- New analysis confirms expanded Heathrow would deliver a benefit cost ratio (BCR) of up to 10.2
- Government classes infrastructure investment as “very high value” if it has a BCR above 4
- Heathrow’s BCR compares favourably with HS2 (2.3) and Crossrail (2.76 to 3)
An expanded Heathrow would be the UK’s best value-for-money infrastructure project according to new analysis of Airports Commission research and HM Treasury data.
In a speech to the Aviation Club, Heathrow CEO, John Holland-Kaye will say that politicians could have confidence that expanding the nation’s airport hub would be a phenomenal investment in the future of the UK and create an economic legacy for the next generation.
Independent analysis of the Airports Commission’s most optimistic scenario by research company QUOD shows that a third runway at Heathrow would have a benefit cost ratio (BCR) of up to 10.2, making it by far the best value approved or proposed infrastructure project in the UK.
The Airports Commission has assessed that Heathrow expansion would create up to £211bn of economic growth and 180,000 jobs across Britain. It also finds that expanding the UK’s only hub would require a public contribution of £3.9bn for surface access improvements. Using the Commission’s scale of economic benefit, from its more conservative central case to the most optimistic, an expanded Heathrow would have a BCR of between 4.1 and 10.2, making it “very high value for money”. Heathrow believes that only £1.2bn in public contribution would be necessary – which would triple its value for money.
BCR is calculated based on the benefits returned, minus the costs incurred to public finance. HM Treasury grades projects with a BCR of between 2 and 4 as “high value for money”, and a BCR above 4 is regarded as “very high value for money”. Amongst other transport projects HS2 has a BCR of 2.3, Crossrail 2.76 to 3 and Thameslink 1.4.
Mr Holland-Kaye revealed the analysis alongside a new vision for the UK’s only hub airport – to deliver the best airport service in the world.
Over the last 10 years, Heathrow has invested over £11 billion of private money to build Terminal 5 and the new Terminal 2 – taking the airport from one of the lowest rated in the world to being ranked by passengers as the 8th best airport and for the first time ahead of Amsterdam as the best in Western Europe.
With Terminal 1 closing at the end of this month, Heathrow will enter the next phase of its transformation – doubling the size of Terminal 2 to allow for the closure of Terminal 3 –giving Britain a world-class, efficient airport to compete with other leading global hubs.
Mr Holland-Kaye emphasised expansion at Heathrow will create the world’s most modern, efficient and best connected hub airport at the heart of an integrated transport system with links North, South, East and West with 5 motorways and 5 rail lines. He also added that Heathrow would become a ‘third generation’ of airport designed not just around passengers but also the environment.
Heathrow CEO John Holland-Kaye said:
“Heathrow expansion would create an economic legacy for future generations by connecting the whole country to global growth.
“The return on investment for the UK is phenomenal and our politicians can be confident in making a quick decision. Let’s get on with it.”
The full analysis from independent research company QUOD can be downloaded from the external assets section in the right-hand column.
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