Economic benefits of expanding airport questioned

Is it really good for the economy to grow the airport? Nic Ferriday, from AirportWatch, questioned this conventional wisdom when he spoke at Bitterne Park Secondary School on October 14. Read his speech here.

"Thanks for inviting me to speak tonight, it's absolutely brilliant there's so many people here - it does show the level of interest and concern about the issue. And this is mirrored precisely all around the country.

John [Denham, MP, Chair] has just said that I'm from AirportWatch - I'll just say what that is briefly: AirportWatch is a loose coalition of both national environmental groups that are concerned about the impact of air travel - and that includes Transport 2000, Friends of the Earth, the Aviation Environment Federation - and also a number of big local campaign groups who are concerned about expansion in their particular areas. Notable ones are groups around Gatwick, Stansted and Heathrow.

I'm not from this area so I don't know exactly how the airport impacts you at the moment and I can't necessarily judge how it would impact it. What I have done is I've read through the draft masterplan, and I've also been able to interpret in the light of what we know from other sites up and down the country. So hopefully my observations on the masterplan, as I see it as an outsider, will help you to make up your own minds, and make suitable representations.

Two things struck me when looking at the airport masterplan: firstly there is all the usual stuff about how important it is for the economy, and for jobs, to expand the airport, and I will be saying quite a bit about that because I think it's quite important - that's the real argument being put forward for expansion.

The other key feature that I noticed in the plan, is that there is virtually no mention of environmental impact. It actually doesn't tell you what the impacts are now, what they're likely to be, whether they'll be any limits, whether there's any environmental capacity limit. So I'll talk a bit more about particular aspects of that as well.

Boost to the economy?
But let's just look at the economy first: there seem to be almost a conventional wisdom that it must be good for the economy, to grow the amount of aviation, the amount of airports and suchlike. Actually there's no real evidence that the amount of  aviation is a significant determinant of the size of our economy. Logic tells us that actually it's the other way around: the amount of air travel is a function of the size of the economy. Aviation is just a product, just a service, just like other things we and businesses buy. And yet the way you hear people talk about the importance of expanding it, you'd think it was quite different.

Let me just give you an example. Suppose I chose to spend some money on buying a fridge: OK, that would generate economic activity in the place that makes fridges, it would generate jobs in fridge-making, but I don't think anyone would argue that we've all got to have more fridges to grow the economy to become wealthy, would they?

If we had more cars and built lots of roads to drive on, that would create economic activity and jobs, but again no one says, "Oh we must have lots more of those to grow our economy and become wealthy." And I could go on and on with examples.

So why is it that, when someone says, "We need more flying around the place, we need more planes," all of a sudden, that's going to make us wealthy and grow our economy. It's not. Air travel, aviation and airports have no magical economic powers, any more than any of these other more prosaic sectors of the economy.

[pause as plane flies overhead]

This happened at a public meeting in Ealing, and we kept being interrupted. What's interesting is that government actually denies we're affected by aircraft noise!

So the point I was saying before I was so rudely interrupted, was that we have choice as to how we spend our money: and we can spend it on aviation, or we can spend it on other things. It doesn't actually affect the economy very much either way.

A case in point is tourism: the great majority of air travel is tourism. There's relatively little for business, and I think it's a particularly small proportion here in Southampton. Now I saw figures in the masterplan saying how important tourism is: it quoted hundreds of millions of pounds of tourism money coming in to the county of Hampshire. All very well, but it actually says only 12% of tourists are coming from abroad anyway. The great majority of tourism is from this country, certainly not flying into Southampton or any other airport, and it will always remain that way. So you have to watch all these figures about the economic benefits of tourism.

And what you also need to bear in mind, is that you've got to look at both sides of the picture: yes of course tourism brings money into Britain, into Hampshire, and possibly into Southampton, I don't know how many people come here for holidays….


but it takes a great deal more money out of the country. Tourism takes twice as much out as it brings in . There's a balance of payments deficit of about Ł15 billion per annum, in the UK as a whole. And in the South East of England, if you exclude London, which is a bit of a special case, there's a 3.3 to 1 balance against. So for every pound brought into the area, Ł3.3 goes out as a result of tourism.

I'm not saying that people shouldn't go on holidays, that there shouldn't be tourism - there's very good social and democratic, and indeed political reasons why we wouldn't say that people should actually be restricted on where there go.

But it is completely fallacious to claim that there's big economic arguments in favour of it; actually as far as this country is concerned it's a significant drain on our economy.

Just coming down to a related issue, which is employment or jobs: a lot of people might think that a bigger airport, more air travel, is going to create jobs, and therefore it must be a good thing, mustn't it? It's a no-brainer.

Well actually it's not that simple. I don't know what the local and regional policies are here, but I suspect that they're not to 'create jobs' per se. There might be policies to reduce unemployment, but that's actually quite a different thing, because if you just create jobs in a location that doesn't just reduce unemployment, certainly not by the same amount, unless you've got relatively high unemployment, and unless you've got resources of all sorts lying idle, that can just be picked up by that new development.

