Taxpayers 'may end up subsidising third Heathrow runway'

Taxpayers may end up subsidising the £9 billion third runway at Heathrow because of the "precarious" finances of the airport's operator, it was claimed today.

Labour's John McDonnell highlighted reports that BAA had urged the Government to revise plans that would give ministers powers over its airports if it went bust.

Mr McDonnell, whose constituency includes Heathrow, said this would mean the Government footing much of the bill for the controversial expansion.

Speaking in a Westminster Hall debate in Parliament, the Hayes and Harlington MP said such a subsidy would hit the Government's transport investment programme.

Junior transport minister Paul Clark did not answer the BAA claims, but insisted the arguments in favour of Heathrow had not changed. Expansion was "vital" for the British economy, he insisted.

There have been reported fears about the financial health of BAA, which has a multibillion pound debt burden. Analysts believe it could have to sell Gatwick and Stansted to alleviate the problems.

Mr McDonnell referred to a report in the Guardian newspaper that BAA had approached ministers about what could happen if they went into administration.

He said: "They have asked for the arrangements to be changed so the Government no longer appoints the administrator...it doesn't inspire confidence.

"We know the Government is going to have to pay for the collateral damage in terms of the impact on the local communities, the shift of populations, the new schools, the creation of new communities elsewhere for these people to live.

"We now believe there will be direct subsidy as a result of BAA's precarious financial position and the precarious financial position of Grupo Ferrovial globally (BAA's parent company) and that we will have to actually subsidise the development itself, the construction of the runway and the terminal."

Former Transport Secretary Geoff Hoon provoked an angry backlash from climate campaigners and residents when he gave the go-ahead to plans for a third runway in January.

But airlines, business organisations, BAA and some unions all welcomed the announcement, which paved the way for the construction of the 7,200ft runway sometime between 2015 and 2020.

A breakaway group of leading companies including Sainsbury's, Credit Suisse, Carphone Warehouse and B&Q owner Kingfisher oppose the plans.

Mr McDonnell said he looked forward to a judicial review of the decision to expand Heathrow which is being brought by some the 2M Group of 24 local authorities who oppose expansion.

The case would "expose the collusion that has gone on between BAA and the Government at various levels", he claimed.

Mr Clark defended the Government's plans and said the appointment of new Transport Secretary Lord Adonis would not mean any change in policy.

He said: "The decision that was taken and announced on January 15 by the then officeholders within this Government, that, whilst they may have changed as individuals, the arguments have not changed.

"The fact has not changed that having a transport system is the lifeblood of Britain's economy, indeed that Heathrow is our only hub airport, it is absolutely vital in terms of our international gateway, vital to our economy, connecting us to growth markets of the future, that has not changed.

"Those are still the issues that we have to deal with. This is a Government decision...that we have to reach, but not at any price."