Heathrow’s arrogant response to its regulator will not fly

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Heathrow’s arrogant response to its regulator will not fly

Heathrow’s third runway must be “cost-efficient and sustainable” and “minimise costs to airlines, passengers and freight owners”, according to the government’s policy statement that gave the go-ahead for expansion in June. What does that mean in hard numbers? And who is on the hook if the cost of the project explodes beyond £14bn? Heathrow’s private-sector owners or paying passengers?

The questions were left unanswered in the summer. Transport secretary Chris Grayling muttered ineffectually about the need for “affordable” numbers and details were left to the regulator, the Civil Aviation Authority, to work out. After many months of pushing Heathrow for information, CAA chief executive Richard Moriarty sounds exasperated.

His “interim update” to the Department for Transport was a long complaint about “the lack of high quality and comprehensive information” from Heathrow on costs and efficiency. Concerns “have not yet been adequately addressed”. The company must “urgently and demonstrably” rise to the challenge. Unless there is “a significant improvement”, the regulator may use its formal powers to intervene.

In most industries, a rebuke in that style would be met with an immediate promise to do better. Heathrow’s response, however, amounted to a shrug of the shoulders. The airport said it will present its planning masterplan next year and didn’t even attempt to explain why it has not satisfied the CAA’s long-standing and reasonable requests.

Heathrow’s owners, one suspects, take the view that the regulator is a minor distraction and that the real battle was won with the parliamentary vote. It may be right, but it is an arrogant way to behave. The high-handed response will also deepen fears that a splendidly protected company is preparing a proposal in which other people are expected to underwrite the construction risks. Not good enough.

Bets off on Brexit certainty

On 9 November, if the nation’s economists are correct, the UK will report third-quarter growth in GDP of 0.6%, a relative triumph when you look across the channel at the 0.2% recorded last week by the eurozone for the July-September period. Enjoy the moment while you can. The latest data suggests Brexit-induced worries are now biting.

The dominant services sector grew at its slowest pace for seven months in October, according to the monthly survey of executives by IHS Markit and the Chartered Institute of Procurement and Supply. Brexit was perhaps not the only explanation since Chris Williamson, IHS Markit’s chief business economist, had other factors on his list, including a global slowdown, trade wars and geopolitics. But, as he says, the detail of the report offers “mounting evidence that Brexit worries are taking an increasing toll on the economy.” On this evidence, overall growth in the fourth quarter could be a sluggish eurozone-style 0.2%.

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If you are optimist, the drag will disappear when, or if, Theresa May secures a negotiated deal. According to this line of thinking, pent-up investment will be released and the chancellor’s expansionary budget will become the story. Well, maybe. It seems equally likely that any withdrawal agreement with Brussels will be so fudged that it raises as many questions as it answers about the UK’s future trading relationship with the EU. If business is waiting for certainty, it may be disappointed.

The lure of the limelight

You understand why Chris Kennedy, finance director of Micro Focus, might prefer to count numbers for a different employer. He joined the FTSE 100 software outfit only in January this year, which allowed just enough time to prepare the details on a huge profit warning in March that almost halved the share price. Micro Focus was instantly reclassified as a problem stock, as opposed to the go-go business that had shelled out £6.6bn for a large chunk of Hewlett-Packard Enterprise’s operations in 2017.

Now Kennedy is off to ITV. Television probably offers more excitement than software ever will, and he will be reunited with Dame Carolyn McCall, his old boss from easyJet days. All the same, quitting after 10 months – or 12 by the time he’s totted up the full-year numbers – is a bit quick, isn’t it? Micro Focus would be entitled to be annoyed.

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