Latest news with #HowardDavies
Yahoo
29-01-2025
- Business
- Yahoo
How quickly could Rachel Reeves' new plans boost growth?
Chancellor Rachel Reeves said on Wednesday that "economic growth is the number one mission of this government" as she unveiled a series of proposals to boost the UK's economy. But how quickly could the government get growth from the plans she announced? Critics have argued some of the projects - such as expanding Heathrow - would not help in the near term. BBC Verify has examined some of the key numbers and claims. The most recent official data shows there was virtually no growth in GDP - the overall size of the UK economy - between the July 2024 election and November 2024. And the latest medium term official growth forecast from the Office for Budget Responsiblity, the government's official forecaster, is for 1.6% GDP growth in 2029, which would be well below the pre-2008 financial crisis average growth of 2.8% a year. However, the International Monetary Fund has forecast that the UK's growth rate for 2025 and 2026 will be higher than in France and Germany. Lower rates of GDP growth would translate into slower growth in our wages and incomes and general living standards. The chancellor said that allowing Heathrow to build a third runway would "create 100,000 jobs", boost investment and exports and "unlock futher growth". She cited a new report by the consultancy Frontier Economics which found it could increase the UK's potential GDP by 2050 by 0.43%, around £17bn. That is broadly in line with the findings of an independent commission by Sir Howard Davies in 2015, which concluded a third runway at Heathrow would support UK trade and enhance productivity and push up GDP by 0.65-0.75% by 2050 relative to otherwise. However, most analysts believe it would likely take many years before shovels went into the ground to start building a new runway, even with new reforms to speed up the planning process. And the government will have a difficult balancing act to both expand Heathrow and meet its climate goals. BBC Verify asked the Treasury for its source for the 100,000 jobs figure and it pointed to a 2017 report by the Department for Transport estimating that a new runway at Heathrow could add between 57,000 and 114,000 additional local jobs. Though that report added that "these jobs are not additional at the national level, as some jobs may have been displaced from other airports or other sectors." The chancellor in her speech claimed an Oxford and Cambridge Growth Corridor "could add up to £78bn to the UK economy by 2035". This corridor is a resurrection of the previous government's plans to join Oxford and Cambridge with new transport links and allow those two university and research hubs to expand. In support of the chancellor's figure, the Treasury has cited research by an industry group called the Oxford-Cambridge Supercluster. This research shows that this £78bn is a "cumulative figure" over 10 years, not the boost in a given year. The analysis suggests the project could add £25bn in Gross Value Added (GVA) a year to the UK economy by 2035. That would constitute roughly a permanent 1% boost to UK GDP by that date. Estimates of the impacts of an infrastructure project on growth are inherently uncertain and very sensitive to the assumptions of researchers about what would have happened to growth if it had never been built. Yet most economists do believe infrastructure projects, especially those that allow already productive places to expand, will ultimately help the UK economy grow more rapidly than otherwise. Ben Caswell, a senior economist at The National Institute of Economic and Social Research (Niesr), said: "Big infrastructure projects typically deliver growth over the long term, approximately 10 to 20 years." "There may be a small demand side boost in the short term when shovels are in the ground, but nothing so significant that you would see it in headline GDP growth figures. "However, after the project is complete, the supply capacity of the economy is permanently enhanced, and, all other things equal, that delivers higher sustained GDP growth than would have otherwise been." Another reform the chancellor says will be pro-growth is enabling UK companies to access the funds from their "defined benefit pension" pots, held on behalf of their workforces to fund their retirement. Defined benefit pension schemes guarantee an annual pension payment to retired workers, based on their salary while they were in work. Many of these defined benefit pension pots have moved into surplus in recent years due to the rise in interest rates since the pandemic, meaning their financial assets (their investments) are greater than their financial liabilities (what they have to pay out to pensioners). The Treasury has said that approximately 75% of schemes are now in surplus and that the total surplus adds up to £160bn. The chancellor wants to legislate to allow the firms to use these funds to invest, while keeping safeguards to protect and guarantee workers' pension pay-outs. Pension shake-up plan aims to boost growth What's the plan for a third runway at Heathrow Airport? At a glance: What was in Rachel Reeves's speech? Measuring the size of the surplus of defined benefit scheme depends on various complex assumptions about the scheme and its relationship to the employer. The official Pension Regulator estimates that on one measurement the size in September 2024 was £207bn, but £137bn on a different measurement. The Treasury's estimate is roughly midway between the two. If such sums were deployed that could, in theory, make a positive difference to overall UK business investment, which is regarded by economists as both a short term and a long term driver of GDP growth. Total business investment in 2023, according to official data, was £258bn. But the size of any boost from this pension reform would depend on companies being willing to invest their surpluses, which is subject to great uncertainty as many firms have been looking to offload their defined benefit pension schemes to insurance companies in recent years. What do you want BBC Verify to investigate? Reeves backs third Heathrow runway in growth push Labour must make economic growth ideas work this time Will a third runway at Heathrow help UK growth?
