Rachel Reeves was facing criticism on Saturday night as it was confirmed that a report she cited as evidence that a third runway at Heathrow would boost the UK economy was commissioned by the airport itself.
Experts and green groups also challenged Reeves’s view that advances in the production of sustainable aviation fuel (SAF) had been a “gamechanger” that would substantially limit the environmental damage of flying, saying the claims were overblown and did not stand up to scrutiny.
In a speech in Oxford heralding her commitment to “leave no stone unturned” in the search for economic growth, the chancellor said a new runway would create 100,000 new jobs and connect the UK “to emerging markets all over the world, opening up new opportunities for growth”.
She added: “According to the most recent study from Frontier Economics, a third runway could increase potential GDP by 0.43% by 2050”.
In addition, “60% of that boost would go to areas outside London and the south-east,” she said.
The Frontier Economics consultancy has since confirmed to the Observer that it had been commissioned by Heathrow to write the report, which it insisted had been an entirely independent exercise. Heathrow confirmed it had asked Frontier Economics to do the work. It has published an executive summary online, not the entire report.
The New Economics Foundation (NEF) thinktank criticised the chancellor on Saturday night for the justifications she gave for backing a third runway, saying it also believed the methodology used had previously been judged unreliable by the Department for Transport.
Alex Chapman, senior economist at the NEF, said: “It is very concerning that the chancellor appears to be basing her support for Heathrow expansion on a figure from a report commissioned by Heathrow airport.
“Even more worrying is the fact that the methodology they have applied is one that the Department for Transport has previously decided is not fit for purpose, and that the report uses forecast data supplied by the airport itself.
“Heathrow expansion represents a major threat to the UK’s climate goals and flies in the face of scientific advice. To ensure that the claimed economic benefits are concrete, assessments should be carried out by independent government economists following best-practice methodology.
“NEF’s analysis has identified a wide range of weaknesses in the economic case, which have emerged since it was last fully appraised in 2015. Not least, the decline of business air travel, the surge in outbound leisure travel and the negative impacts on wider regions of the UK – all of which erode the potential growth benefit.”
Analysis by climate crisis website Carbon Brief suggests that, using the government’s own figures, SAF will barely cut emissions by 2040, and any reduction will be wiped out by rising flight numbers.
Separately, in 2023, the Royal Society found that to grow enough crops – biofuels – to make all UK aviation fuel sustainable would require about half of UK agricultural land.
A spokesperson at Frontier Economics defended its record as a well-regarded consultancy.
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“Frontier Economics is one of the most respected economic consultancies in Europe. We have worked for stakeholders across the aviation industry, including the UK government, the Civil Aviation Authority and airlines.
“They, and Heathrow, value our analysis precisely because it is unbiased. In this particular case, our results broadly match those previously found by the independent Airports Commission and the Department for Transport. We recognise this is a complex issue; our report is clear about all aspects: the costs, the benefits, the overall impact and the uncertainties.
Aoife O’Leary, chief executive of non-governmental organisation Opportunity Green, said increasing the number of flights in and out of the UK would not drive the economic growth Reeves was so desperate to deliver.
“Business travel represents a dwindling share of flights, while foreign tourists coming into the UK and boosting our economy are outnumbered three to one by UK tourists leaving the UK to spend money abroad, taking net £41bn out of the economy. “If the government wants growth, better options for investment include boosting connectivity outside London with improved domestic public transport.” She also said that SAF was “essentially a mirage”.
She added: “Yes, these fuels are biofuels made from crops, cooking oils and other sources of plant biomass. But producing them takes up huge amounts of land, endangering food security and biodiversity. “Indeed, very little of these fuels even exist today and producing them at anything like the scale that will be needed to decarbonise aviation would be totally incompatible with any notions of sustainability.”
The Treasury was approached for comment.
