Ready for take off? Rachel Reeves set to back Heathrow expansion as she outlines plan to boost economy
29 January 2025, 09:09 | Updated: 29 January 2025, 09:24
Rachel Reeves is set to back a Heathrow expansion as she outlines her plan to boost the economy.
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The Chancellor is expected to back the expansion of Heathrow Airport in her speech on Wednesday, despite it being an issue Cabinet ministers have opposed in the past.
She is also set to reiterate the Government's support for the redevelopment of Manchester United's Old Trafford as part of plans to boost economic activity.
She will say that linking top university cities Cambridge and Oxford will create the European equivalent of Silicon Valley in the US.
It comes as Ms Reeves and Keir Starmer suggested to business leaders that Cabinet colleagues have been ordered to ditch policies which could stand in the way of their efforts to grow the economy.
Separately, the Prime Minister vowed on Tuesday night to deregulate to grow the economy, invoking the spirit of Margaret Thatcher - while admitting it was unusual for a Labour government to seek to get rid of regulations.
Some claim Labour themselves have acted as a drag on Britain's economic prospects. Britain's top recruiter told LBC on Tuesday that the government's increase of employers' National Insurance was akin to a "jobs tax".
James Reed urged Labour to reverse the plan and said that the change had "spooked" businesses.
Meanwhile the Conservatives also pointed the finger of blame at Labour, claiming that Reeves and Starmer were blocking economic growth themselves.
Starmer said in an article in the Times that he wanted to "clear out the regulatory weeds and allow a new era of British growth to bloom."
He compared the agenda of his government to the deregulatory efforts of Margaret Thatcher in the 1980s, and Tony Blair in the late 1990s and 2000s.
Starmer said: "There is a morass of regulation that effectively bans billions of pounds more of investment from flowing into Britain. Thickets of red tape that, for all the Tories talked a good game, was allowed to spread through the British economy like Japanese knotweed.
"Our pledge today is that this government will do what they could not."
In her speech, Ms Reeves is expected to describe Britain as a country of "huge potential" but also say that "for too long, that potential has been held back".
"For too long, we have accepted low expectations, accepted stagnation and accepted the risk of decline. We can do so much better," she will say.
"Low growth is not our destiny. But growth will not come without a fight. Without a Government that is on the side of working people. Willing to take the right decisions now to change our country's course for the better."
New reservoirs and a new train station are among the measures set to be announced by the Chancellor during the speech, which will include plans to boost connectivity in the region around the two university cities.
As part of the delivery of what Ms Reeves will call the "Oxford-Cambridge growth corridor", she will also touch on funding for East-West rail, a long-proposed railway line that would connect the cities, as well as a new railway station in Tempsford.
She will say the cities are "two of the least affordable in the UK" and existing transport options mean that to travel between them "by train takes two-and-a-half hours" while "there is no way to commute directly from towns like Bedford and Milton Keynes to Cambridge by rail".
"Oxford and Cambridge offer huge economic potential for our nation's growth prospects," she is expected to say.
"Just 66 miles apart, these cities are home to two of the best universities in the world, two of the most intensive innovation clusters in the world and the area is a hub for globally-renowned science and technology firms in life sciences, manufacturing and AI.
"It has the potential to be Europe's Silicon Valley. The home of British innovation."
James Reed: Jobs market is like a 'slow motion 2008'
She will later add: "In other words, the demand is there but there are far too many supply side constraints on economic growth in the region."
It is also expected the Chancellor will touch on the Environment Agency having dropped its objections to a new development near Cambridge that could see 4,500 new homes being built.
In December, South Cambridgeshire District Council announced that planning permission had been issued for up to 4,500 new homes at Waterbeach after the Environment Agency had withdrawn their opposition.
As well as proposals to update transport in the region - including an upgrade to the A428 - there are also plans for nine new reservoirs after ministers reached agreement over billions in water company investment over the next five years.
Alongside support for a proposed third runway at west London's Heathrow, it is expected the Treasury will also endorse expansion at Gatwick and Luton airports.
There has also been speculation that Ms Reeves will support the Lower Thames Crossing - a proposed road crossing between Kent and Essex - as well as a Universal Studios theme park near Bedford.
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Science minister Sir Patrick Vallance will be appointed as the Oxford-Cambridge growth corridor champion.
Sir Patrick, who was seen regularly during the Government's Covid briefings in his then-role as the government's chief scientific adviser, will make sure the Government's ambitions in the region are delivered, the Treasury said.
On Tuesday, it emerged that Ms Reeves and the Prime Minister have ordered Cabinet colleagues to ditch policies that could get in the way of their efforts to grow the economy.
Starmer told business chiefs at a meeting in the City of London that he was "hard-wiring growth into all the decisions of the Cabinet" and that "what Rachel and I have done is to make it clear to each of our Cabinet colleagues that in each of their briefs, growth is the number one mission".
Ministers will be expected to set out the growth credentials of new policies in order to get approval from their Cabinet colleagues, in a shake-up to the usual system to get "collective agreement" on substantive changes.
The Prime Minister has asked Cabinet Secretary Sir Chris Wormald to implement the changes.
The rules mean the economic impacts of proposals will be subjected to the same rigorous assessment that already applies to new public spending.
But Downing Street acknowledged the new requirement would not necessarily block all policies that harmed growth.
The Prime Minister's official spokesman said: "The decision-making will continue to be for the Cabinet; we are not going to pre-empt Government decision-making.
"The point is the growth impact, the growth credentials, must be presented - much like public spending implications must be presented - such that in reaching collective agreement it is very clear what the impact of those decisions will be on growth."
Shadow chancellor Mel Stride has claimed that the "biggest barriers to growth" are Sir Keir, Ms Reeves and their financial plans.
Ahead of the speech on Wednesday, Mr Stride said: "Hastily cobbled together announcements of growth in the 2030s will do nothing to help the businesses cutting jobs right now because of Labour's punishing jobs tax, the companies being crushed under their barrage of new regulations, or the farmers facing bankruptcy over the cruel family farm tax."
