Reeves Makes Case for New Heathrow Runway Despite Cabinet Splits
(Bloomberg) -- Chancellor of the Exchequer Rachel Reeves made the case for expanding Heathrow in the strongest hint yet that she’s preparing to green-light a controversial third runway at London’s busiest airport in a decision that’s divided the government.
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Britain’s finance minister pushed back on environmental concerns long been made by senior Labour figures including London Mayor Sadiq Khan and Energy Secretary Ed Miliband, arguing in a BBC interview on Sunday that the debate has moved on and reducing carbon emissions can be achieved alongside economic growth.
“A lot has changed in terms of aviation — sustainable aviation fuel is changing carbon emissions from flying, there’s huge investment going on electric planes and also a third runway would mean that instead of circling London, flights can land at Heathrow,” Reeves said. Nevertheless, she declined to confirm a Bloomberg report that she’s poised to approve the project— and expansions of two other airports — in a speech on growth on Wednesday.
The chancellor and Prime Minister Keir Starmer are on a concerted push to deliver growth for the UK’s flat-lining economy by relaxing regulations, attracting foreign investment and giving the go-ahead to infrastructure projects that have been snarled up in the planning system for years. As part of its push for growth the Labour government is looking to burnish trade ties with both the EU — more than 8 years after the UK voted to leave the bloc — and the US, despite the protectionist rhetoric of President Donald Trump, who was inaugurated six days ago.
In her interviews with Sky and the BBC on Sunday, Reeves also:
Appeared to acknowledge divisions in cabinet over Heathrow, telling Sky she will make an announcement “when ready to, with collective ministerial responsibility.” At least four cabinet members are opposed to the plan on environmental grounds, Bloomberg reported this week.
Signaled the UK is open to membership of the Pan-Euro-Mediterranean (PEM) convention as it looks to ease trade frictions with the European Union.
Said changes to the temporary repatriation facility for wealthy foreigners would make it easier to bring money into the UK “without facing punitive charges” while still raising the same amount of money through changes to the non-dom system.
After being criticized for her gloomy messaging about the state of the public finances in the run-up to the budget in October, Reeves has pivoted to optimism, repeatedly saying she wants to move “faster and further” in the pursuit of growth.
“I don’t believe that low growth is our destiny,” Reeves told the BBC. “I know that we can do so much better than that and my optimism for Britain has never burned brighter than it does now, and that’s why we’re going further and faster in removing those things that are blocking investment and blocking businesses from creating wealth and prosperity in our country.”
On Sunday, Reeves suggested she’d examine the possibility of joining the PEM, a customs framework helps broaden the supply chain companies can use in their trade between the bloc and other countries in Europe and North Africa.
“We are absolutely happy to look at these different proposals because we know the deal the previous government secured is not working well enough,” she said, referring to Britain’s Brexit agreement with the EU.
With Trump in office now for almost a week, there was a boost for the Labour government — no ideological bedfellow of the president — when he had warm words for Starmer, telling reporters aboard Air Force One on Saturday that the pair have a “very good relationship.” He said the two men would speak by phone “over the next 24 hours.”
“I like him a lot,” Trump said of Starmer. “He’s liberal, which is a little bit different for me. But I think he is a very good person. And I think he’s done a very good job thus far.”
Any call would mark the first time the pair have spoken since Trump re-entered the White House, though they did speak by phone following his election victory in November, and the pair had dinner together in New York a few weeks prior. Trump said that the UK and Saudi Arabia were both under consideration for his first trip abroad in his second term.
--With assistance from Stephanie Lai.
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