Analysis: Chancellor Rachel Reeves revives Heathrow third runway plan but will the project offer the previously promised billions of pounds for UK regions this time around? Tony McDonough reports
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Chancellor Rachel Reeves has revived the Heathrow Airport third runway plan as the Labour Government attempts to kick-start a new era of growth.
Her announcement on Wednesday was expected as was the mixed reaction from political, business and environmental leaders. Big question is how much would this multi-billion pound project benefit the rest of the UK, including Liverpool city region?
Liverpool City Region Metro Mayor Steve Rotheram is backing the expansion but will warn Rachel Reeves that Liverpool John Lennon Airport must get access to valuable Heathrow landing slots as part of the project.
Back in 2020 the Court of Appeal struck down the then Conservative Government’s approval for the Heathrow third runway. The court said the Government did not adequately take into account the UK’s climate change commitments under the Paris Agreement.
However, one of Labour’s election promises was to overhaul the process for decision-making on major infrastructure projects and so far Reeves and Prime Minister Sir Keir Starmer have been resolute in their determination to face down the ‘NIMBYs’.
In her speech on Wednesday, the Chancellor said: “I can confirm today that this Government supports a third runway at Heathrow and is inviting proposals to be brought forward by the summer.
“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 service transport costs will be financed through private funding.
“It will ensure that a third runway is delivered in line with our legal, environmental and climate objectives.”
Key to the rationale behind the move is constrained capacity at Heathrow. It handles more than 80m passengers a year and growing. It is one of the world’s key aviation hubs but that status could be threatened without further expansion.
It will be a few months before we get further details as Heathrow Airport will have to present a fresh proposal and this is expected in the summer. Last time the estimated cost was around £16bn. Several years on that figure is sure to be bigger.
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There is already significant opposition to the expansion in the South East. Environmental campaigners have long been aghast at the prospect of any expansion. And they have powerful allies. In particular London’s Labour Mayor Sadiq Khan.
There is also opposition from within the party here in the North West. Greater Manchester Mayor Andy Burnham said this week that Heathrow’s expansion “diverts infrastructure investment away from the north and traps it in London”.
However, Heathrow and the Government may attempt to win favour in the regions by offering a share in the billions of pounds of investment to the complex supply chain that will be needed to deliver a third runway.
In 2018 Birkenhead shipyard Cammell Laird put its hat in the ring to provide pre-assembly facilities. It secured a place on a 65-strong UK-wide shortlist, along with the Port of Liverpool, from which four locations were to be selected.
A high-level delegation from Heathrow visited Cammell Laird to take a closer look at the two sites the company put forward – Campbeltown Road and the MEA Park Wirral Waters in Beaufort Road.
There would certainly be no shortage of companies in and around the Liverpool city region who would be willing to be part of the supply chain.
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A possible revival of the third runway scheme was mooted in spring 2024. At that time LBN spoke to local business leaders in Merseyside. Downtown in Business chief executive Frank McKenna was supportive but insisted it needed to be linked to a broader conversation about levelling up and investment in the regions.
“It is definitely something that we should look actively at. The country needs big ambitious infrastructure projects,” said Frank. “We do need additional capacity and if Heathrow is the choice then we do need to support it.”
A hub link with Heathrow, and its almost unrivalled global connectivity, has long been the Holy Grail for Liverpool John Lennon Airport (LJLA). There was a link between the two via British Midland in the late 1980s.
In recent years LJLA has secured valuable hub links with Frankfurt, via Lufthansa (a route that is for the moment suspended), and with Aer Lingus via Dublin, which offers onward connections to key North American destinations.
Nevertheless, a direct connection with the world’s premier aviation hub here in the UK would still be seen as a valuable prize. LJLA has also seen a resurgence in passenger numbers post-COVID and is keen to maximise its potential.
LBN understands LJLA remains supportive of the third runway plan on condition the commitment to access to value landing slots for regional domestic air routes remains firmly part of the expansion plan and “doesn’t just benefit the South East”.
That must happen if the Heathrow expansion is to offer any benefit to Liverpool city region, insists Steve Rotheram. He told LBN: “The third runway at Heathrow has the potential to bring huge economic benefits to the UK.
“But it’s vital that those benefits aren’t limited to London and the South East. We have to ensure that regional airports, like Liverpool John Lennon, get a fair share of the new slots.
“Right now, we’re the largest city region in Europe without a hub airport connection. That’s not just an inconvenience – it’s a major barrier to growth. Direct global access would be a game-changer for our businesses, unlocking international trade, tourism, and investment that’s long overdue.
“Liverpool John Lennon Airport has massive untapped potential. With the right investment, we can turn that potential into jobs, opportunities, and a real boost for our economy. I’ll be raising this directly with the Secretary of State responsible – because our region deserves its fair share of project benefits.”
Paul Cherpeau, chief executive of Liverpool Chamber, told LBN he welcomed the latest announcement from the Chancellor agreeing with her on the “need for growth”. He added: “If we are to accept that Heathrow is a key driver for UK economic growth, then its expansion is to be welcomed.
“However, it must also be considered in the broader context of how it can support more integrated and direct connections with regional airports such as Liverpool John Lennon Airport.
“And it must be combined with improvements in surface access and environmental impact – most notably through the development of Sustainable Aviation Fuel – if we are to see a genuine and sustainable impact on our city region.”
Rachel Reeves insists any Heathrow expansion will be in line with the UK’s net zero commitments. In particular there is an emphasis on so-called sustainable aviation fuel. However, while some airlines have started to use SAF take-up has been sluggish with the fuel remaining relatively expensive.
Although aviation globally accounts for little more than 2.5% of total human CO2 emissions, large passenger aircraft have long been a very visual representation of our dependence on fossil fuels.