New report - The Government’s support for a third runway is "flawed and misleading”
A report is just out on HACAN website. It is very useful ammunition against the suspect business model used by BAA/Government. http://www.hacan.org.uk/ I have copied the summary below:"14 February 2008The Government’s support for a third runway at Heathrow is “flawed and misleading”A major new report, published today by independent research and consultancy firm CE Delft, undermines the central pillar of the Government’s case for a third runway at Heathrow and offers a viable alternative to expanding capacity.In justifying a third runway the Department for Transport (DfT) cite a study by Oxford Economic Forecasting (OEF)1 which was funded, at least in part, by BAA.The new report, commissioned by HACAN ClearSkies and titled “The economics of Heathrow expansion”, criticises the methodology used by OEF.Speaking at the launch of the report former transport minister and candidate for Mayor of London Steve Norris said: “The Government is pushing ahead with plans for a third runway without really understanding what that means for the economy. It seems that the OEF report is fundamentally flawed and that by relying on it the Government are misleading us over the need for a third runway at Heathrow.“We are often told that a third runway is essential for the Capital’s economy.” But this report shows those benefits have been overstated by the Government and the aviation lobby.“How can we compare the cost of valid alternatives, such as high-speed rail, if we are over-estimating the value of more runways?”In their report CE Delft go on to suggest viable alternatives to expansion based around amending slot allocation, or pricing environmental effects through market mechanisms.CE Delft’s main criticisms are:• OEF incorrectly assess the impact on direct, indirect and induced employment and therefore the additional runway’s contribution to GDP. If airport capacity were not expanded, people would find jobs elsewhere in the economy, possibly at lower wages, but still giving rise to indirect and induced employment. Therefore the employment figures provided cannot be used to substantiate a claim for expanding runway capacity.• OEF report at length on how aviation supports other parts of the economy. They do not account for economic activity which would happen without aviation. In any event, the benefits are poorly expressed compared to levels of trade.• Critical to the calculation of economic benefit is the additional business passengers generated by expansion of capacity. OEF assume high numbers of additional business passengers. For mixed-mode operation, for example, DfT’s own estimates are 0.5 million by 2015 whereas OEF assumed six times as many i.e. 3 million.• OEF estimate the economic impact to be about £400 per additional business passenger, or £120 over all passengers. This compares to a consumer surplus of about £30 per passenger based on the DfT’s own estimates of economic impact. It is implausible that the economic impact is many times greater than the value passengers themselves derive from flying.• Although not always stated explicitly, OEF estimate of economic impacts are often upper limits, so they indicate the maximum economic impact and not the most likely or plausible outcome.HACAN Chair John Stewart said, “What the CE Delft report clearly shows is that it is essential that the Government should not rely on propaganda promoted by vested interests. We are not asking that they should wholly rely on the CE Delft report. What I do say is that we need a proper independent study into the economic impacts of airport expansion and that greater transparency in the consultation process is necessary for the public to have full confidence in the conclusions reached; something that is sadly lacking at the moment.”Notes for Editors:Key Points from CE Delft Report1. CE Delft’s report casts doubt upon the Government’s estimate thatexpansion at Heathrow will bring economic benefits of £5 billion (over 70 years).The Government estimate is based on the Oxford Economic Forecasting(OEF) reports of 1999 and 2006 which CE Delft shows to be seriouslyflawed. OEF significantly over-estimates the suppressed business demand that would be released by expansion at Heathrow.CE Delft highlight this, saying: “We do not feel the OEF report provides a satisfactory justification for this assumption. While it may be true that adding runway capacity will to some extent encourage business investment and allow businesses to operate more efficiently, these wider impacts themselves need to be demonstrated by the OEF model, rather than being assumed from the outset and rather arbitrarily quantified in terms of additional business passengers.”The OEF Report does not factor in the cost to the Exchequer of the taxbreaks the aviation industry receives each year.CE Delft found that: “To give a truer account of the impact of aviation on the national budget, the figures for taxes and charges paid by the aviation sector could have been set against the subsidies and other forms of government support that are paid to the sector, something that the OEF report does not attempt.”2. CE Delft found that if Heathrow did not expand people would spendtheir money elsewhere with the result that other sectors of the economy would grow.In a thriving economy, such as exists in London and the South East, people have money to spend. If they do not spend it on one thing (e.g. aviation), they will spend it on something else (e.g. on a holiday in the UK or buying a new kitchen). So other sectors will expand, creating jobs and contributing to Gross Domestic Product (GDP).CE Delft wrote: “The economic importance of the sector can only be determined by comparing the overall size of the economy with its assumed size in the absence of the sector. It is clear that the money currently spent on aviation would be spent in alternative ways in other sectors if there were no aviation sector. Thus it wouldcontinue to contribute directly to GDP and employment, as well as giving rise to indirect and induced employment. The same would hold for expenditure on aviation forgone as a result of a decision not to increase airport capacity.”----CE Delft is an independent research and consultancy organisation specialised in developing innovative solutions to environmental problems. www.ce.nl/eng/
Duncan Walker ● 6368d3 Comments