Third runway at Heathrow cleared for takeoff by ministersHeathrow airport

The government has approved a third runway at Heathrow to expand UK airport capacity following a cabinet committee meeting on Tuesday.

Transport Secretary Chris Grayling said the “truly momentous” decision would support trade and create jobs.

Gatwick airport said it was disappointed with the decision, which was “not the right answer for Britain”.

The issue has split the Cabinet, with Foreign Secretary Boris Johnson saying a third runway was “undeliverable”.

The Education Secretary, Justine Greening, whose Putney constituency in southwest London is near the airport, has also been a vocal critic of Heathrow expansion.

The Department for Transport said a new runway at Heathrow would bring economic benefits to passengers and the wider economy worth up to £61bn and create as many as 77,000 additional local jobs over the next 14 years.

Heathrow said the expansion would allow it to offer more direct flights to UK destinations as well as up to 40 new cities abroad such as Wuhan, Osaka and Quito.


A public consultation will now be held on the effects of airport expansion before the government makes a final decision as part of a national policy statement on aviation.

MPs will then vote on that decision in the winter of 2017-18. It is unlikely that any new runway capacity would be operational before 2025.

Construction is not likely to begin until 2020 or 2021, the Airports Commission has said.

Mr Johnson, the MP for Uxbridge and South Ruislip in west London, doubted whether construction would ever start: “The day when the bulldozers appear is a long way off, if indeed they ever materialise.”

Sadiq Khan, the mayor of London, also said expanding the west London airport was the wrong decision for both London and the UK.

“There are more people affected by noise because of Heathrow than people affected by the airports in Paris, Amsterdam, Frankfurt, Munich and Madrid combined,” he said. “The air in London is a killer. It makes you sick and it’s unlawful.”

Heathrow airportImage copyrightGETTY IMAGES

Greenpeace UK chief John Sauven said a third runway at Heathrow would increase air pollution and “be a waste of time, money and lives”.

Andy Slaughter, Labour MP for Hammersmith, said opposition from predominantly Tory-controlled councils, communities and MPs meant “the chances of a toxic third runway being built are vanishingly small”.

However, a wide range of unions and business groups welcomed the decision to expand Heathrow. TUC general secretary Frances O’Grady said it was “absolutely vital for Britain”, while CBI chief Paul Drechsler said it would create jobs and boost economic growth.

Heathrow management said the airport was ready to deliver a third runway that was “fair, affordable and secures the benefits of expansion for the whole of the UK”.

Expanding airport capacity in the South East of England has been a political hot potato for many years, which is why successive governments have attempted to duck the issue.

Although Heathrow has always been the favourite among businesses, it has attracted the most opposition from MPs with constituencies near the airport or under flight paths.


A study last year led by Sir Howard Davies recommended a third runway at Heathrow, but other options included a new runway at Gatwick or extending one of Heathrow’s existing runways.

Zac Goldsmith, the Tory MP for Richmond Park, has resigned in protest against the decision, which he called “catastrophic”.

The shadow chancellor, John McDonnell, whose Hayes and Harlington constituency includes Heathrow, said the announcement was the start, rather than the end, of the process.

“It beggars belief that it has taken ministers over a year since the publication of the Davies report to even make that start,” he said. “There is no justification for dithering on this scale.”

Analysis: Simon Jack, business editor

We have a long way to go before we see the proverbial shovels in the ground – there will be legal and planning challenges aplenty to come. However, with today’s decision to recommend a third runway, this government has arrived at a point its predecessors failed to. From beating ourselves up for not being able to build anything, the UK is suddenly building everything.

Heathrow was chosen because of the extra boost it gives to the UK economy, but it is not the only mammoth project out there. After a last-minute wobble, the £18bn Hinkley Point nuclear power station was given the green light, while the biggest project of them all is coming down the track fast.

Construction on the £42bn HS2 is scheduled to begin next year – and that is probably not all. Chancellor Philip Hammond has hinted he may reveal some moderate borrowing to fund targeted infrastructure spending in his Autumn Statement next month. It’s enough to make the Victorians sit up and take notice.

If projections for a fairly sharp post-Brexit slowdown in the economy next year are correct then we may need this spending boost. If these projects proceed on time, there is something else we will need: people to build all this stuff. With unemployment close to historic lows, it’s not clear we have enough. Like the Victorians did, it seems very likely we will need to look abroad to find the workers for our golden age of infrastructure – and that, post-Brexit, will present a political rather than an engineering challenge.

