Howard Davies: Harangued over Heathrow and a sad farewell to Manchester

MT DIARY: The employment and business advantages of a third runway are not getting a fair hearing.

by Howard Davies
Last Updated: 21 Jan 2016

There is not much policy unanimity in Europe these days. As Jean-Claude Juncker said in his State of the Union address, Europe is ‘not in a good place’. The Greek negotiations strained many relationships, and not just with the egregious Professor Varoufakis. The migrant crisis has revealed new fault lines between Germany and France, and between the West and the former East. Grexit may be out for now, but Brexit is back on the agenda. Some of our partners are wondering whether, difficult though it would be, it could yet be preferable to Bremain, if the terms we demand threaten long-cherished European principles.

But there is still one point on which, at the level of principle at least, one can find violent agreement: Europe needs to invest more in its infrastructure, to create high-quality jobs and to enhance productivity and competitiveness. Hands up anyone who is against? I thought not. 

So a plan for an £18 billion investment, where the demand for the new facility is not in doubt, indeed where there is already a waiting list of companies and individuals keen to use it, should be welcomed with open arms. Especially where almost all the funding would come from overseas investors, with only a modest public sector contribution required. 

Yet at a two-and-a-quarter hour hearing before the Greater London Authority, where I was summoned to answer questions about the Airports Commission’s recommendation for a third runway at Heathrow, you would have thought I had come with a proposal to demolish the Tower of London at huge public expense. There are important issues to discuss on noise and air quality, of course, and they got a good hearing, but the employment benefits were not mentioned at all, nor the clear advantages for exporters and indeed individual travellers. I began to wish I had followed the Chilcot strategy, and kept on working indefinitely with no publication date. Though if the government had wanted that, they should have paid the Commission the Chilcot per diem. At a zero daily rate, your incentive is to deliver. 

But every time you get depressed about British politics, I recommend taking a trip to Paris. We all know about the state of the French economy – in a word, flat. Their political scene, by contrast, is very bumpy indeed.

President Hollande has just one objective in mind. The next  presidential election is in 2017. Hollande has said he won’t stand unless unemployment is falling, but on the assumption that there is one month when that happens, it is clear he wants to run again. He may be able, Gordon Brown-like, to prevent another candidate from within the Socialist Party from standing against him, but opinion polls show him failing to get into the second round if other leftist candidates stand. The French Corbyn, Jean-Luc Mélenchon, is outside the party. 

If there is a strong showing from Mélenchon or another, gaining 10% or so of the popular vote, then Le Pen is likely to win the first round, with either Sarkozy or Juppe in second place. The centre right are committed to a primary –  a new thing for them – so there will only be one candidate from their ranks. What that means is that Hollande needs to find bones to throw to the Greens and to the ‘gauchistes’, to convince them that it is worth keeping him in office. So every time the economy minister makes a
business-friendly speech, the Élysée Palace has to find an offsetting gesture to the left. Not, you might think, the ideal recipe for coherent policy making, and it shows.

The French do have one trump card, though. They have a serious political novelist. Michel Houellebecq’s latest book, Submission, has just come out in English. It’s a story of the near future, when the political establishment, worn out by the small-minded manoeuvres of the traditional parties, rallies round a Muslim candidate as the best hope of defeating Marine Le Pen. He wins, and France begins to change fast. The Sorbonne is sold to the Saudi royal family – just as Paris Saint-Germain is already in the hands of Qatar. It’s both intellectually provocative and a page-turner. I am struggling to find anything as muscular and thought-provoking on this year’s Man Booker list.

Back in Blighty I am about to sever my last physical link with the Manchester area – selling my late mother’s house in Rochdale. (I remain connected to Man City through an emotional umbilical cord, of course.) The transaction has bumped me up against the reality of our two-tier property market. The price of her very liveable family house would pay for an eighth of a new ‘architect-designed’ (that should justify a discount in itself) townhouse on Goldhawk Road in west London. And while the latter might be a des res, Goldhawk will never be a des road. We have lived nearby for a quarter of a century and it has had as many revivals as My Fair Lady, without ever losing its arterial, down-at-heel character.

How do we explain this differential? Are the earnings opportunities within striking distance of W6 really eight times as high as they are in Greater Manchester? Are the schools that much better? That seems highly unlikely. Maybe I should have waited until my Mum’s dormer bungalow (as she used to call it) became one of George Osborne’s Northern Powerhouses? But I doubt if cutting the journey time to Leeds will be the complete answer, unless Elland Road once again hosts a Premier League team, and that seems a good way off. So we cashed the cheque and sold out. I feel bad about it, though.

Howard Davies is the chairman of RBS. Follow him on Twitter at: @howardjdavies

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