Hamish McRae: The Heathrow problem could be solved with a few minor tweaks

Economic view

So Heathrow is to get a third runway ... oh, no it's not. Whatever the arguments in favour and notwithstanding the Government's decision last week, it is not going to happen.

We do, thank heavens, live in a functioning democracy and more people don't want it than those who do. So there has to be a Plan B. I say that despite accepting the business case for expansion and having little sympathy for celebrities who fly in from Los Angeles, club class, to make their protest in person – or indeed the other celebs who fly back and forth to their villas in Corfu or wherever while urging the rest of us to save the planet. One of the things that British liberal grandees, bless 'em, are good at is hypocrisy.

If the third runway is not going to happen, we need an alternative strategy and improving rail links isn't one. Yes, a case for more investment in rail can be made, but that would not solve the runway problem of the South-east. The idea of taking a train to Paris to take a flight to the US makes no sense, in either economic or environmental terms. As for London losing interchange traffic to say Frankfurt or Schiphol, that brings no overall environmental advantage either. The plain truth is that were the London agglomeration to be a less successful economy it would generate less air traffic but while it continues to be successful people will want to come to London and Londoners will both want and need to travel abroad.

Some people would like the London region to be less successful, either though jealousy or because they are far enough up the economic food chain to want to restrict foreign travel to people further down the scale. For them, restricting air travel is the aim. But leave them aside and accept that air communication is vital economically and socially – something that binds us together rather than drives us apart – the question is how can these needs be met in an efficient and environmentally progressive way.

Fortunately, there could be a Plan B and a realistic one at that. It would be silly to do more than try to sketch its outlines but to understand it, you have to start with a principle. That principle is that London should build on its main asset: that it is a relatively low-density agglomeration and therefore works best when facilities are diversified. That already applies to air transport. London is the world's number one air destination, with more people flying through its five main airports – Heathrow, Gatwick, Stansted, Luton and City – than any other place on the planet. So the burden is already spread. New York has three main airports, Tokyo two, Shanghai two, and Paris two and two bits (Le Bourget is mostly business jets and Beauvais is mostly Ryanair).

The first part of the plan would be to increase capacity at Heathrow a bit and make it environmentally more acceptable by limiting stacking. The obvious way to do that would be to permit mixed-mode operation on the runways, allowing both to be used for take-off and landing at the same time. That has been ruled out in the Government's plans and would meet opposition from people living under the flight path because they would be subjected to more movements. But as planes have become progressively quieter, the noise footprint has decreased and will come down further. In addition, night flying curbs could be tightened. Besides, presumably people who live near Heathrow had some awareness when they bought their homes that the airport was nearby and that planes might be noisy.

The second part of the plan would be to use an existing runway just north of Heathrow more intensively. Northolt is run by the RAF and its private use now is mostly executive jets. But it was London's main airport when Heathrow was being developed and it has a 5,500-ft runway, shorter than the 7,200 one planned for Heathrow, but just about acceptable for short-haul flights. It is only six miles from Heathrow so a new rail shuttle on the lines of the one between terminals at Gatwick could cut the transfer travel time to 10 minutes, no more in practice than it takes to get between terminals at Heathrow at present. It would need a new terminal, possibly called Heathrow North.

Those two initiatives would help the Heathrow problem – a slightly messy fix but a fix none the less. One bonus would be that the land being safeguarded for the third runway could be developed into high-quality hotel and office use, thereby helping boost the local economic environment. Much better to build useful buildings than cover the fields with a runway.

But the rest of the South-east would still have a problem. Given its large catchment area round the south of London, we could certainly build the long-postponed second runway at Gatwick, probably a better site than Stansted, because the population to the north-east is smaller than the population to the south. And City airport, already being expanded a bit, could grow more provided its use continues to be limited to the quietest planes. Luton could also cope with some further expansion, particularly if it had a proper rail link.

The only quadrant of London that is really ill-served at present is the south-east, for apart from Gatwick, due south, has little choice. Biggin Hill in Kent is convenient and capable of some growth but the obvious candidate for expansion is Manston, or Kent International Airport as it is now called, which has a 9,000-ft runway, long enough for anything. The London Mayor, Boris Johnson, has hinted that this might be part of the solution and it is not a stupid idea. It would need much better links to the rest of Kent and to central London but the costs of that would be far less than the costs of the third runway at Heathrow or the unthinkably large ones of building an entirely new airport somewhere in the Thames estuary. That would wreck the local environment and in any case would be on the wrong side of London for the mass of the population.

Put all this together and you could create enough capacity. You would have to look carefully at the hub implications because we do gain wealth from that activity. So we need to think about better ways of getting people between the main airports than at present. It is not a grand solution and it is not the solution being chosen by other world cities, which are building new runways all over the place. No carbon guilt there. But it is an approach that could be followed relatively swiftly and it would mirror London's natural development: no grand projects, just lots of tweaks to make an inherently messy metropolis work reasonably well.

Meanwhile, just consider that statistic noted above. More people fly through London airports than any other place on the planet. That must surely tell us that we are doing something right.

Britain could do better in 2010 than the gloom merchants predict

The past few days have seen a sudden further downward lurch in economic sentiment, well captured by the new Item forecasts reported on page 77. Item is not alone. Its forecast of a 2.7 per cent contraction in the economy this year is topped by a minus 3.1 per cent from ING Bank. Even a relatively optimistic Goldman Sachs thinks there will be a 1.4 per cent fall in GDP.

Given that past forecasts have turned out to be so wrong, I think the more helpful approach is not to fuss about the numbers, but to look at their direction. Two things stand out: first, most forecasters, but not all, think there will be some growth in 2010; and, second, there is a split between those that think the UK will do relatively badly and those that think it will be less affected than most of the Continent.

What has shaken people, including the board of the European Central Bank, has been the suddenness of the deterioration in international trade. You see this in the plight of the car industry, where US retail sales fell off a cliff. From remarks made last week by Sir John Gieve, deputy governor of the Bank of England, the Bank has been shaken, too. You could say the data coming through is more like that of the early 1980s recession than that of the 1990s and it would be prudent to expect several more months of really bad numbers.

Those of us who have long felt that 2009 would be the most difficult year won't be at all surprised by this. Consumers worldwide are going to be most cautious through into 2010. But you have to be careful about forecasting a real collapse in consumption. Thanks to falling inflation rates, real incomes in the UK may rise this year, running ahead of the rise in prices. So the question is: will people save the money or spend it? Credit Suisse calculates that real incomes in the UK will rise by 2 per cent, allowing the savings rate to climb by 2 per cent and still leave consumption flat. If consumption doesn't decline, the UK may do rather better than some of the most gloomy forecasts.