INTERACTIVESee how proposed flightpaths with the third runway differ from current flightpaths

Proposed Flight Paths

Current Flight Paths


Willie Walsh, chief executive of British Airways owner IAG, welcomed the decision to expand Heathrow but added: “The government’s directive to cap customer charges at today’s level is fundamental. Heathrow is the world’s most expensive hub airport so it’s critical that new capacity is affordable.”

His counterpart at Virgin Atlantic, Craig Kreeger, described the announcement as an exciting opportunity to radically transform airline competition at the UK’s main airport”. The airline would strive to ensure that passengers were not “overburdened by paying for runways and facilities that won’t be open until the mid-2020s”.

Heathrow map of proposal

US to examine AT&T deal to buy Time WarnerThis combination of pictures created shows AT&T cell phone store in Springfield, Virginia (21 October 2016)

US lawmakers and both presidential candidates have raised questions about AT&T’s deal to buy Time Warner.

The US telecoms giant, already the country’s third largest cable provider, is paying $85.4bn (£70bn) for the company, which owns CNN and HBO.

A Senate subcommittee responsible for competition will hold a hearing in November.

However, AT&T’s chief executive Randall Stephenson believes regulators will approve the deal.

Senator Mike Lee, the Republican who chairs the antitrust subcommittee, said the deal would “potentially raise significant antitrust issues, which the subcommittee would carefully examine”.

The biggest merger to be announced this year would combine AT&T’s distribution network, which includes 130m mobile phone customers and 25m pay-TV subscribers, with content from the Warner Brothers film studios and the cable TV channels HBO, the Cartoon Network and CNN.

The competition concerns centre on higher prices for customers and less consumer choice.

A spokesman for the Democratic presidential candidate Hillary Clinton said there were “a number of questions and concerns” about the deal that regulators needed to scrutinise, but added “there’s still a lot of information that needs to come out before any conclusions should be reached”.

Meanwhile Republican candidate Donald Trump has said that he would block the merger if he wins, because it was “too much concentration of power in the hands of too few”.

The president does not have the final say – that lies with the US Justice Department, which can approve, block or put conditions on the takeover going through.

Extras from Game of ThronesImage copyrightREUTERS
Image captionRevenue from HBO, which shows Game of Thrones and True Detective, contributes to about 18% of Time Warner’s total revenue

Other critics, such as John Bergmayer from Public Knowledge, a campaign group that promotes access to affordable media, warned that consumers may lose out from the deal. Mr Bergmayer suggested that AT&T might let mobile customers watch TV and films from Time Warner without counting it against their data caps, which would make video from other providers less attractive.

But AT&T’s Mr Stephenson argued that there was “no competitive harm that is being rendered by putting these two companies together, so any concerns by the regulators, we believe, will be adequately addressed by conditions.”

AT&T incentives

The competition lawyer Amanda Wait from Hunton & Williams in Washington said it was not a straightforward issue.

“The anti-trust division here in the US is going to have to take a hard look at how this deal changes AT&T’s incentives and that’s a really complicated question,” she told BBC radio’s World Business Report.

There are two main issues, she said. Firstly, whether AT&T now has an incentive to withhold Game of Thrones from other cable providers. And secondly, whether AT&T will favour its own content over others that it’s carrying.

“Is AT&T going to have an incentive to make HBO and other Time Warner channels more visible, more easily accessible on [AT&T’s] various service networks and dis-favour, or maybe even hide, the other channels that it’s carrying?” she said.

Analysis: Joe Lynam, BBC correspondent

AT&T has the means by which millions of Americans consume their entertainment. It owns the platform – be that cable or broadband – which enables people to watch their favourite shows. But it does not – until now- own the shows or the “content” which households want to watch, be that Game of Thrones, CNN or live NBA basketball.

Buying Time Warner, which we should not confuse with Time Warner Cable, allows AT&T to become a full service media provider and one of the more important companies in the world.

It allows a newly-merged entity to steal a march on the likes of Verizon or Comcast in a very competitive US market.

But the deal may never happen. It could be deemed anti-competitive by regulators because AT&T already owns mobile phone, broadband and cable TV networks, and allowing it to control the shows as well might deprive consumers of choice.