BBC News
29-01-2025
- Business
- BBC News
Could Racheal Reeves' new reforms boost growth?
Chancellor Rachel Reeves said on Wednesday that "economic growth is the number one mission of this government" as she unveiled a series of proposals to boost the UK's economy. But how quickly could the government get growth from the plans she announced?Critics have argued some of the projects - such as expanding Heathrow - would not help in the near Verify has examined some of the key numbers and claims. How slow is the UK's growth? The most recent official data shows there was virtually no growth in GDP - the overall size of the UK economy - between the July 2024 election and November 2024. And the latest medium term official growth forecast from the Office for Budget Responsiblity, the government's official forecaster, is for 1.6% GDP growth in 2029, which would be well below the pre-2008 financial crisis average growth of 2.8% a the International Monetary Fund has forecast that the UK's growth rate for 2025 and 2026 will be higher than in France and rates of GDP growth would translate into slower growth in our wages and incomes and general living standards. Heathrow expansion The chancellor said that allowing Heathrow to build a third runway would "create 100,000 jobs", boost investment and exports and "unlock futher growth".She cited a new report by the consultancy Frontier Economics which found it could increase the UK's potential GDP by 2050 by 0.43%, around £ is broadly in line with the findings of an independent commission by Sir Howard Davies in 2015, which concluded a third runway at Heathrow would support UK trade and enhance productivity and push up GDP by 0.65-0.75% by 2050 relative to most analysts believe it would likely take many years before shovels went into the ground to start building a new runway, even with new reforms to speed up the planning the government will have a difficult balancing act to both expand Heathrow and meet its climate Verify asked the Treasury for its source for the 100,000 jobs figure and it pointed to a 2017 report by the Department for Transport estimating that a new runway at Heathrow could add between 57,000 and 114,000 additional local jobs. Though that report added that "these jobs are not additional at the national level, as some jobs may have been displaced from other airports or other sectors." Oxford-Cambridge Growth Corridor The chancellor in her speech claimed an Oxford and Cambridge Growth Corridor "could add up to £78bn to the UK economy by 2035".This corridor is a resurrection of the previous government's plans to join Oxford and Cambridge with new transport links and allow those two university and research hubs to support of the chancellor's figure, the Treasury has cited research by an industry group called the Oxford-Cambridge research shows that this £78bn is a "cumulative figure" over 10 years, not the boost in a given analysis suggests the project could add £25bn in Gross Value Added (GVA) a year to the UK economy by would constitute roughly a permanent 1% boost to UK GDP by that date. Estimates of the impacts of an infrastructure project on growth are inherently uncertain and very sensitive to the assumptions of researchers about what would have happened to growth if it had never been most economists do believe infrastructure projects, especially those that allow already productive places to expand, will ultimately help the UK economy grow more rapidly than Caswell, a senior economist at The National Institute of Economic and Social Research (Niesr), said: "Big infrastructure projects typically deliver growth over the long term, approximately 10 to 20 years." "There may be a small demand side boost in the short term when shovels are in the ground, but nothing so significant that you would see it in headline GDP growth figures."However, after the project is complete, the supply capacity of the economy is permanently enhanced, and, all other things equal, that delivers higher sustained GDP growth than would have otherwise been." Pensions reform Another reform the chancellor says will be pro-growth is enabling UK companies to access the funds from their "defined benefit pension" pots, held on behalf of their workforces to fund their benefit pension schemes guarantee an annual pension payment to retired workers, based on their salary while they were in of these defined benefit pension pots have moved into surplus in recent years due to the rise in interest rates since the pandemic, meaning their financial assets (their investments) are greater than their financial liabilities (what they have to pay out to pensioners).The Treasury has said that approximately 75% of schemes are now in surplus and that the total surplus adds up to £ chancellor wants to legislate to allow the firms to use these funds to invest, while keeping safeguards to protect and guarantee workers' pension shake-up plan aims to boost growthWhat's the plan for a third runway at Heathrow Airport?At a glance: What was in Rachel Reeves's speech?Measuring the size of the surplus of defined benefit scheme depends on various complex assumptions about the scheme and its relationship to the official Pension Regulator estimates that on one measurement the size in September 2024 was £207bn, but £137bn on a different Treasury's estimate is roughly midway between the such sums were deployed that could, in theory, make a positive difference to overall UK business investment, which is regarded by economists as both a short term and a long term driver of GDP business investment in 2023, according to official data, was £ the size of any boost from this pension reform would depend on companies being willing to invest their surpluses, which is subject to great uncertainty as many firms have been looking to offload their defined benefit pension schemes to insurance companies in recent years. What do you want BBC Verify to investigate?
