Heathrow’s global status at risk, says NIC

Economy

The National Infrastructure Commission is consulting on how to measure the effect of infrastructure investment on the UK’s competitiveness. In doing so, it appears to warn about the potential damage to the UK’s competitiveness if Heathrow Airport is not allowed to expand.

Improving competitiveness is one of the NIC’s three charter objectives, alongside supporting “sustainable” economic growth and improving the quality of life.

Noting that there is no single definition for competitiveness, the NIC proposes three yardsticks: 

• Improving access to markets
• Access to mobile labour and capital
• Supporting and being a source of globally significant clusters and assets

Discussing the third measure, the NIC says Heathrow Airport could be considered a “globally significant infrastructure asset”. 

It then appears to warn about the potential of the airport’s status diminishing, in what may be seen as a comment on the Government’s willingness to see the airport’s third runway plan fail following the Court of Appeal ruling in February. The court ruled that the Airports National Policy Statement, which supports expansion, did not take account of the 2015 Paris Agreement on climate change (LTT 06 Mar). 

Says the NIC: “The nature of international aviation means that London Heathrow’s main competitors are hub airports in Europe and the Middle East, rather than other UK airports. This adds a national strategic significance to the performance of these infrastructure assets. 

“The shift from London to Rotterdam as the centre of freight shipping in Europe in the 1960s is an example of how competitive advantage of a global asset can be lost if there is a resistance to change and to adopting new innovations.”

Turning to the impact of infrastructure on business clustering, the NIC says: “Understanding the exact role of infrastructure in cluster success will be difficult to measure, as successful clusters are usually the result of a unique and complex combination of factors and interactions.”

On assessing the role of infrastructure in improving access to markets, the NIC suggests using its existing transport connectivity metric to measure changes to market access within Great Britain. This measures the effectiveness of transport networks at moving people within an urban area or between different places. “Extending this measure to include connectivity to international gateways would help to measure international market access,” it says. 

Nevertheless, it adds: “Evidence indicates that improve-

ments to transport, including global gateways such as ports and airports, have a particularly positive effect on international trade in lower income countries, while improvements to digital communications infrastructure play a bigger role in higher income countries. 

“This may be because higher income countries already have relatively mature transport networks whereas digital communications technology is improving rapidly, and is particularly important to service industries, which account for a bigger share of high income economies.” 

On access to mobile labour and capital, the NIC says that, although transport project promoters often claim their scheme will bring new jobs to an area, “the current literature on the link between infrastructure and inward migration or investment is weak”. 

Surveys suggest infrastructure is one of many factors affecting investment. “The availability of skilled labour and political stability are found to be more important.”

The NIC wants to see more research on this topic but, until the quality of evidence improves, it will treat this measure as a “secondary consideration”.