Banks poised to relocate out of UK over Brexit, BBA warnsCity of London banks

Large banks are getting ready to relocate out of the UK early next year over fears around Brexit, the British Bankers’ Association (BBA) has warned.

Writing in The Observer, its boss Anthony Browne also says smaller banks could move operations overseas by 2017.

“Their hands are quivering over the relocate button,” he wrote. Most banks hadbacked the UK remaining in the EU.

Mr Browne also said the current “public and political debate at the moment is taking us in the wrong direction.”

His comments build upon those he made at the BBA annual conference last week, when he said banks had already “set up project teams to work out what operations they need to move by when, and how best to do it”.

‘Legal right’

“Banking is probably more affected by Brexit than any other sector of the economy, both in the degree of impact and the scale of the implications,” he told the newspaper.

“It is the UK’s biggest export industry by far and is more internationally mobile than most. But it also gets its rules and legal rights to serve its customers cross-border from the EU.”

Analysis: Joe Lynam, BBC Business correspondent

One of the perks of Europe’s Single Market – which also currently includes the UK, Norway and EU countries such as the Netherlands – is “passporting“. Passporting allows banks and insurance companies to sell their services anywhere in the single market without having to establish a base in every country in Europe.

But single market membership comes with conditions: freedom of movement of goods, services, capital and (crucially) people. Theresa May has already said she intends to restrict the free movement of people from the EU after Brexit, while EU leaders have meanwhile said the four freedoms are indivisible ie non-negotiable.

That means the UK may have to quit the single market and lose passporting. What Anthony Browne from the BBA is doing is upping the ante on the government, by saying some banks will start to relocate in the coming months without passporting.

What he also says though is that erecting any barriers to cross-border banking will be just as bad for Europe as it would be for the UK.

Mr Browne added: “For banks, Brexit does not simply mean additional tariffs being imposed on trade – as is likely to be the case with other sectors. It is about whether banks have the legal right to provide services.”

Banks want to see the continuation of the EU’s “passporting” system, allowing UK-based financial services to operate across Europe without needing separate authorisation.

‘Split in two’

Banks have called for transition arrangements to be put in place after the UK leaves the EU.

But Mr Browne warned that in Europe and among UK eurosceptics the mood was “hardening”.

“The problem comes – as seems increasingly likely, judging by the rhetoric – when national governments try to use the EU exit negotiations to build walls across the Channel to split Europe’s integrated financial market in two, in order to force jobs from London,” Mr Browne said.

“From a European perspective, this would be cutting off its nose to spite its face. It might lead to a few jobs moving to Paris or Frankfurt but it will make it more expensive for companies in France and Germany to raise money for investment, slowing the wider economy.”

Meanwhile, Liberal Democrat foreign affairs spokesperson Tom Brake said that if the UK pursued a “hard Brexit” then it would “threaten the £65bn the UK financial services industry pays in taxes each year”.

He added: “The Conservative government must explain how it will make up this funding shortfall if the UK leaves the single market.”

Microsoft shares at new high as cloud focus pays offMicrosoft chief executive Satya Narayana Nadella

Microsoft’s focus on cloud computing has helped it deliver better-than-expected quarterly profits, sending its shares to an all-time high.

The software giant posted a $4.7bn (£3.8bn) profit for the three months to September.

Chief executive Satya Nadella has focused on building Microsoft’s expertise in cloud-based services amid slowing PC sales.

Shares rose 6% to $60.73 in after-hours trading.

The previous high was $59.97 in December 1999, close to the peak of the dot-com boom, shortly before Steve Ballmer replaced Bill Gates as chief executive.

When Mr Nadella succeeded Mr Ballmer in 2014, Microsoft’s shares were trading below $37.

Changing environment

Investor confidence in Microsoft has been restored by focusing on mobile and cloud computing rather than its traditional hardware like its Windows operating system and its Office software.

Individuals and businesses are increasingly accessing computing services such as servers, databases, software and storage that are provided over the internet (“the cloud”).

And Mr Nadella said the changing business environment meant this was paying off.

“It’s not just the Silicon Valley startups anymore; it is the core enterprise that is also becoming a digital company. And we are well-positioned to serve them,” Mr Nadella said.

Revenue from Microsoft’s Office 365 cloud service increased 8% in the quarter while revenue from its Surface tablet – pitched as a rival to the iPad – rose 38%.

And while revenue from its flagship Xbox – Microsoft’s games console – fell, the number of people playing online rose to 47 million from 39 million a year.

