The projected economic benefit of Heathrow’s third runway has been dramatically reduced, with new government analysis finding the expansion may boost GDP by just 0.05 per cent.
That figure represents a 90 per cent reduction from the 0.5 per cent economic boost that Heathrow had previously promised the project would deliver.
Government analysis found that the GDP impact could be as little as 0.3 per cent, raising fresh questions about the financial case for the project.
Heathrow has long argued it is nearing capacity and that a third runway is essential to unlocking the UK’s full economic potential.
Responding to the Department for Transport’s publication of a draft policy backing the expansion, Heathrow chief executive Thomas Woldbye urged the government to accelerate its support for the project.
“The UK cannot realise its full economic potential without an expanded Heathrow,” Woldbye said, pushing back against the significantly reduced economic projections.
The airport criticised the government’s “very narrow” analysis, arguing it fails to account for rising cargo trade and underestimated passenger number growth.
A spokesperson for Heathrow said the economic assessment is “extremely limited” and was designed for publicly funded projects rather than schemes of this nature.
“It doesn’t capture any value from increased trade, inbound tourism or massive private investment into UK supply chains, businesses and steel producers. It’s not fit for purpose and needs to be reformed to capture these clear benefits,” the spokesperson said.
Opponents of the expansion have seized on the revised figures, arguing that the social and environmental costs of the project now outweigh its economic benefits.
Alex Chapman, head of economic policy at progressive think tank the New Economics Foundation, said: “The results from the department’s impact assessment seriously undermine the government’s case for expansion.”
Business leaders have taken a different view, welcoming the government’s launch of a formal consultation on the expansion plans.
John Dickie, chief executive of industry body Business LDN, said: “Building a third runway at Heathrow is vital to the UK’s competitiveness as an island trading nation, so it’s positive to see the Government taking the next steps towards making the project a reality.”
Dickie’s organisation backed Heathrow’s own proposal, which he described as “the only viable option for delivery” among the competing plans currently under consideration.
Heathrow’s expansion has faced additional pressure after aviation regulator the Civil Aviation Authority indicated it could allow rival firms to bid for the right to build the third runway.
Heathrow West, led by hotel tycoon Surinder Arora, has tabled a competing proposal priced at £23bn, considerably cheaper than Heathrow’s own £33bn plans.
Government planning documents appeared to open the door to that rival bid by acknowledging that a phased construction approach might be necessary given the project’s “scale, complexity and delivery timeframe.”
The Civil Aviation Authority is also weighing up imposing tighter spending controls on Heathrow, a move Woldbye warned would risk “taking the UK backwards and weakening our competitiveness.”
A Department for Transport spokesperson defended the overall case for expansion, saying: “Net present value is just one part of the overall picture — crucially, an expanded Heathrow could support over 60,000 new local jobs and deliver £40bn of benefits to the UK.”
The spokesperson added that the expansion would attract international investment, strengthen Britain’s connectivity, and would be financed entirely by the private sector.