If you don't have lots of unemployment and lots of resources lying idle, and you sort of dump a big job creator in the middle of a conurbation, what actually happens is a number of things:

  • firstly there's actually employment pressures - other employers in other sectors find they can't get the staff
  • there's cost pressures, because it tends to drive up costs for business
  • there's all sorts of pressure on infrastructure - we can already see there are problems anticipated with things like roads.
  • And what also happens is it tends to induce immigration into the area, with all the attendant problems of housing shortages and things like that. And we're already seeing all of that in west London, so much so that BAA were at pains to show how few jobs would be created by Terminal 5!

So when people say, "it creates jobs so it must be a good thing," you really do have to think just a bit more broadly than that. It does increase the amount of economic activity in the area, it does increase the amount of jobs, but if you've just got this spread over more people it doesn't actually increase per capita income  - prosperity - it doesn't actually make you better off.

Final couple of points on economics: a lot of you have probably heard, because we've been campaigning about it like mad, about the tax exemptions that aviation receives - there's no tax on aviation fuel, they don't pay VAT, they don't pay for the environmental damage that they cause, and so on. Those tax exemptions are estimated at Ł9 billion per annum across the country. A huge sum of money. Now if that tax were to be collected and distributed out, to say local authorities, we've worked out that Southampton and Eastleigh councils together would get Ł52 million per annum. That's a lot of money. I suspect you could do with that.  Just think what that could do for the infrastructure for public services, and, in fact, as a boost to the economy. So you might just like to think, and I know you can't make representations on this directly, but you might just like to think wouldn't we rather have that than be subsidising cheap air travel?

I'd like to finish by quoting, because I can't do better than this quote that came from Stansted. An economist there said:

"You don't need a Nobel prize in economics to question the overall economic benefit to the UK, of subsidising Irish airlines (he's talking about Ryanair, I don't know if they're here yet) to buy American planes (I think he's talking about Boeing) in order to transport vast numbers of British people to spend their money in France and Spain."


A brilliant and concise summary of what I've been saying for the last 10 minutes.

Environmental impact
I'm now going to move on, to what you probably expected me to talk about, to the environmental impact. Well it seems pretty obvious to me that if there is going to be a four-fold increase in passengers and a large increase in flights, there's going to be a serious increase on impact. Now the current airport masterplan doesn't actually say what the current impacts are, as far as I can see. It doesn't talk about any limits there might be, it doesn't talk about capacity of the area for coping with environmental impact, or anything. I think that's a major omission that you've really got to make representations about.

In the case of air pollution, there's a discussion about it, but again, there's no discussion about actual limits about the amount of air pollution the airport will cause. All it says, rather lamely, is that roads cause a lot more pollution than the aircraft. Well that's not really good enough - two wrongs don't make a right…..

[aircraft noise overhead]

…. and in any case, while road traffic is growing slowly, and emissions are tending to decline, air travel is increasing, so it's becoming a progressively more significant proportion. You really do have to address air pollution: you need monitoring, you need estimates, and you need action plans, and BAA must, in my opinion, play their part in that.

Now noise is perhaps the issue that concerns most people, and again, the airport masterplan really says nothing useful about it, that I can see. It doesn't tell you what the noise climate is at the moment, no figures, no forecasts, no action  - the only thing I could see is they say they'll try and stick to the current limit on night flights.

Just an aside there, be very careful that they don't try and take away the limit on flight numbers, and just use a noise quota instead. That would be very dangerous. It would increase the noise nuisance.

There's no discussion about noise insulation, there's no discussion of purchasing the houses of people who are really badly affected, and there's no discussion of what we call economic instruments - which is actually having… perhaps charging the airport, charging the airlines according the noise the aircraft makes. Which is a very powerful incentive to use quieter planes. And there's certainly no discussion of compensating people who are really badly affected.

So all of those issues just seem to really be missing from the airport masterplan, and I would strongly recommend that yourselves, and the council, actually say to BAA: "Look, we want a real plan, that addresses these issues."

One of the biggest issues of aviation is climate change. I'm not going to say anything much about this because I think Caroline [Caroline Lucas, Green Party, MEP for the South East Region] will probably be saying something more eloquently than I ever could. But what I would just like to finish up by saying, is that there are, as I said at the outset, two issues: first there's all this battering of propaganda in relation to telling you how important the growth of the airport is for the economy, and actually there's very little evidence for that.

Secondly there are, as I've very briefly described, virtually no measures, no plans for environmental protection for any sort… …whether it be for air pollution, noise, safety, climate change, or anything. There's just nothing there. And that's what I think is missing from the airport masterplan.

You are being invited in a sense to accept some sort of balance. Now that balance is, accept the economic benefits, and accept all the degradation of the environment. It's trade-off, is what you're really being asked to accept in the masterplan, and I do see this in other documents as well, it's not just BAA…...

What I would say is, don't fall for that. The future, what's called sustainable development, is not about trading off the environment and the economy: it's about making progress in both. And I think you've got a right to demand that your environment actually gets better - or at least stays the same if it doesn't get better - not get worse, just to achieve some alleged economic benefit.

I hope that's given you a few ideas on what I think of the masterplan, and what you might like to say about it.  Thank you very much."


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