Expansion of Heathrow 'will not boost economy'

The expansion of Heathrow is unlikely to boost the economy of London and the South-East, a report claims.

It says the Government's projections of a £4.4 billion windfall are greatly exaggerated and based on flawed assumptions.

It also questions the claim by ministers that the economy will suffer if expansion does not go ahead.

The study, by consultancy firm CE Delft, was commissioned by antiexpansion group Hacan ClearSkies.

"It is clear that the money currently spent on aviation would be spent in alternative ways in other sectors if there had been no aviation ... Thus it would also contribute to GDP and employment, and have indirect and induced effects," the report says.

It adds that the Government's prediction of a windfall is based on a report by Oxford Economic Forecasting which does not factor in the cost to the Treasury of tax breaks given to the aviation industry each year. The Oxford projections claim the economy will be boosted by £120 for each extra passenger using Heathrow. But other studies suggest the benefit will be only £30 per passenger, says the CE Delft report.

A consultation is under way over plans to build a third runway and sixth terminal at the airport and increase flights to more than 700,000 a year.

Steve Norris, former Conservative candidate for London Mayor, said: "We are often told that a third runway is essential for the capital's economy.

But this report shows those benefits have been overstated by the Government and the aviation lobby.

"How can we compare the cost of valid alternatives, such as high-speed rail, if we are overestimating the value of more runways?"

Hacan chairman John Stewart said: "What the CE Delft report clearly shows is that it is essential the Government should not rely on propaganda promoted by vested interests.

"We need a proper independent study into the economic impacts of airport expansion. Greater trans- parency in the consultation process is necessary for the public to have full confidence in the conclusions - something sadly lacking at the moment."

According to the Department of Transport, the net benefit of expansion is expected to be £4.4 billion over 70 years. But £3 billion of this will be money raised by the Government through aviation duty - leaving a direct boost to the private economy of about £1.4 billion a year. Also, the figures do not include the environmental and health costs of expansion.

Justine Greening, Conservative MP for Putney, said: "No wonder the Government didn't include this figure for air passenger duty in the public consultation document. The Government says the business case for Heathrow is compelling - and now we know why: expanding Heathrow is as much about keeping the Treasury's coffers full as anything else."

But business pressure group London First said: "London doesn't dig coal, bash metal or make cars - it is a centre for global trade. Our world city status is at risk if we don't invest in a world-class Heathrow airport which meets both its passenger needs and its environmental responsibilities."