New Report Explodes Myths About Heathrow And The Economy
A new report by Friends of the Earth has exploded the myths about aviation and the economy. Friends of the Earth’s new report, “Pie in the Sky: Why the costs of
airport expansion outweigh the benefits”, reveals that the
benefits to the economy of expanding
Friends of the Earth’s research found that claims that airport expansion will
bring enormous economic benefits are flawed for three reasons
• The economic benefits are exaggerated
• The economic costs of environmental damage are ignored
• The economic costs to other sectors of the economy have not been
considered
[For detail see Annex]
The Conservative and Liberal Democrat parties, who have both expressed concerns about Government aviation policy, have described the report as a valuable contribution to the debate [Notes 1,2]
Nic Ferriday, spokesperson for Friends of the Earth, said “When confronted with the huge impacts of Heathrow on local people and the environment, supporters of its expansion always cite its local and national economic benefits. This report shows that instead of benefits, there would be large economic and social costs from expanding Heathrow and other airports.”
Aviation receives tax exemptions of £9 billion pa and this acts as a subsidy for growth. If this tax was collected and distributed around the country in proportion to population, council areas around Heathrow would receive [Note 3]:
Elmbridge £ 19 million pa
Slough £ 18 million pa
Windsor & Maidenhead £ 21 million pa
Wokingham £ 23 million pa
Epsom & Ewell £ 11 million pa
Runneymede £ 12 million pa
Spelthorne £ 14 million pa
LB of Brent £ 41 million pa
LB of Ealing £ 47 million pa
LB of Hammersmith £ 25 million pa
LB of
LB of Hillingdon £ 38 million pa
LB of Hounslow £ 33 million pa
LB of Kensington & Chelsea £ 25 million pa
LB of
LB of
LB of Wandsworth £ 41 million pa
LB of
Of the £9 billion subsidy, Heathrow accounts for a staggering £3.5 billion. [Note 4]
Contact: Nic Ferriday 07851 196906
………………………………………………………….
Notes
1 Chris Grayling MP, Conservative Shadow Secretary of State for Transport,
said:
"I have real reservations about the Government's Aviation White Paper and
the scale of expansion planned. It's no longer good enough to expand
aviation purely in the name of growth. There are huge environmental
implications if we expand our airports, and I don't think the Government's
strategy goes anywhere near addressing these adequately."
2 Chris Huhne MP, Liberal Democrat Shadow Secretary of State for
Environment, Food and Rural Affairs, said:
"The true cost of aviation must be taken into account with a charge on the
emissions from each flight as this week's Liberal Democrat party
conference has demanded. Higher green taxes would be offset by lower
income taxes so that the more people change their behaviour the more
they save."
3 Calculated using the figure of £9.2 billion subsidy from ‘The hidden cost of flying’ by Brendon Sewill and 2001 census data.
4
Based on fuel usage of Heathrow aircraft compared with total
……………………………………………………………………..
Annex
Here is full text of the national press release (Fri 22 Sep)
COSTS OF AIRPORT EXPANSION OUTWEIGH THE BENEFITS, SAYS
NEW REPORT
Government must rethink aviation strategy
Friends of the Earth Contacts: Simon Bullock (Economic Coordinator):
0781 652 9857
Richard Dyer (Aviation campaigner): 0113 389 9960/ 07940 850 328 (m)
Press Office: 020 7566 1649/ 07712 843 209 (m)
The costs of airport expansion outweigh the economic benefits, new
research by Friends of the Earth reveals today [1]. The environmental
campaign group is calling on the Government to scrap its plans to allow
airport expansion when it reviews progress on the White Paper later this
year.
The Conservative and Liberal Democrat parties, who have both expressed
concerns about Government aviation policy, have described the report as a
valuable contribution to the debate.
In 2003 the Government published its White Paper, The Future of Air travel,
which gave the go-ahead to a huge
expansion of
Transport Secretary, Alistair Darling, said “we need to plan ahead so we
can continue to benefit from the economic and social advantages of air
travel” [2].
But Friends of the Earth’s new report, “Pie in the Sky: Why the costs of
airport expansion outweigh the benefits”, reveals that the benefits to the
economy of expanding
aviation industry and the Government, while the real economic, social and
environmental costs have been practically ignored.
