Heathrow expansion would give negative economic benefit

4th May, 2010

The New Economics Foundation (NEF) has conducted a detailed, independent re-evaluation of the economic case for a third runway at Heathrow airport. Its study finds that the costs of the Runway 3 proposal outweigh the benefits by at least £5 billion.

NEF has re-run the government’s model which estimates the economic benefits of Heathrow. The re-run uses new official assumptions about growth, exchange rates and carbon prices. The model generates estimates of the economic benefits and carbon costs from the new runway as well as the infrastructure costs.

Informed by stakeholder engagement, NEF has also re-calculated the costs to the local community of living with a new runway. The DfT’s model does not take proper account of the substantial and highly material community impacts. NEF have used a relatively new method – Social Return On Investment (SORI) to assess these impacts.

Based on stakeholders’ insights and experience, the report looked again at the potential costs of additional noise and worse air pollution, and for the first time estimated costs for surface congestion and community blight – factors that were not quantified by the DfT (Department for Transport).

The up-to-date NEF figure of net benefit of minus £5 billion contrasts starkly with the government’s out-of-date figure of figure of plus £5 billion.

Economic benefits are being used by the government as the justification – the only justification – for a third runway Heathrow. The NEF result shows how right the judge was in the recent High Court case to say that the economic justification of Heathrow needs to be re-visited.

A copy of the report may be found on the NEF web site.