Chancellor Rachel Reeves backed a range of projects designed to kick-start activity in a keynote speech this morning

Airport expansion – including support for the long-mooted third runway at Heathrow (pictured) – and creating ‘Europe’s Silicon Valley’ in the Oxford-Cambridge corridor are among the initiatives

An artist’s impression of how the Heathrow site could look after expansion

Protests against airport expansion were taking place outside the speech today

London Mayor Sadiq Khan immediately signalled he will resist the plan, saying he ‘remains opposed’ due to the ‘severe impact it will have on noise, air pollution and meeting our climate change targets’

Speaking at a Siemens plant in Oxfordshire, Ms Reeves said: ‘I can confirm today that this Government supports a third runway at Heathrow and is inviting proposals to be be brought forward by the summer.

‘We will then take forward a full assessment through the airport national policy statement. This will ensure that the project is value for money and our clear expectation is that any associated service transport costs will be financed through private funding.

‘It will ensure that a third runway is delivered in line with our legal, environmental and climate objectives.’

Ms Reeves said more capacity at the hub airport was ‘badly needed’, pointing out no full-length runway has been built in Britain since the 1940s.

But within minutes Mr Khan released a statement saying: ‘I remain opposed to a new runway at Heathrow airport because of the severe impact it will have on noise, air pollution and meeting our climate change targets.

‘I will scrutinise carefully any new proposals that now come forward from Heathrow, including the impact it will have on people living in the area and the huge knock-on effects for our transport infrastructure.

‘Despite the progress that’s been made in the aviation sector to make it more sustainable, I’m simply not convinced that you can have hundreds of thousands of additional flights at Heathrow every year without a hugely damaging impact on our environment.’

Downing Street tried to cool the row after PMQs in the Commons.

Asked if Sir Sadiq’s opposition made him a blocker, a spokeswoman said ‘No, we agree with the Mayor of London that growth must come hand-in-hand with our climate obligations, and that’s why the Chancellor set out that we support a third runway.

‘That will be in line with our climate obligations and we look forward to working closely with the mayor throughout the process.’

It is unclear if there will be a fresh Commons vote, with the PM’s spokesman saying that will be decided later.

Ministers have asked for proposals from Heathrow Airport to be presented to them by June.

Heathrow sources said airport bosses want to work with the Government on a number of changes before making major investments in the project.

They are seeking planning reforms that mean they can be confident an application to build the scheme will not be held up for several years because of appeals.

They also want an overhaul in how the airport’s finances are regulated, as they believe the current system would not allow them to recoup the investment needed to build a new runway.

The Civil Aviation Authority determines the cap on per passenger charges that airlines must pay to Heathrow.

A third issue that Heathrow bosses want assurances over is airspace modernisation, to reduce the time and fuel wasted by outdated and inefficient flight routes.

If all those barriers are overcome, the next stage will be for the airport to apply for permission to go ahead with the project through a Development Consent Order (DCO).

This process is expected to last around 18 months and will involve a public consultation on the expansion plan.

The Planning Inspectorate will consider the application and make a recommendation to the Transport Secretary, who will decide whether to grant the DCO.

If the scheme is approved, there is a strong possibility that campaigners will launch judicial reviews of the minister’s decision.

If legal challenges are not brought or are unsuccessful, Heathrow can begin construction.

On the wider state of the economy, Ms Reeves said: ‘We have fundamental strengths in our history, in our language and in our legal system to compete in a global economy, but for too long that potential has been held back. For too long we have accepted low expectations and accepted decline.

‘We no longer have to do that. We can do so much better. Low growth is not our destiny, but growth will not come without a fight, without a Government willing to take the right decisions now to change our country’s future for the better.

‘That’s what our plan for change is all about. That is what drives me as Chancellor.’

Ms Reeves complained that UK productivity had lagged behind major rivals.

‘The productive capacity of the UK economy has become far too weak,’ she said.

