The third runway is expected to create 100,000 jobs.
The move is expected to provoke a major backlash for the Labour party.
Chancellor's Announcement and Climate Concerns
In her speech this morning, Reeves 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.”
She claims that the third runway is “badly needed” to support economic growth.
The Chancellor promised that the development would align with “legal” climate objectives – though critics claim this expansion will threaten the UK’s path to net zero.
Mayor of London, Sadiq Khan, has opposed the move and said he would support any legal challenge.
Climate activists have also begun protesting against the plans outside the centre in Oxfordshire where Reeves’ speech was given.
Former Labour shadow Chancellor John McDonnell also criticised the government saying the third runway development would be a "huge political, economic and especially environmental mistake".
The Green Party have said the announcement is the most irresponsible since Liz Truss' budget.
Heathrow residents, however, are relieved that clarity around the expansion has finally been given.
Business Secretary's Response and Investment Plans
However, Business Secretary Johnathan Reynolds has denied that the third runway will clash with net zero commitments.
During her speech, Reeves also mentioned plans to invest £63m into advanced fuel funds over the next year to help encourage investors to back production in the UK – bringing high-skilled jobs to areas like Teesside.
She has also backed the mayor of Manchester’s plans for the redevelopment of Old Trafford and promises to create housing and commercial development around the stadium.
In addition, two new national wealth fund investments were announced: £65m for Connected Curb to extend their electrical charging networks and £28m equity investment in Cornish Metals, which provides raw metals for solar panels and wind turbines.
PM Keir Starmer defended the growth commitments at PMQs with opposition leader Kemi Badenoch claiming that he thinks the government causes "growth" when it is, in fact, "business".
Challenges Ahead for the Government's Third Runway at Heathrow Airport Plan
This news comes after Reeves gave her Autumn Budget, which faced criticism from manufacturing and engineering industry leaders – with many claiming little has been done to reassure businesses. She has also refused to rule out tax rises in March.
Industry Reactions
Tony Hague is CEO of PP Control & Automation said: "Nothing in the chancellor’s speech was overtly negative, in fact the language was positive, and businesses will welcome the genuine change in tone and direction to speed up investment, remove bureaucracy, and press ahead with a new modern industrial strategy. It feels like Rachel Reeves and her team have finally woken up to the fact that talking down the economy is not the best driver of growth!
I also welcome the firm focus on national government and local councils working closer together with business, and the wider community will acknowledge the potential economic benefits of the proposed infrastructure projects.
However, as with any strategy and political speeches, they can communicate all the right signals, but the question remains on how the grand ideas will actually be delivered.
That is the overarching sentiment from today’s speech… promising words but talk is cheap. Let’s keep an eye on the execution.”
Stephen Phipson, Chief Executive of Make UK, said: “Industry will welcome this upbeat, forceful and positive statement from the Chancellor which helps inject a much needed reset into the debate. In particular, companies have become very frustrated at the UK’s longstanding, sclerotic approach to planning reform, energy and infrastructure investment and broadband connectivity. The Chancellor’s commitment to tackling these issues and removing the barriers facing companies who want to invest will be central to enabling growth and economic success.
“However, there is little doubt that the next twelve months are set to be immensely challenging in a difficult and, ever changing, international environment. In this context, shifting the dial on boosting growth becomes far more complex. Furthermore, there is a clear contradiction between implementing laudable measures such as planning reform and infrastructure investment whilst, at the same time, applying a handbrake through measures which will inevitably reduce investment and freeze recruitment. This is a clear dichotomy that Government needs to resolve internally about boosting growth and, the trade offs this will mean if it is to deliver these welcome but, ambitious, commitments.
“As a first step, however, Government must now set out as a matter of urgency the immediate and significant priorities to boost advanced manufacturing as part of its industrial strategy given the very clear benefits to the economy overall this will bring. Make UK looks forward to helping deliver on this critical objective.”
On Heathrow expansion, Stephen Phipson added: “Heathrow is the UK’s only hub airport, with over 92% of the global economy within reach of a direct flight from Heathrow and it is the country’s largest port by value. Last year, over £200 billion of British trade passed through Heathrow - more than double all other UK airports put together. Its unique mix of passenger and freight routes make it a vital infrastructure asset and one which is essential to power economic growth.
“However, Heathrow is almost at capacity and without increasing that capacity, other European hubs will overtake it. Today’s announcement is vital if we are to drive economic growth - more connectivity with the rest of the world provides British exporters with more markets to sell their goods and drives inward investment to every part of the country.”
This is a developing story. We'll give updates on the situation as we learn more. 15:05pm 29/01/2025
