Costs of Heathrow’s third runway could outweigh benefits by £2.2bn, says thinktank

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NEF said that the £2.2bn net costs could be shouldered by passengers and government. (Source: Getty)

The costs of Heathrow’s controversial third runway could outweigh the economic benefits by at least £2.2bn, according to a thinktank.

The New Economics Foundation warns that the third runway may no longer be “financially viable” and that the best-case scenario may only deliver £3.3bn of benefits, a significant scaledown from the Independent Airports Commission’s projection of £11.8bn in 2015.

According to the government’s own formula for assessing value for money, Heathrow expansion would be rated as “poor” or “low” value, it said. Even a second runway at Gatwick, which is estimated to offer value for money of between £1bn and £2.4bn would still be rated low value, according to the report.

NEF said that the £2.2bn net costs could be shouldered by passengers, or even government. It said this figure could rise to a cost of £5.5bn if the benefits of increased passengers are not taken into account, as recommended by the Department for Transport (DfT).

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A Dft spokesperson said: “This report makes a number of deliberately misleading claims that do not stack up against the evidence we have set out in two comprehensive reports.

“Our analysis shows that the Heathrow north west runway scheme will result in up to 114,000 local jobs, passenger benefits totalling up to £74 billion, and can be delivered and funded privately at no cost to the taxpayer.”

The NEF also said that the third runway could deplete passenger numbers at regional airports in the South East if there was no corresponding expansion, and that Heathrow’s expansion could hurt economies in poorer areas as a result.

Andrew Pendleton, Director of Policy and Advocacy at New Economics Foundation said:

“This report clearly shows that a new runway at Heathrow is not only bad for the environment but also poor value for money. And it threatens to further entrench the regional imbalances in our economy.

“Based on this report, we question whether the planned Parliamentary vote on the scheme this Spring should go ahead. It seems clear that Heathrow’s third runway project is no longer financially viable, and indeed the Government’s own method for appraising such projects should rule it out.

“If the vote does go ahead, we urge MPs to consider carefully the poor value for money that Heathrow now offers and whether other schemes would bring much greater benefit top passengers across the UK at much less cost.”

A Heathrow spokesperson said:

“This analysis, paid for by a group opposed to Heathrow expansion, is fundamentally flawed, using a methodology designed to assess publicly funded projects and their values. Heathrow is not one of those and will not be paid for by public money. Unlike this research, the independent Airports Commission and the Government have been clear – not expanding Heathrow will mean higher airfares, less competition, fewer jobs and lost trade.”

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