Government backs Heathrow expansion
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Speaking to an audience of business chiefs at Siemens in North Oxfordshire this morning, the Chancellor set out the government’s latest set of reforms to kickstart economic growth and drive up living standards across the UK by driving investment, getting Britain building and tackling regulatory barriers. This included the announcement that the government supports and is inviting proposals for a third runway at Heathrow.
The Chancellor confirmed that the government will move at speed to review the Airports National Policy Statement (ANPS). This provides the basis for decision making on granting development consent for a new runway at Heathrow, to ensure that any scheme is delivered in line with our legal, environmental and climate obligations.
In her speech, Chancellor of the Exchequer Rachel Reeves said: "I have always been clear that a third runway at Heathrow would unlock further growth, boost investment, increase exports, and make the UK more open and more connected as part of our Plan for Change. And now the case is stronger than ever because our reforms to the economy - like speeding up our planning system and our strengthened plans to modernise UK airspace - mean the delivery of this project is set up for success.
"So I can confirm today that this Government supports a third runway at Heathrow and is inviting proposals to be brought forward by the summer."
As well as creating over 100,000 jobs in the local area and many more indirectly, research published today by Frontier Economics finds that 60% of the economic boost from a third runway would be felt by areas outside of London and the South East – putting more money in the pockets of working people across the UK through lower fares and greater choice for passengers as part of the Government's Plan for Change.
During the speech, Reeves announced that the Transport Secretary Heidi Alexander is expected to take decisions on expansion plans at Gatwick and Luton shortly and that the government will work with Doncaster Council and the Mayor of South Yorkshire to support their efforts to reopen Doncaster Sheffield Airport as a thriving regional airport.
The Chancellor also announced that a new partnership between global logistics giant Prologis and East Midlands Airport to build a new advanced manufacturing park within the East Midlands Freeport zone to unlock £1 billion of investment and 2,000 jobs.
It follows this Government’s expediting approval of similarly stalled plans for London City Airport to expand to nine million passengers per year by 2031 and a £1.1 billion investment at Stansted Airport to extend its terminal and create 5,000 jobs.
The Government aims to secure the future of the UK’s world-class aviation sector and the sustainable growth it can provide. Air freight represented 57% of the UK’s non-EU exports by value in 2023, with over 60% of freight coming through the UK doing so through Heathrow.
International connectivity also supports vital tourism and business links, with overseas visitors spending £31 billion on their visits to the UK in 2023 and 15 million business travellers using Heathrow in the same year.
It comes after reforms to speed up the planning system and a presumption to ‘back the builders over the blockers’ were set out by the Prime Minister Keir Starmer last week. The government has siad it is committed to making decisions on 150 major economic infrastructure applications over this Parliament, having already made decisions on multiple significant projects within its first six months spanning airports, data centres, energy farms and major housing developments. The Planning and Infrastructure Bill to be introduced in Spring will enact further reforms to reduce red tape for approval of infrastructure projects.
Alongside these reforms and plans to modernise UK airspace, the government is taking great strides in transitioning to greener aviation. Sustainable Aviation Fuel reduces CO2 emissions compared to fossil jet fuel by around 70% and the Chancellor announced that the government is supporting UK producers by investing £63 million in 2025-26 into the Advanced Fuels Fund and setting out details of a Revenue Certainty Mechanism.
This investment is aimed at supporting the development of high-skilled green jobs in plants across the UK - with previous winners of the Fund ranging from across the north of England to South Wales - and follows the Sustainable Aviation Fuel Mandate coming into law at the start of 2025. Taken together, Government commitments to SAF will support thousands of jobs in places like Teesside and Humberside, as well as bringing down UK transport emissions.
Commenting on the Chancellor's speech, Rob Bishton, Chief Executive at the UK Civil Aviation Authority said: “We recognise the vital role that aviation plays in the growth of the UK economy, and the role of the aviation regulator has in enabling that.
“Expanding the sector will give passengers more choice and build resilience as well as contributing to the UK’s productivity.