DiCaprio to co-operate in probe into Malaysia’s 1MDB scandalLeonardo DiCaprio

Leonardo DiCaprio has offered to help US authorities in their corruption probe into Malaysia’s state fund 1MDB.

Both the Hollywood actor’s charity foundation and his movie The Wolf of Wall Street have allegedly received money siphoned off the Malaysian fund.

The US hopes to seize more than $1bn (£761m) in assets related to the fund.

The Justice Department filed a civil suit to seize luxury real estate, artwork and other assets purchased with allegedly stolen funds from 1MDB.

A spokesman for Mr DiCaprio said his charitable foundation would return gifts or donations if they were found to have come from the fund.

The spokesman said that on finding out about corruption probe through news reports in July, DiCaprio “immediately had his representatives reach out to the Department of Justice to determine whether he or his foundation, the Leonardo DiCaprio Foundation, ever received any gifts or charitable donations directly or indirectly related to these parties, and if so, to return those gifts or donations as soon as possible.”

The statement said that Mr DiCaprio and foundation would be “entirely supportive of all efforts to assure that justice is done in this matter”.

Funds ‘misappropriated’

Malaysia’s 1MDB fund started to attract attention in early 2015 when it missed payments for the $11bn it owed to banks and bondholders.

This was followed by allegations of an international scheme of embezzlement and money-laundering involving billions of dollars of 1MDB money, rocking the Southeast Asian country’s political establishment.

Traffic passes a 1Malaysia Development Berhad (1MDB) billboard at the Tun Razak Exchange development in Kuala Lumpur, Malaysia, 6 July 2015Image copyrightREUTERS

Read more: 1MDB – The case that riveted Malaysia

In a July lawsuit, the US Justice Department alleged the “misappropriated” funds financed lavish lifestyles of “multiple individuals including public officials”.

The $1bn to be seized only makes up a proportion of the money that was allegedly diverted, which comes to more than $3.5bn.

“The Malaysian people were defrauded on an enormous scale,” deputy FBI director Andrew McCabe said in July.

The court papers detailed how “Malaysian Official 1” – soon afterwards identified by officials as Malaysian Prime Minister Najib Razak – had family members and close associates divert billions of dollars from the fund.

Mr Najib launched 1MDB in 2009 to turn Kuala Lumpur into a financial hub and closely oversaw it. While the fund has admitted that “mismanagement” took place and has since replaced its board, Mr Najib denies any personal involvement in the case.

The court papers though name Mr Najib’s stepson, Riza Aziz, whose company Red Granite Pictures produced the Leonardo DiCaprio film The Wolf of Wall Street.

Red Granite Pictures has said that to its knowledge it did not receive any illegitimate money and it has done nothing wrong.

Airports expansion decision to be made next weekHeathrow airport

The government will next week announce its decision on whether to favour expanding either Heathrow or Gatwick airport, after decades of delays.

Unusually, the decision will not be taken by the full cabinet but by a sub-committee, chaired by Theresa May.

MPs will not get to vote on the decision for at least another year.

Some ministers will be allowed to speak out against it for a limited period in a move being seen as evidence a third runway at Heathrow will be backed.

Expanding Heathrow is strongly opposed by Foreign Secretary Boris Johnson, and Education Secretary Justine Greening.

Allowing ministers to speak out could avert the possibility of resignations from cabinet.

In a letter, Prime Minister Theresa May has told cabinet colleagues that once a decision has been taken by the airports sub-committee on the preferred scheme it will then be subject to a “full and fair public consultation” before a final decision is put before the Commons in the winter of 2017-18.

Number 10 would not comment as to whether MPs would be able to vote freely on the matter.

A Heathrow spokesperson said it was “the expected and appropriate political process” – a view echoed also by Gatwick.

Analysis: Richard Westcott, transport correspondent

The government, the airports – they all insist that this is not a delay and that it was always an expected part of the planning process.

Ministers will still pick a winner next week, they say. We think they will plump for a third runway at Heathrow.

MPs might then get the chance to vote on the issue quite soon. However, it will not be binding.

It will just be a chance for everyone to air their views, including MPs such as Boris Johnson and Justine Greening, who are both vehemently opposed to expanding Heathrow.

Critically, though, the binding MPs’ vote – the one that counts – will not happen for another year or so.

