Reeves Says ‘Answer Can’t Always Be No’ on Britain’s Planning Decisions

Chancellor of the Exchequer Rachel Reeves said “the answer can’t always be no” when it comes to approving major infrastructure works and planning decisions, in the latest indication the UK’s Labour government will push ahead with controversial projects in a bid to spur economic growth.

Author of the article:

Bloomberg News

Joe Mayes and Ailbhe Rea

Published Jan 22, 2025  •  3 minute read

Rachel Reeves on Jan. 22. Photographer: Chris Ratcliffe/Bloomberg Photo by Chris Ratcliffe /Bloomberg

(Bloomberg) — Chancellor of the Exchequer Rachel Reeves said “the answer can’t always be no” when it comes to approving major infrastructure works and planning decisions, in the latest indication the UK’s Labour government will push ahead with controversial projects in a bid to spur economic growth.

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“This was the problem in the last government,” Reeves said in an interview with Bloomberg News Editor-in-Chief John Micklethwait in Davos, when asked about potential opposition from the likes of London Mayor Sadiq Khan and Energy Secretary Ed Miliband to projects such as airport expansions. “There was always someone that said, ‘Oh yes of course we want to grow the economy but we don’t like investment, we don’t like that wind farm, we don’t like those pylons, we don’t like that airport, we don’t want that housing near us’.”

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Reeves’ comments come as she tries to convince investors that she has a plan to boost Britain’s sluggish growth rate, after corporate leaders attacked her October budget for its £26 billion ($32 billion) hike in employer payroll taxes, which worsened a slump in consumer and business confidence. Reeves is due to give a speech on growth next week when she’s expected to discuss plans to advance long-delayed planning decisions and infrastructure projects, potentially including airport expansions.

The government is preparing to publicly signal support for a long-sought third runway at Heathrow, sign off on plans to bring the second strip at Gatwick into full-time use, and allow an increase in the capacity at Luton Airport, Bloomberg reported earlier this week. The moves are likely to trigger a backlash within Prime Minister Keir Starmer’s Labour Party, given eight members of his cabinet voted against expansion of Heathrow in 2018, including Starmer himself, Miliband and Darren Jones, who is Reeves’ deputy in the Treasury.

Yet Reeves’ remarks indicate that she’s ready to face down such opposition and will green-light projects even if there’s controversy.

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“That’s been the problem in Britain for a long time,” she said. “That when there was a choice between something that would grow the economy and sort of anything else, ‘anything else’ always won.”

The chancellor also highlighted other measures the government is considering to boost growth, including reviewing visa routes for high-skilled workers to attract the best talent and pursuing closer economic ties with the European Union and China after years of animosity under the previous Conservative government. 

“You look at the UK compared to other jurisdictions and we are a better place to invest,” she said, citing the regulatory freedom of being outside the EU as a helpful factor. “We have that flexibility, we can be more nimble.”

Showing concrete action to spur UK growth has become an urgent priority for Reeves, whose position came under pressure in recent weeks amid a market slide that exposed the fragility of Britain’s public finances. There’s also been weak economic data: gross domestic product grew a meager 0.1% in November following contractions the previous two months, leaving the economy smaller than when Labour came to power last summer.

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Reeves was handed further bad news before the interview when the UK’s deficit came in larger than expected. Public borrowing was £17.8 billion in December, more than double last year’s amount, the Office for National Statistics said Wednesday. Economists had expected a reading of just over £14 billion, yet interest payments on the national debt and higher public sector pay drove up the deficit and left the chancellor borrowing around £4 billion more than officially forecast for the current fiscal year.

Challenged on the public finances in Davos, Reeves acknowledged the situation is “tight” and said that she would “respond in the proper way” to ensure the government meets its fiscal rules. Her key rule requires day-to-day government spending to be covered by tax receipts by 2029-30, yet she only left herself a £9.9 billion buffer against that in her budget in October. Economists calculate that margin has twice been eroded since then due to rising borrowing costs.

Reeves declined to say whether she wanted to increase her fiscal headroom, saying she was still waiting to see the Office for Budget Responsibility’s official forecasts, which are due to be published on March 26.

(Updates with context, further comment from Reeves starting in fourth paragraph.)

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