Benefits of third runway at Heathrow 'are exaggerated'

The true economic benefits of the Heathrow expansion have been vastly exaggerated, according to an independent investigation into the White Paper on the third runway.

The claim of a potential £7.8bn benefit to the economy, used by the Department of Transport to justify the growth of the airport, was described by investigators as "overestimated", while the financial benefits to the UK were found to be questionable by the independent consultancy Colin Buchanan, whose inquiry was commissioned by the Green Party.

The 2003 White Paper that provided much of the basis for justifying Heathrow's expansion described the "strong economic benefits" of a third runway. Yet according to the independent investigation shown to The Independent, many of the figures used in the report were overestimated. Vastly different assumptions on the economic value of passenger time savings were used in the report than are normally applied to assess transport benefits. If the report had applied the usual cost to transport for "value of time", the estimated benefits would have come out 40 per cent lower.

The White Paper priced passenger time at £62 an hour during work time, and £31 out of work time - 2.8 and 7.4 times higher than those previously used for rail and road schemes.

The study, called The Heathrow Economics Study: Expansion of Heathrow Airport, warned that expansion of the airport could damage the UK's own tourism. "Expanding airport capacity would have a negative impact regarding tourism if flows were split equally between in- and outbound tourism. By constraining capacity, UK residents that would have spent money travelling abroad are likely to spend it on UK visits or other goods and services."

The White Paper had gone against usual Treasury guidelines by including benefits to foreign tourists and business visitors as well as UK nationals in its statistics. This fails to take into account the fact that UK residents spend more abroad than their counterparts do in the UK. On average, foreign tourists spend £405 when they travel to the UK, while the average spending of British tourists abroad was £486. If foreign passengers were not included in the breakdown of its figures, the overall economic benefit of Heathrow's expansion would be reduced by 25 per cent.

The idea that putting a constraint on airport expansion might lead to job losses was similarly dismissed. The independent investigation said: "The economic effect of slowing down the growth in aviation will be to produce a different distribution of jobs around the UK."

A spokesman for the Department of Transport said: "The Department does not believe that the benefits of expansion at Heathrow were overstated. The White Paper outlined for the first time a sustainable aviation policy which balanced a growing economy with our environmental obligations. Passenger numbers are expected to rise to 490 million by 2030 and as a result there needs to be more capacity, especially in the congested South-east... Sir Rod Eddington's recent transport study showed that a healthy economy must have excellent transport systems and identified that an additional two runways in the South-east would deliver economic benefits of £17bn."

Conclusions

* Customers' 'value for time' was calculated with a rate as much as 7.4 times higher than those ordinarily used to measure the benefits of road and rail schemes.

* Expanding Heathrow might actually have a negative impact on British tourism, as UK tourists spend more money abroad than foreign tourists do in the UK.

* Including the benefits for international passengers in the results was incompatible with HM Treasury guidelines. If they had not been included the overall economic benefit would be 25 per cent lower.