Earlier, Mrs May told ministers at a cabinet meeting that a decision on increasing airport capacity in the South East had been “delayed for too long”.

Her spokeswoman said the prime minister believed it was important to now take a decision “in the national interest”.

The nine members of the airports sub-committee do not include Mr Johnson, whose Uxbridge and South Ruislip seat is close to Heathrow, Putney MP Justine Greening or any other minister representing a London constituency.

Mrs May’s spokeswoman said the decision to give ministers a limited period to voice their personal views was a “mature, common-sense approach reflecting the fact that many ministers have long-held views and that ministers are also MPs and some have specific constituency issues that they have to address”.

Heathrow airportImage copyrightGETTY IMAGES

As many as 60 Tory backbenchers could vote against expansion at Heathrow, where options include building a third runway, or lengthening one of the existing runways.

Zac Goldsmith, the Tory MP for Richmond Park, has vowed to resign from the Commons if the government approves a Heathrow expansion.

The Evening Standard reported on Tuesday that the local Conservative party would back Mr Goldsmith if he stood for re-election as an independent.

Airlines and business groups favour expansion of Heathrow, which offers far more direct connections than Gatwick and handles much more freight.

A final decision on which London airport to expand has been years in the making.

In 2009, former prime minister David Cameron pledged that there would be no new runway at Heathrow.

In July 2015, the Airports Commission chaired by Sir Howard Davies backed a new third runway at Heathrow, but did not rule out the option of expanding Gatwick.

Mr Cameron had promised a decision by the end of last year on whether to build a new runway at Heathrow.

UK economy ‘faces prolonged weakness’, Item Club report saysWelder

Britain’s economy faces a “prolonged period” of weaker growth as consumer spending slows and business curbs investment, according to a report.

Although the EY Item Club think tank predicts the economy will grow 1.9% this year, it expects that performance to fizzle out as inflation rises.

The economy’s stability since June’s Brexit vote was “deceptive”, EY said.

Meanwhile, a senior Bank of England official told the BBC that inflation may surpass its 2% target.

The Bank’s deputy governor Ben Broadbent told Radio 5 live that sterling’s weakness would fuel inflation, but that controlling prices with tighter monetary policy could hit growth and jobs.

The dilemma facing policymakers was underlined in the Item Club report.

It expects inflation to jump to 2.6% next year before easing back to 1.8% in 2018. That will cause growth in consumer spending to slow from an expected 2.5% this year to 0.5% in 2017 and 0.9% the year after, the report said.

Business investment is also forecast to fall due to uncertainty surrounding Britain’s future trading relationship with the EU, dropping 1.5% this year and more than 2% in 2017.

EY predicts that the impact of weaker consumer spending and falling investment will cause UK GDP growth to drop sharply to 0.8% next year, before expanding to 1.4% in 2018.

Vulnerable sectors

Peter Spencer, chief economic advisor to the EY Item Club, said: “So far it might look like the economy is taking Brexit in its stride, but this picture is deceptive.

“Sterling’s shaky performance this month provides a timely reminder that challenges lie ahead. As inflation returns over the winter it will squeeze household incomes and spending.

“The pressure on consumers and the cautious approach to spending by businesses mean that the UK is facing a period of relatively low growth,” he said.

Bank of England deputy governor Ben BroadbentImage copyrightREUTERS
Image captionDeputy governor Ben Broadbent told 5 live that monetary policy involves a “trade off”

The report said that exporters will benefit from the depreciation of sterling, which last week tumbled against a basket of currencies. Exports will increase by 4.5% in 2017 and 5.6% in 2018, EY forecast.

But Mr Spencer did not expect this to be enough to offset a wider slowdown.

“With activity in the domestic market flat, GDP growth will become heavily dependent upon exports next year,” he said.

‘Undesirable consequences’

“But once the UK has left the EU certain sectors, such as aerospace, automotive, and chemicals that trade extensively with the EU will be a lot more vulnerable and may need to be supported by subsidies and more robust industrial policies,” he said.

Some of the economic challenges were spelled out in Mr Broadbent’s BBC interview with 5 live’s Sean Farrington.

The deputy governor, echoing remarks by the Bank’s governor Mark Carney last week, said that letting inflation run ahead of the 2% target might ensure the economy does not suffer.

Tighter monetary policy to meet the target could lead to “undesirable consequences” such as lower growth and higher unemployment, he said. It’s a “trade off”, he added.