“In doing so, it will be important for the sector to remain safe and grow in a responsible way. In undertaking this regulatory role, we will work with Government and the aviation sector.”
Alan Fisher, CEO, Farnborough Aerospace Consortium (FAC), said: “The Chancellor is correct when she said we haven’t had a new runway built for 80 years. With a third runway Heathrow would have increased capacity and with upgrades to other airports it does send a positive message to the aerospace and aviation industries.
“Every generation of aircraft and every new fuel is far better for the environment than the previous one, so boosting the aerospace and aviation sectors will help power research and development into more new technologies.
“The announcement of investment in the Advanced Fuels Fund is welcome as we have members directly involved in creating new fuels.
“We all know that the Heathrow expansion debate has been raging for decades, with passionate advocates on both sides of the argument. So we will have to wait and see what emerges from the proposals for the expansion when they are put forward and we will be closely watching updates through the Airport National Policy Statement.
“The Chancellor’s speech does now provide our members with some certainty."
Karen Dee, chief executive of AirportsUK, the trade association for UK airports, said: “Airports make an enormous contribution to the economy, connecting businesses, facilitating imports and exports, bringing in investment and creating jobs.
“Expanding capacity will support growth in all these areas and will not come at the expense of our sustainability goals. New, cleaner fuels, more efficient and quieter aircraft, decarbonised airport operations and modernisation of our airspace will all ensure aviation is able to meet its obligations, alongside growth.
“The Chancellor is right to get behind airports as key engines for economic growth and to prioritise policies that can help deliver additional global connectivity.
“Sectors as diverse as transport equipment, pharmaceuticals, the creative industries and clothing rely on good air links, to the tune of billions of pounds of value. Growing connectivity into global markets will support these sectors and countless others, creating jobs, bringing new customers to our goods and services and opening new opportunities for investment.”
“Aviation’s contributions are also shared across the entire country, with all regions of the UK benefitting through increased trade opportunities brought about by better connectivity. Supporting airports is to support local businesses, create jobs in our towns and cities, and help hard working, ordinary people of the UK go on holiday and visit family every year.”
Alun Cornish, Manager Director Ramp and Gateways at FedEx Europe, said: "Expansion at Heathrow is a step in the right direction for UK growth. To fully realise its potential, it’s crucial that expansion plans include provisions for cargo growth alongside passenger flights. The ability to efficiently import and export goods is essential for UK economic growth, so it's vital that cargo forms part of the UK’s future airport strategy.
"Trade is a cornerstone of our economy and our research last year revealed that the UK remains a leading exporter to both the EU and other global markets. Increased capacity in UK supply chains would be welcomed and would be a key enabler of the UK’s plans for growth."
Olivier Jankovec, ACI EUROPE Director General said: “By supporting a third runway at London Heathrow, the UK Government is seizing the power of air connectivity as one of the key levers for boosting the country’s economy and reinforcing its global position. We now call on the Government to expedite the approval of expansion at London Gatwick and London Luton airports.”
“With every 10% increase in air connectivity yielding a 0.5% gain in GDP and 1.6% rise in employment, allowing airports to expand where needed to meet future demand is all about effectively supporting wider economic activity — in particular trade, inward investment and tourism. This is both highly relevant and timely, considering the new era of geoeconomic competition we now face. Ultimately, this is about futureproofing the country.”
Thomas Knight, transport market lead for UK and Europe at Mott MacDonald, said: “The Chancellor's support for a third runway at Heathrow Airport and investing in new and upgraded airport facilities in Doncaster and Manchester is also encouraging.
"It is essential that new airport infrastructure is built and operated in line with the Government’s Airport National Policy Statement (ANPS) and the associated environmental, noise and sustainability obligations. Mott MacDonald continues to work with Heathrow Airport to deliver these obligations, including carbon reduction ambitions. We look forward to supporting Heathrow and the UK government in addressing these challenges through a review of the current ANPS."