Friends of the Earth’s research found that claims that airport expansion will
bring enormous economic benefits are flawed for three reasons [3].
• The economic benefits are exaggerated
• The economic costs of environmental damage are ignored
• The economic costs to other sectors of the economy have not been
considered
Friends of the Earth’s economics coordinator, Simon Bullock, said:
“The economic case put forward by the Government and aviation industry
for expanding
advantages have been heavily exaggerated, while the costs to both the
economy and the environment have been ignored. The reality is that the
costs of airport expansion outweigh the benefits. The Government must
urgently rethink its aviation policy and stop championing forms of growth
that damage other economic sectors, people’s health and the
environment.”
Chris Grayling MP, Conservative Shadow Secretary of State for Transport,
said:
"I have real reservations about the Government's Aviation White Paper and
the scale of expansion planned. It's no longer good enough to expand
aviation purely in the name of growth. There are huge environmental
implications if we expand our airports, and I don't think the Government's
strategy goes anywhere near addressing these adequately."
Chris Huhne MP, Liberal Democrat Shadow Secretary of State for
Environment, Food and Rural Affairs, said:
"The true cost of aviation must be taken into account with a charge on the
emissions from each flight as this week's Liberal Democrat party
conference has demanded. Higher green taxes would be offset by lower
income taxes so that the more people change their behaviour the more
they save."
Government plans to allow a massive expansion in air travel are causing
mounting concern:
• Last year the Tyndall Centre for Climate Change research published a
report [4] warning that if aviation continues to grow at the current rate, it
could account for 100 per cent of
the
will make it virtually impossible to meet targets on tackling climate change
as all householders, motorists and businesses would have to reduce their
carbon dioxide pollution to zero.
• An all-party committee of MPs, the Environmental Audit Committee,
attacked the government’s aviation plans in June 2004. Its Chair, Peter
Ainsworth MP accused the Government of being both "irresponsible and
intellectually dishonest" in attempting to "massage down" warnings about
emissions from air travel [5].
• Research published by Friends of the Earth last year showed that the
boom in flights from the
economy, with some regions losing around five times more revenue than
they gain from aviation [6].
Friends of the Earth’s climate campaign, The Big Ask, is calling on the
Government to announce a new law in the Queen’s Speech calling
requiring an annual reduction in
law is backed by all the main opposition parties, most MPs and around
three quarters of the public. See www.thebigask.com
Friends of the Earth is part of the Airportwatch coalition which is calling for
the Government to undertake a fundamental Rethink of the aviation White
Paper rather than just review progress on it later this year. see:- www.rethi
nk.airportwatch.org.uk
Notes:
1. A summary of Friends of the Earth’s report, Pie in the Sky: Why the
costs of airport expansion outweigh the benefits, can be found at:
http://www.foe.co.uk/resource/briefings/econ_aviation_summary.pdf
The full report can be found at: http://www.foe.co.uk/resource/briefings/
econ_aviation.pdf
2. http://www.dft.gov.uk/stellent/groups/dft_control/documents/contentserv
ertemplate/dft_index.hcst?n=11653&l=2
3. The economic benefits of further expansion have been heavily
exaggerated. On just one count - when more realistic assumptions around
the cost of flying are put into the Government’s models, figures for net
economic benefits largely evaporate. Expansion also has major negative
impacts on other sectors of the economy, which have been ignored. Of
many such costs, two stand out. First the extra cost of climate change
from airport expansion runs to over £20 billion. Second, the extra tourism
deficit the
billion pounds more leaving the
detailed information is in the annex below or see report summary:
http://www.foe.co.uk/resource/briefings/econ_aviation_summary.pdf
4. www.tyndall.ac.uk/media/press_releases/tyndallpr21sep.pdf (PDF†)
5 http://www.publications.parliament.uk/pa/cm200304/cmselect/cmenvaud/
623/62302.htm
6. http://www.foe.co.uk/resource/press_releases/airport_expansion_is_bad
_f_03082005.html
ANNEX - Summary of "Pie in the Sky"
A fuller summary of Friends of the Earth’s report, Pie in the Sky: Why the
costs of airport expansion outweigh the benefits, can be found at:
http://www.foe.co.uk/resource/briefings/econ_aviation_summary.pdf
The full report can be found at:
http://www.foe.co.uk/resource/briefings/econ_aviation.pdf
Our analysis of the economic case for expansion is that it overstates net
benefits in three main ways:
1 Over-egging the pudding
The economic benefits are exaggerated
The claims made for the economic benefits of airport expansion by the
Government and aviation industry are exaggerated. Their analysis:
• Assumes that the cost of flying will continue to fall. However, it is
doubtful that the price of oil will return to its 2002 price of $25 per barrel - it
already exceeds $60 per barrel. It is also unlikely that the industry will
continue to enjoy its current tax
breaks of £9 billion per year as
EU politicians are already considering removing these huge tax breaks, or
include aviation in the EU emissions trading scheme – which would have a
similar effect on the cost of flying if the scheme is effective. Re-runs of the
Government’s models with a constant rather than falling cost of flying show
far lower figures for net economic benefits.
