BusinessLDN and Arcadis outline key steps needed to deliver ambitious expansion plans that will strengthen the UK’s global links, create jobs and bolster international competitiveness
The Government must double down on efforts to tackle regulatory, fiscal and planning barriers to investing in the UK for major infrastructure projects to avoid international competitors stealing a march and accelerate billions of pounds of private funding to expand London’s global ports.
That’s according to a new report published today by the capital’s leading business campaign group BusinessLDN and global consultancy Arcadis.
‘Pathway to Delivery: Expanding London’s Global Connections’ sets out the key milestones that need to be hit to unlock at least £53.5bn of private investment into three of the capital’s airports, plus an international rail hub and deep-water port.
This investment pipeline outlined in the report encompasses five major projects: delivering a third runway at Heathrow (£49bn), bringing Gatwick’s Northern Runway into routine use (£2.2bn), increasing passenger capacity at London Stansted (£1.1bn), delivering new berths at the London Gateway Port and Logistics Park (£1bn), and upgrading St. Pancras International Station alongside widened access to the Temple Mills rail depot (£265m).
The report calls for regulators’ objectives to be aligned with the Government’s growth mission, ministers to build on recent planning reforms by streamlining the process for applications for major projects and reducing delays, and changes to the business rates system which would encourage and enable investment into these global ports and other businesses with long-term, high-value capital spending plans.
John Dickie, Chief Executive at BusinessLDN, said: “The Government has rightly invested significant political capital by backing these projects and it now needs to seize the moment by ensuring they move from the drawing board to delivery as quickly as possible. That will require ministers to ensure that all parts of Whitehall and regulators pull in support of these expansion plans so they do not get bogged down by red tape. Accelerating reforms to the UK’s byzantine planning system and keeping a close eye on how tax changes affect the return on investment is also vital to unlock billions of pounds of private capital and boost growth.”
Peter Hogg, Country Director for the United Kingdom and Ireland at Arcadis said: “This analysis shows London can unlock at least £53.5bn of private investment from investing in our ports, airports, and railway hubs, but only if we remove the barriers standing in the way. Government must urgently align regulators with its growth mission, speed up and simplify planning for major projects, and reconsider business‑rates changes that make our global ports less competitive. The next round of policy decisions will determine whether this investment comes to London or to international rivals, with the wrong outcome leading to a lost generation of growth.”
The new report highlights how improving London’s global transport links will be integral to the success of the eight frontier sectors identified by the Government’s Modern Industrial Strategy and its aspirations to strike new trade deals.
Many of the key growth sectors identified in the strategy are thriving in the capital, including financial services, creative industries, tourism, professional services and life sciences, all of which depend on global transport hubs to thrive by accessing new and existing markets. It also details how planned investments in London’s transport infrastructure can support tens of thousands of jobs across UK-wide supply chains.
The report outlines specific pathways to delivery for each of the major projects, identifying challenges that must be addressed prior to delivery, including around airspace reform, greater support in maintaining sustainable operations, and access to the electricity grid.
It calls for stronger partnership between business and policymakers to enable delivery alongside a joined-up approach from all tiers of government to provide the political certainty that investors need to back long-term projects.
To accelerate delivery of at least £53.5bn of private investment into London’s international ports, the report calls for:
- A joined-up approach from government: Successful delivery of these expansion plans requires partnership between the public and private sectors as well as a coordinated approach from Whitehall and all levels of government. Establishing cross-departmental teams which troubleshoot issues as they emerge, alongside greater encouragement for Mayors and other local political leaders to maximise growth opportunities around the ports, could help to bolster investor confidence.
- Regulatory reform: Regulators such as the Civil Aviation Authority and Office of Road and Rail set the regimes that can make or break capital investment, and therefore their work must be aligned with the Government’s focus on economic growth. The Government must strike a balance between effective regulation and a business environment that enables operators to invest, avoiding the kind of regulatory uncertainty which can cause projects to be delayed or abandoned.
- Further planning reforms to streamline delivery of major projects: The Government’s Planning and Infrastructure Act has begun to simplify the process for approving projects of national significance and put limits on legal challenges to them. At the same time, Ministers have updated guidance around appraising projects with a greater focus on developing strong business cases. It must now build on this progress to create a planning system that better supports the delivery of major projects, reduces delays to getting shovels in the ground, and ensures operators are provided with reasonable conditions for expansion.
- Fiscal focus: The UK’s ports make a significant positive contribution to the public finances. They contribute hundreds of millions of pounds in business rates each year alone. Changes to the business rates system and increases to multipliers charged to large premises away from the high street could push up bills significantly for many ports. The Government should ensure that tax changes do not discourage long-term investment or undermine the UK’s international competitiveness.
Thomas Woldbye, CEO of Heathrow, said: “Heathrow expansion is pivotal to the UK’s national mission for economic growth. Delivering a third runway will boost trade and connectivity, unlock thousands of new jobs and ensure billions of pounds of private investment flows into businesses both in London and across the country. To keep this flagship project on track, it is crucial that Government and the Civil Aviation Authority meet vital milestones this year to enable the next phase of the project and to ensure we secure planning permission by 2029.”
Robert Sinclair, CEO of London St. Pancras Highspeed, said: “The potential for international rail to act as driver of UK economic growth has never been greater. Full utilisation of our high-speed line and further investment in related infrastructure will have a significant benefit for the UK, opening up more business and tourism opportunities, while bringing Europe closer with journeys into some of the continent’s leading city centres. We have an incredible opportunity right now and an important responsibility to help maximise the take-up of sustainable rail travel. London St. Pancras Highspeed and our industry partners are excited about the journey ahead.”
Pierre-Hugues Schmit, Chief Executive of London Gatwick, said: “London Gatwick supports the call for government and regulators to accelerate delivery of at least £53.5bn of private investment into London’s international ports. With demand for international connectivity rising, it is essential that planning, regulatory and fiscal frameworks incentivise long-term investment to enable major infrastructure projects and deliver significant economic value for the whole country. Our £2.2bn privately-financed Northern Runway scheme is a prime example of the growth this investment can deliver, with the potential to create 14,000 jobs and add £1bn to the regional economy every year.”
Gareth Powell, Managing Director of London Stansted, said: “Enhancing international connectivity is key to the economic success of London and the wider UK. It has been pleasing to see the Government recognise that through its support for airport expansion across the capital. London Stansted has immediately available runway capacity, permission to add more than 20m annual passengers and shovel-ready plans to invest £1.1bn in its infrastructure. That makes it perfectly placed to deliver much-needed growth in the short, medium and long-term — creating jobs, boosting supply chains and stimulating trade and tourism through better global connections. To seize that opportunity, Government needs to create the conditions that encourage private investment, maximise its impact and deliver sustainable growth for all.”
BusinessLDN’s Growth Commission will next month set out a package of cross-cutting measures that the Government should adopt to unlock the full economic potential of London as an engine for the UK.