UK government support for airport expansion, including a third runway at London’s Heathrow, was at the centre of a landmark speech on economic growth on Wednesday delivered by Rachel Reeves, the chancellor of the exchequer.
However, she was sharply criticised by Michael O’Leary, Ryanair’s group chief executive, who said the chancellor had no plan for growth and was “talking rubbish”.
“She doesn’t get business,” said Mr O’Leary, according to a transcript of an interview he gave to Sky’s Sophy Ridge, which was circulated by the broadcaster. “She has no clue how to deliver growth. She knows that runway will not be delivered for 15 or 25 years.”
Mr O’Leary criticised the UK government for rebuffing his offer to boost passenger traffic into Britain in return for lower air taxes.
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Ms Reeves had earlier shrugged off separate criticism of her airport decision from environmentalists and even some senior Labour politicians to insist that expanding Heathrow, Britain’s biggest aviation hub, was a “huge opportunity” for UK growth. She said it could deliver 100,000 new jobs and add almost half a percentage point to GDP.
She said Britain had not built a new full-length runway since the 1940s and accused previous governments of “ducking the decision” on Heathrow for decades. She also highlighted government support for increased activity at Stansted and London City airport and hinted that further support was also being considered for expansion of flights at Luton and Gatwick.
“We are taking a totally different approach to airport expansion. A third runway [at Heathrow] is badly needed,” said Ms Reeves, speaking at a magnet factory in Oxfordshire as she tried to reset Labour’s stuttering narrative on growth – the UK economy has flatlined in recent months.
The chancellor insisted that strides in the development of less environmentally-damaging “sustainable aviation fuel” mean a third runway could be built without Britain breaching climate targets. However, Sadiq Khan, the mayor of London, said he was opposed to the plan.
“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.
At a briefing with reporters in Westminster on Wednesday afternoon, government officials sidestepped questions over prime minister Keir Starmer’s past opposition to expansion at Heathrow, as well as Ms Reeves’s previous opposition to a new terminal at Leeds-Bradford airport, which she was publicly against as recently as 2020. That airport is near her constituency.
Speaking in Oxfordshire, however, the chancellor insisted the time was right to expand Heathrow as she invited proposals on a new runway for the airport by the summer. Up to 60 per cent of any economic pay-off from Heathrow expansion would go to regions outside London and England’s wealthy southeast, she said.
As well as aviation expansion, Reeves also announced government backing for a redevelopment scheme at Old Trafford, centred on a new stadium for Manchester United; plans to create “Europe’s Silicon Valley” in Britain; and a development arc linking Oxford with Cambridge.
She also highlighted the Labour government’s moves to spur house building and other forms of development through reform of the planning system, including an end to schemes being stymied by worries over “bats and newts”.
The upbeat speech by Ms Reeves was in stark contrast with the gloomy economic tone Labour took in its first few months in power, when it repeatedly warned of a £22 billion “black hole” in the UK’s finances and said it had inherited the worst economy since the second World War.
About £40 billion (€47.75 billion) of tax rises, including hikes in employers’ national insurance, in Ms Reeves’s October budget also drew fierce criticism from business groups. The budget was blamed for a stalling of the economy from November.
The Labour government is also pushing through an employment rights Bill to tilt the balance back in favour of workers, easing restrictions on the right to strike, for example.
In the House of Commons at noon, an hour after the chancellor’s speech, Tory leader Kemi Badenoch excoriated the government over the impact of the proposals, which she dubbed an “unemployment Bill”.
Ms Badenoch noted that many of the government’s proposals, such as Heathrow expansion, would take many years to bring to fruition. In the meantime, she alleged, the economy will suffer because of taxes on business and more rights for workers.
“What is the government doing for economic growth now?” asked Ms Badenoch.
Meanwhile, Jonathan Reynolds, the business secretary, said he hopes that British people will begin to feel financially better off by the end of this year.
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