UK Poised to Back Heathrow Airport Expansion in Push for Growth

Keir Starmer’s government is preparing to approve controversial expansions to three London airports as part of a push to spur growth that’s become more urgent this month after international markets cast doubt on the credibility of the UK’s economic plans.

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Bloomberg News

Ailbhe Rea, Ellen Milligan and Alex Wickham

Published Jan 20, 2025  •  4 minute read

Rachel Reeves Photographer: Isabel Infantes/Reuters/Bloomberg Photo by Isabel Infantes /Bloomberg

(Bloomberg) — Keir Starmer’s government is preparing to approve controversial expansions to three London airports as part of a push to spur growth that’s become more urgent this month after international markets cast doubt on the credibility of the UK’s economic plans.

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Ministers are set 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, according to people familiar with the matter, who asked for anonymity discussing plans that haven’t been finalized. 

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“We are determined to get our economy moving and secure the long-term future of the UK’s aviation sector,” the government said in a statement. “All expansion proposals must demonstrate they contribute to economic growth” while staying in line with environmental obligations.  

The aviation proposals are part of a wider push within government to advance long-delayed planning decisions and infrastructure projects in a bid to stimulate growth. Chancellor of the Exchequer Rachel Reeves is considering announcing some or all of the decisions in a speech about growth due to take place later this month, the people said. That speech has yet to be finalized and is still subject to change.

With the UK economy flat-lining, the chancellor said last week that the government needs to go “further, faster in driving economic growth,” which Starmer has described as his government’s core mission. Ministers are relying on loosening red tape, fast-tracking planning decisions and ramping up housebuilding to achieve that aim, and Reeves is set to deliver a speech on growth before the end of the month. 

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Other projects poised to be signed off after being delayed are the Lower Thames Crossing, a road tunnel beneath London’s Thames River, and a Universal Studios theme park north of the capital, the people said. 

Reeves intends the growth speech to define her economic plans for the year and is set to warn that the fiscal situation is still difficult but she’s pulling every lever possible to spur growth. The intervention will follow a period of market turmoil in the first half of January that saw the pound tank and borrowing costs soar, casting doubt on the Labour government’s economic plans by eroding away the narrow headroom she enjoyed at the time of the budget in October against her self-imposed fiscal rules.

Any announcements come, nevertheless, with political risk, because airport expansion decisions divide the Labour party and were delayed under the previous Conservative government amid controversy over the environmental impact and noise objections. Starmer’s administration is hoping to mitigate the political backlash by arguing that the environmental impact will be minimized by the so-called Sustainable Aviation Fuel mandate that enters into force this year, decarbonizing aviation fuel, the people said.

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Proponents of the plan said the pursuit of growth had to be put above climate and noise objections by ministers including Energy Secretary Ed Miliband and backbenchers representing constituencies in and around the three airports. If the government ultimately made decisions against expanding airports, it would be hard to show that was consistent with its growth mission, one official said.

The expansion of Heathrow in particular has long been touted as a potential source of growth. When former Prime Minister Theresa May gave the green light for a third runway at Europe’s busiest airport in late 2016, her government estimated the project would benefit the British economy to the tune of £61 billion ($75 billion) over 14 years, creating as many as 77,000 jobs. The plan then became snarled up in delays linked to legal cases brought by environmental campaigners and London Mayor Sadiq Khan.

While there is no outstanding application for a so-called development consent order for the runway at Heathrow, the people suggested Reeves would look favorably on one if it were to be made.

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Heathrow has divided politicians for two decades, and Starmer himself voted against the proposed third runway in 2018 when Reeves supported it. Several prominent Labour politicians, including Miliband and Khan, have strongly opposed the plan. 

“I have nothing against expanding airport capacity,” Reeves said in June. “I want Heathrow to be that European hub for travel.”

A decision on Luton airport expansion is due by April 3. The plan involves using the existing runway to handle more flights, expanding the existing terminal and building a new one, and is projected to create 12,000 jobs, contributing an estimated £1.8 billion per year to the local economy, according to Buckinghamshire council.

Gatwick says its expansion would create 14,000 new jobs and inject £1 billion into the region’s economy every year. Transport Secretary Heidi Alexander must make a decision on its proposal by Feb. 27.

“If approved, the £2.2 billion privately financed plan would be one of the largest capital investment projects in the region in decades,” Gatwick says on its website. “It would help the airport meet future passenger demand by serving around 75 million passengers a year by the late 2030s.”

—With assistance from Siddharth Philip.

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