Heathrow, viewed from below. Photo: Getty Images
Show Hide image

The Prime Minister must get his act together on airport expansion

Once again we stand to have a major decision of national consequence determined more by the political management of the Tory party than the national interest, says Tessa Jowell.

Three years, £20million, and 342 pages later, the Airports Commission has reported. The Commission was asked to identify and recommend options to maintain the UK’s position as Europe’s most important aviation hub - where airlines direct more of their flights, linking up to other airports around the world. 

Its conclusions are, in the words of its chair Sir Howard Davies, “clear and unanimous”. This expert committee has concluded that “the best answer” is to build a third runway at Heathrow.

The Commission’s report sets out in detail the economic case for a third runway at Heathrow, alongside consideration of the alternative case for Gatwick. It would increase Britain’s GDP by between £131bn-147bn, compared with £89bn if Gatwick were expanded. The fact that Heathrow is already a hub means it would generate more long-haul trips, improving London’s connectivity and protecting the UK’s hub status. This status is currently under threat as other airports have better connectivity outside of Europe and North America. And crucially, Heathrow would create more jobs, more quickly – in an area of higher average unemployment than Gatwick.

However, as the report sets out, expansion of Heathrow would be enormously disruptive to the lives of many people. Any progress must focus very particularly on mitigating the impact on communities under the flight path.

We need to deal with existing levels of noise pollution and air pollution, and understand how a third runway would make these worse. Above all, we need to recognise that the recommendation of the Davies Commission is conditional on mitigating this impact.

Some 550,000 would be affected by noise as a result of an expanded Heathrow, compared with 22,000 in Gatwick. Building a third runway would cause 47,063 properties to be exposed to increased nitrogen dioxide air pollution – compared with 20,985 for Gatwick. And the Heathrow proposal would likely result in an additional 22.2 million tonnes of carbon dioxide – compared with 16.5 million tonnes for Gatwick. The potential for a real human and environmental cost is plain to see.

The Davies Commission sets out a number of conditions to soften the impact. In particular, there should be no scheduled night flights; no overall increase in noise; air quality levels should not breach EU limits; there should be enhanced compensation for those who lose their homes, and at least £1bn in a special community compensation fund for those affected by the airport; and an independent aviation noise authority should be established with real powers over flight paths and other operating procedures.

I recognise the need for additional airport capacity and would support the Davies recommendation, but on the non-negotiable basis that safeguards on noise, air pollution, traffic congestion are embedded in the operational planning.

The government have said that they will respond to Davies by Christmas. What is already clear is that the government is deeply divided, and once again we stand to have a major decision of national consequence determined more by the political management of the Tory party than the national interest.

There are great economic benefits at stake - jobs, security and the growth upon which we all rely - as everyone from the CBI to major trade unions like the GMB and Unite recognise.

By the end of the year, the government has to make a decision. I will be spending the time talking to those affected, for better or for worse. Any further delay will, in the words of Sir Howard Davies, “be increasingly costly”. Not only will the cost of the project rise, but so too the cost for the country, which is why the Prime Minister has to make his mind up.

Getty
Show Hide image

BHS is Theresa May’s big chance to reform capitalism – she’d better take it

Almost everyone is disgusted by the tale of BHS. 

Back in 2013, Theresa May gave a speech that might yet prove significant. In it, she declared: “Believing in free markets doesn’t mean we believe that anything goes.”

Capitalism wasn’t perfect, she continued: 

“Where it’s manifestly failing, where it’s losing public support, where it’s not helping to provide opportunity for all, we have to reform it.”

Three years on and just days into her premiership, May has the chance to be a reformist, thanks to one hell of an example of failing capitalism – BHS. 

The report from the Work and Pensions select committee was damning. Philip Green, the business tycoon, bought BHS and took more out than he put in. In a difficult environment, and without new investment, it began to bleed money. Green’s prize became a liability, and by 2014 he was desperate to get rid of it. He found a willing buyer, Paul Sutton, but the buyer had previously been convicted of fraud. So he sold it to Sutton’s former driver instead, for a quid. Yes, you read that right. He sold it to a crook’s driver for a quid.

This might all sound like a ludicrous but entertaining deal, if it wasn’t for the thousands of hapless BHS workers involved. One year later, the business collapsed, along with their job prospects. Not only that, but Green’s lack of attention to the pension fund meant their dreams of a comfortable retirement were now in jeopardy. 

The report called BHS “the unacceptable face of capitalism”. It concluded: 

"The truth is that a large proportion of those who have got rich or richer off the back of BHS are to blame. Sir Philip Green, Dominic Chappell and their respective directors, advisers and hangers-on are all culpable. 

“The tragedy is that those who have lost out are the ordinary employees and pensioners.”

May appears to agree. Her spokeswoman told journalists the PM would “look carefully” at policies to tackle “corporate irresponsibility”. 

She should take the opportunity.

Attempts to reshape capitalism are almost always blunted in practice. Corporations can make threats of their own. Think of Google’s sweetheart tax deals, banks’ excessive pay. Each time politicians tried to clamp down, there were threats of moving overseas. If the economy weakens in response to Brexit, the power to call the shots should tip more towards these companies. 

But this time, there will be few defenders of the BHS approach.

Firstly, the report's revelations about corporate governance damage many well-known brands, which are tarnished by association. Financial services firms will be just as keen as the public to avoid another BHS. Simon Walker, director general of the Institute of Directors, said that the circumstances of the collapse of BHS were “a blight on the reputation of British business”.

Secondly, the pensions issue will not go away. Neglected by Green until it was too late, the £571m hole in the BHS pension finances is extreme. But Tom McPhail from pensions firm Hargreaves Lansdown has warned there are thousands of other defined benefit schemes struggling with deficits. In the light of BHS, May has an opportunity to take an otherwise dusty issue – protections for workplace pensions - and place it top of the agenda. 

Thirdly, the BHS scandal is wreathed in the kind of opaque company structures loathed by voters on the left and right alike. The report found the Green family used private, offshore companies to direct the flow of money away from BHS, which made it in turn hard to investigate. The report stated: “These arrangements were designed to reduce tax bills. They have also had the effect of reducing levels of corporate transparency.”

BHS may have failed as a company, but its demise has succeeded in uniting the left and right. Trade unionists want more protection for workers; City boys are worried about their reputation; patriots mourn the death of a proud British company. May has a mandate to clean up capitalism - she should seize it.