Heathrow's Third Runway Could Be Subsidized By Taxpayers

by Jason Gorringe, Tax-News.com, London

18 June 2009

The UK's taxpayers could end up footing the GBP9bn (USD14.6bn) bill for the construction of a third runway at Heathrow Airport, it has been announced.

The warning was issued by Labour MP John McDonnell during a recent Commons debate, where he addressed the financial issues currently facing Heathrow's operator, BAA.

According to Mr McDonnell, BAA has approached the government over its financial concerns for the project, asking government what would happen to the runway construction should it be placed into administration in the near future.

Addressing MPs in the debate, McDonnell remarked:

"We know that, if the development goes ahead, the Government will have to pay for the collateral damage that will impact on local communities - the shifting of populations, the new schools that will be needed and the creation of new communities elsewhere for people to live in."

"We now believe that there will be direct subsidy as a result of BAA's precarious financial position and the precarious position of [BAA owners] Grupo Ferrovial globally, and that the development itself - the construction of the runway and the terminal - will have to be subsided," he added.

McDonnell's warning to taxpayers has, however, been dismissed by a BAA official, who confirmed that all of the runway's costs will be met by the private sector.

The decision to approve the airport's third runway was made by former Transport Secretary Geoff Hoon back in January, prompting a strong reaction from climate campaigners opposed to the airport's expansion.

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