• Often includes predictions of future benefits that will happen anyway,
whether airports are expanded or not, such as those benefits coming from
maximising the use of existing runways.
• Overstates many components of the claimed benefits by counting:
- Benefits that go to foreign passengers. As an example, for the proposed
Stansted expansion these amount to almost £3 billion which should not be
counted in an assessment of benefits
to the
- benefits that will only occur far into the future (between 2030 and 2060)
and only in the unlikely event of the cost of flying continuing to fall
- marginally slower future economic growth caused by not expanding
airports as ‘a loss to the British economy’. In truth, GDP will still rise
massively even if no new runways are built.
• Ignores the fact that less spending on aviation does not mean money lost
to the overall economy. Instead, it will allow more expenditure in other
sectors.
• Overstates the growth of employment opportunities associated with
expanding airports and ignores the falling figures for jobs per million
passengers, particularly relevant within the rapidly expanding budget airline
industries.
• Overstates the case that airport expansion encourages regional
economic development.
2 Turning a blind eye
The economic costs of environmental damage are ignored
Aviation is the fastest growing source of climate changing emissions. Even
conservative estimates calculated by the Government put the total cost of
aviation’s climate change impacts at £69.5 billion for the period 2000-2060,
£20 billion more than the cost without expansion. This huge cost is ignored
when aviation’s net economic impact is assessed. Other costs ignored are
those associated with:
• air and noise pollution
• damage to built and natural heritage
• damage to local communities e.g. the demolition of homes
• additional road congestion
3 Beggar thy neighbour
The economic costs to other sectors are ignored
Aviation imposes costs on other economic sectors which should be taken
into account in any balanced analysis of the industry’s overall benefit to
the
expansion, the Government and aviation industry ignore the costs to:
•
an ever-increasing number of carbon permits when it is included – as
planned - as part of the EU Emissions Trading Scheme, pushing up the
cost of carbon. Unfair tax breaks and the lack of international competition
may allow the aviation industry to absorb the costs, causing other sectors
of the economy to be squeezed.
•
This creates an overall loss to the
airports expand as planned, more people will holiday abroad which is likely
to double this tourism deficit by
2030. The cumulative extra cost to the
economy in the coming decades would be well over £100 billion .
• The
exemptions amounting to £9 billion per year. Removing these exemptions
would allow more spending elsewhere (e.g. hospitals and schools, or
improving public transport) and/or lower taxes in other areas (e.g.
employment tax).
•
against cheap imports that are subsidised by artificially low air freight
costs.
•
exemptions as aviation, causing artificial competition. For example, Irish
Ferries recently announced 500 workers sacked, partly blaming pressure
from low cost airlines.
• Poorer sectors of society in the
off people who fly more and take advantage of cheaper flights. At the same
time, it is poorer people who are more likely to suffer the effects of climate
change, in the
• The
- Around £3 billion leave the
spending on air transport services (such as air tickets).
- Large amounts of capital leaves the
property and holiday homes in France and Spain etc.
- Although aviation does promote investment in the
street as it also makes it easier
for
- Most aviation fuel is imported. The fuel used in 2004 was valued at around
£2.5 billion – a price that will only increase with airport expansion.
• Expenditure in other priority areas:
millions to support airport infrastructure such as new or widened roads to
serve Heathrow,
have been spent on improving public transport in these areas.
--
Neil Verlander
Press Officer
Friends of the Earth
020 7566 1674
07712 843 209 (m)
www.foe.co.uk
Press office direct line: 020 7566 1649
September 2006