central government, local leaders and businesses working together.”
Reeves also listed a range of other projects the government is supporting across the UK, from TransPennine rail to efforts to regenerate and reopen Doncaster Sheffield airport and to create a new mass transport system for West Yorkshire.
The chancellor said she had been “genuinely shocked” about the slow pace of decision-making on planning. She highlighted a solar farm in Cambridgeshire that was first raised with government in 2021, adding: “It’s ridiculous.”
She promised a planning and infrastructure bill to be laid in parliament this spring, which would “fundamentally reform our approach to environmental regulation”, making it harder to object to new developments.
