The economic case for a third runway at Heathrow has been dealt a devastating blow after government analysis revealed the promised boost to GDP is a tiny fraction of previous estimates – and could be outweighed by up to £62.5bn in costs.
Documents prepared by the Department for Transport, released as ministers pushed ahead with expansion in the name of growth, show the runway is expected to add no more than 0.05% to GDP by 2056. That is 90% less than the 0.5% figure repeatedly cited by successive governments.
“Heathrow's third runway would boost GDP by only 0.05%, 90% less than previously claimed, government analysis shows.”
The net present value of the project – the overall social value compared with not building it – ranges from -£23.4bn to -£62.5bn, even if entirely privately financed, according to the DfT appraisal. While lower air fares would generate between £29bn and £42.4bn in benefits to passengers, those gains are crushed by social and environmental costs estimated at £58bn to £82bn. Profits at airlines and other airports are expected to fall by about £25bn.
The figures, described as “some of the worst in history” by Alex Chapman, head of economic policy at the New Economics Foundation, put the chancellor Rachel Reeves in an awkward position. Reeves, who launched the next stage of the legislative process on Thursday, has championed rapid expansion as “this government’s top priority”. But the DfT’s own analysis undermines that argument.
“In its desperation for a fraction of a per cent of GDP growth, this government has lost its way,” Chapman said. “They said they were backing Heathrow expansion for economic reasons but their own analysis shows it won’t deliver. The economic argument for expansion does not add up.”
Heathrow responded by arguing that the new figures fail to capture the full economic benefits, while a government spokesperson said they were “only part of the picture”. A DfT spokesperson added that “net present value is just one part of the overall picture”, though the full sentence was cut off in the released documents.
With the projected GDP boost now vanishingly small and the net cost potentially tens of billions, the question of what – beyond political commitment – is left to justify the runway remains unanswered.