Yahoo
29-01-2025
- Business
- Yahoo
How ‘mixed mode' could solve Heathrow's capacity crunch long before a third runway
'If you think a third runway is unpopular, try mentioning 'mixed mode' in polite Home Counties company.' That was the private response of one of the 16 transport secretaries this century when I asked whether they had considered allowing both runways at London Heathrow airport to be used for arrivals and departures at the same time. The shorthand for this technique is 'mixed mode'. For a government obsessively focused on growth, it could unlock extra capacity at the UK's biggest hub for very little additional financial cost – but, as the erstwhile minister indicated, huge political cost. At present, Heathrow dedicates one strip of asphalt to landings and the other to take-offs. The only regular use of mixed mode is between 6am and 7am daily, the busiest hour for arrivals into the airport. Planes are allowed to land on both runways. Intuitively, you might imagine that the most efficient way to operate a two-runway airport like Heathrow is to separate arrivals and departures. In fact, the opposite is true: you can extract more capacity if there is a plane coming into land a few seconds after an aircraft ahead has taken off. Heathrow at its peak has a landing every 80 seconds and a take-off every 80 seconds. But across at Gatwick, air-traffic controllers can manage an arrival and a departure in as little as 65 seconds. Mixed mode adds capacity without the need for another runway. When Sir Howard Davies's Airport Commission looked into mixed mode, they concluded: 'The increased operational flexibility could be used to enhance the resilience of the airport's operations.' Monday was messy this week at Heathrow: 36 flights were cancelled, affecting 5,000 passengers and one Qatar Airways A380 'SuperJumbo' diverted to Amsterdam after a missed approach because there was not room in the system to accommodate another go. Such disruption could become much more rare if Heathrow was open to receiving more flights. Of more interest to the airlines – and, by extension, passengers keen on more choice and lower fares – is that the technique could allow up to 60,000 more flights each year. One senior travel industry figure strongly advocates using mixed mode to increase capacity immediately. Paul Charles, chief executive of travel consultancy The PC Agency, flies through Heathrow at least twice a month. He told me: 'It's embarrassing to see Heathrow held back by the lack of expansion. Airports in most other major cities are growing substantially as their governments focus on growth. The demand to fly from consumers is certainly there. 'I suggest the government apply a two-phase expansion to Heathrow in particular. It could start immediately by allowing greater use of mixed-mode, with aircraft taking off and landing on the same runways, so unlocking greater capacity and flight volumes. 'Then it could agree to a third runway, say from 2035, subject to certain environmental criteria being met. The government would have encouraged growth straight away and Heathrow would have won its long-running request for expansion.' Many interested parties will insist it can't happen. Purely pragmatically, just because Heathrow could physically land 15 per cent more planes, doesn't mean there is the terminal and gate space to handle them. Next, the concept of respite is extremely important to many of the people living on the flight paths. On Tuesday morning, for example, a procession of planes started landing on Heathrow's northern runway from 4.30am. The first four aircraft, all coming in from Africa, flew diagonally across south London as far as Woolwich, where they turned sharp left to line up for the final approach to Heathrow. Deptford, Camberwell, Battersea, Fulham … the noise increased as the aircraft descended. Next in line, Brentford and Isleworth – which just happens to be the constituency for Transport Select Committee chair Ruth Cadbury, who is not a fan of Heathrow expansion. The MP and her constituents at least know that at 3pm the noise will cease, as landings are shifted to the southern runway. The most dramatic reduction in aircraft noise at Heathrow happened overnight in October 2003: Concorde stopped flying. The windows of west London stopped rattling at teatime and shortly after 10pm each night. Since 2006, Heathrow says, the area most impacted by aircraft noise has reduced by 41 per cent. The Davies Commission stopped well short of recommending mixed mode. But the airport assessors did say: 'Should the delivery timescale for new runway capacity be towards the longer end of the anticipated spectrum, then the case for enabling mixed mode operations at Heathrow may be stronger ... It is conceivable that this issue may become material as part of a transition strategy to the preferred longer-term option.' Residents beneath the flight path don't want mixed mode. Heathrow does not advocate the practice. But who knows what the pro-growth chancellor, Rachel Reeves, may recommend as a stepping stone to a third runway?
