Reeves confronts Cabinet on airport expansion with ‘fight for growth'

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28-01-2025

Rachel Reeves will confront Cabinet opposition to the expansion of Heathrow, Gatwick and Luton airports with a warning that 'growth will not come without a fight'.
The Chancellor is on Wednesday expected to announce support for significant increases in airport capacity alongside nine new reservoirs, thousands of new homes in Cambridge and a 'growth corridor' including road and rail upgrades to Oxford.
Ms Reeves is to back airport expansion despite net zero opposition in Cabinet and on the Labour backbenches. Ed Miliband, the Energy Secretary, is a long-time opponent of a third runway at Heathrow and this week claimed it 'won't go ahead' unless it is compatible with strict carbon emissions rules.
However, the Chancellor will say on Wednesday: 'Low growth is not our destiny. But growth will not come without a fight.'
It comes after Sir Keir Starmer announced that all policies will face a test of whether they boost the economy on Tuesday.
'Rigorous assessments' will be carried out under a new system implemented by Sir Chris Wormald, the Cabinet Secretary, to 'hard wire' growth into Whitehall.
The shift immediately exposed rifts in Labour and sparked criticism from the party's backbenchers. One warned that any attempt by Sir Keir to water down plans to boost employment rights would spark a 'massive row'.
The Prime Minister's official spokesman admitted within hours that not every proposal that harms growth will be vetoed.
He was challenged on whether plans to ban new oil and gas drilling in the North Sea, scale back junk food adverts, strengthen workers' rights or reduce net migration would be ditched. There was no indication those policies would be abandoned, however.
The Chancellor will, on Wednesday, seek to focus attention to new projects and policies developed during Labour's economically bumpy first six months in power. In a speech in Oxfordshire, the Chancellor will promise to force through a building blitz to 'kickstart the economy' and banish fears of recession.
Britain will get its first new reservoirs for more than 30 years under Ms Reeves's plans, amid worries the nation will run out of water in the 2030s without radical action.
The Chancellor will promise nine new reservoirs as part of a £7.9bn investment spree from water companies, including the Fens Reservoir near Cambridge and the Abingdon Reservoir near Oxford.
New road and rail links are also on the way for the wider region, including road improvements between Milton Keynes, Bedford and Cambridge and more funds for East-West Rail – which seeks to join Cambridge and Oxford with fast direct services.
She is also expected to back a third runway at Heathrow, to end a long-running dispute over the potential future growth of Britain's biggest airport.
The proposals come as Britain risks recession, with stagnant economic growth, plunging business confidence and shrinking hiring in the wake of Ms Reeves's record tax-raising Budget in October.
Mel Stride MP, Shadow Chancellor, said Sir Keir and Ms Reeves are to blame for the economy's predicament, arguing 'their Budget has killed growth stone dead, and that is even before their tax hikes start to bite in April.'
'The biggest barriers to growth in this country are Rachel Reeves, Keir Starmer, and their job-destroying Budget,' he said.
'Hastily cobbled together announcements of growth in the 2030s will do nothing to help the businesses cutting jobs right now because of Labour's punishing jobs tax, the companies being crushed under their barrage of new regulations, or the farmers facing bankruptcy over the cruel family farm tax.'
The Oxford to Cambridge corridor was previously targeted for major development by the Conservatives. The proposals, which included five new garden towns and expansion of Milton Keynes, were vetoed in 2018 by Theresa May over fears of a voter backlash against tens of thousands of new homes.
A survey by the Confederation of British Industry this week showed companies are now cutting staff, moving jobs overseas and curbing investment as they battle to cut costs and offset the impact of the Chancellor's looming tax changes, ahead of the £25bn National Insurance raid which comes into force in April.
Rain Newton Smith, chief executive of the Confederation of British Industry (CBI), called the Chancellor's plans 'smart'.
She said: 'A relentless focus on growth means making some bold moves, accepting trade-offs and taking risks. Leaders in boardrooms do that every day.'
Sir Tim Martin, boss of JD Wetherspoon, said Ms Reeves's speech reflected 'a dawning realisation in Government that only growth produces prosperity and only free enterprise creates growth.'
He called for the Chancellor to further and reverse some of the tax rises announced in October's Budget.
Sir Tim said: 'Scrapping the tax rises would be a shot in the arm for beleaguered businesses and finding savings in public expenditure should be possible. Just do it, Keir.'
Ben Fletcher, of manufacturing industry group Make UK, hailed the expansion of Heathrow. He said: 'Last year, over £200bn 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, Ms Reeves's plans risk antagonising environmental campaigners and Labour backbenchers, as well as Cabinet colleagues.
Dale Vince, a Labour donor, said Ms Reeves would be 'foolish' to put growth before net zero and approve expansion at Britain's major airports.
The green energy tycoon told The Telegraph: 'It's clearly wrong to say we'll put growth before carbon emissions, because – my word – it will impair our drive to net zero so considerably.'
Sir Keir Starmer's boast that he was 'hard-wiring growth into all the decisions of the Cabinet' has also triggered disquiet on Labour backbenches.
The Prime Minister told business leaders in the City on Tuesday morning: 'Growth is the number one mission of this Government. Wealth creation and investment is what we mean by growth.'
Sir Keir suggested he would block any policies that damage growth. However, the Prime Minister's official spokesman admitted that not every proposal that harms growth will be vetoed.
They said: 'The Government is obviously always facing competing objectives. But overall, the Government is taking an approach that supports growth and supports the economy.'
Specifically the spokesman was challenged on whether the Government's plans to ban new oil and gas drilling in the North Sea, scale back junk food adverts, strengthen workers' rights or reduce net migration would be ditched given the growth focus. There was no indication those policies would be abandoned.
Rachael Maskell, the Labour MP for York Central, warned that employment rights must not be 'sacrificed' as part of the growth drive.
She said: 'Firstly, good employment rights and conditions improve productivity, reduce sickness and are good for business, so employment rights should not be sacrificed as they support growth. Secondly, achieving net zero has to be a fundamental part of growth, if not, we will experience greater risk at home and globally.'
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