The Independent
28-01-2025
- Business
- The Independent
How ‘mixed mode' could solve Heathrow's capacity crunch long before a third runway
'If you think a third runway is unpopular, try mentioning 'mixed mode' in polite Home Counties company.' That was the private response of one of the 16 transport secretaries this century when I asked whether they had considered allowing both runways at London Heathrow airport to be used for arrivals and departures at the same time. The shorthand for this technique is 'mixed mode'. For a government obsessively focused on growth, it could unlock extra capacity at the UK's biggest hub for very little additional financial cost – but, as the erstwhile minister indicated, huge political cost. At present, Heathrow dedicates one strip of asphalt to landings and the other to take-offs. The only regular use of mixed mode is between 6am and 7am daily, the busiest hour for arrivals into the airport. Planes are allowed to land on both runways. Intuitively, you might imagine that the most efficient way to operate a two-runway airport like Heathrow is to separate arrivals and departures. In fact, the opposite is true: you can extract more capacity if there is a plane coming into land a few seconds after an aircraft ahead has taken off. Heathrow at its peak has a landing every 80 seconds and a take-off every 80 seconds. But across at Gatwick, air-traffic controllers can manage an arrival and a departure in as little as 65 seconds. Mixed mode adds capacity without the need for another runway. When Sir Howard Davies's Airport Commission looked into mixed mode, they concluded: 'The increased operational flexibility could be used to enhance the resilience of the airport's operations.' Monday was messy this week at Heathrow: 36 flights were cancelled, affecting 5,000 passengers and one Qatar Airways A380 'SuperJumbo' diverted to Amsterdam after a missed approach because there was not room in the system to accommodate another go. Such disruption could become much more rare if Heathrow was open to receiving more flights. Of more interest to the airlines – and, by extension, passengers keen on more choice and lower fares – is that the technique could allow up to 60,000 more flights each year. One senior travel industry figure strongly advocates using mixed mode to increase capacity immediately. Paul Charles, chief executive of travel consultancy The PC Agency, flies through Heathrow at least twice a month. He told me: 'It's embarrassing to see Heathrow held back by the lack of expansion. Airports in most other major cities are growing substantially as their governments focus on growth. The demand to fly from consumers is certainly there. 'I suggest the government apply a two-phase expansion to Heathrow in particular. It could start immediately by allowing greater use of mixed-mode, with aircraft taking off and landing on the same runways, so unlocking greater capacity and flight volumes. 'Then it could agree to a third runway, say from 2035, subject to certain environmental criteria being met. The government would have encouraged growth straight away and Heathrow would have won its long-running request for expansion.' Many interested parties will insist it can't happen. Purely pragmatically, just because Heathrow could physically land 15 per cent more planes, doesn't mean there is the terminal and gate space to handle them. Next, the concept of respite is extremely important to many of the people living on the flight paths. On Tuesday morning, for example, a procession of planes started landing on Heathrow's northern runway from 4.30am. The first four aircraft, all coming in from Africa, flew diagonally across south London as far as Woolwich, where they turned sharp left to line up for the final approach to Heathrow. Deptford, Camberwell, Battersea, Fulham … the noise increased as the aircraft descended. Next in line, Brentford and Isleworth – which just happens to be the constituency for Transport Select Committee chair Ruth Cadbury, who is not a fan of Heathrow expansion. The MP and her constituents at least know that at 3pm the noise will cease, as landings are shifted to the southern runway. The most dramatic reduction in aircraft noise at Heathrow happened overnight in October 2003: Concorde stopped flying. The windows of west London stopped rattling at teatime and shortly after 10pm each night. Since 2006, Heathrow says, the area most impacted by aircraft noise has reduced by 41 per cent. The Davies Commission stopped well short of recommending mixed mode. But the airport assessors did say: 'Should the delivery timescale for new runway capacity be towards the longer end of the anticipated spectrum, then the case for enabling mixed mode operations at Heathrow may be stronger ... It is conceivable that this issue may become material as part of a transition strategy to the preferred longer-term option.' Residents beneath the flight path don't want mixed mode. Heathrow does not advocate the practice. But who knows what the pro-growth chancellor, Rachel Reeves, may recommend as a stepping stone to a third runway?