‘Productivity, the driver of living standards, has grown more slowly here than in countries like Germany or the US. The supply side of our economy has suffered due to chronic under-investment and stifling and unpredictable regulation, not helped by the shocks that we have faced in recent years.

‘For too long, politicians have lacked the courage or the strength to confront these challenges.

‘When presented with a choice, they have not prioritised growth. Instead, they have accepted the status quo and they have been the barrier, not the enablers of change.’

Ms Reeves said planning rules would be changed around railway stations so the ‘default answer’ to development proposals was ‘yes’.

The Government will work with the private sector to build the Lower Thames Crossing.

She said the project would ‘improve connectivity at Dover, Felixstowe and Harwich, alleviating severe congestion as goods destined to export come from the North and the Midlands, and across the country, to markets overseas’.

‘To drive growth and deliver value for money for taxpayers, we are exploring options to privately finance this important project,’ she said.

Ms Reeves said the government would revive Doncaster Sheffield airport, which was mothballed under the previous adminstration.

Environment Secretary Steve Reed, Transport Secretary Heidi Alexander and science minister Lord Vallance were in the audience for the speech.

The Chancellor confirmed funding towards an East-West Rail link between Oxford and Milton Keynes, and an upgrade to the road linking the Buckinghamshire city to Cambridge.

Ms Reeves is accelerating the development of a new East Coast Mainline station in Tempsford, Bedfordshire, as well as backing for the development of new towns along the Oxford-Cambridge corridor.

She also announced that the Environment Agency has lifted its objections to a new development around Cambridge with 4,500 new homes, as well as office and laboratory space in Cambridge City Centre.

A new ‘Growth Commission for Oxford’ to review how to accelerate growth will be launched, and Sir Patrick Vallance is being appointed as ‘Oxford-Cambridge Growth Corridor Champion’.

The emphasis on the Oxford-Cambridge region marks a shift away from the Tories‘ ‘levelling up’ agenda, in which resources were directed to the ‘left behind places’ in a bid to emulate the levels of prosperity and opportunity in London and the south east.

Ms Reeves argued that the proposals can add £78 billion to the UK economy by 2035.

‘Just 66 miles apart these cities are home to two of the best universities in the world, two of the most intensive innovation clusters in the world and the area is a hub for globally renowned science and technology firms in life sciences, manufacturing, and AI,’ she will say.

‘It has the potential to be Europe’s Silicon Valley. The home of British innovation.

‘To grow, these world-class companies need world-class talent who should be able to get to work quickly and find somewhere to live in the local area. But to get from Oxford to Cambridge by train takes two and a half hours.

Downing Street tried to cool the row with Sir Sadiq (pictured) after PMQs in the Commons

‘There is no way to commute directly from towns like Bedford and Milton Keynes to Cambridge by rail. And there is a lack of affordable housing across the region.

‘Oxford and Cambridge are two of the least affordable cities in the UK. In other words, the demand is there but there are far too many supply side constraints on economic growth in the region.’

Ms Reeves championed a regeneration project around Manchester United’s Old Trafford stadium, which the government claims will lead to new housing, commercial and public spaces.

Writing in The Times, Sir Keir said:’ ‘There is a morass of regulation that effectively bans billions of pounds more of investment from flowing into Britain.

‘Thickets of red tape that, for all the Tories talked a good game, was allowed to spread through the British economy like Japanese knotweed.’

He added: ‘In the 1980s, the Thatcher government deregulated finance capital. In the New Labour era, globalisation increased the opportunities for trade. This is our equivalent.’

The PM has introduced a new ‘growth test’ that will mean policies are vetoed unless the can be shown to boost the economy.

But despite this, No10 confirmed a string of damaging policies – including its £25billion National Insurance raid – will still go ahead, leading critics to urge ministers to ‘unblock the barriers to growth they have created themselves’, including the Chancellor’s ‘job tax’, Angela Rayner’s workers’ rights charter and Environment Secretary Ed Miliband’s ban on new oil and gas exploration in the North Sea – all of which will continue to go ahead.

Shadow business spokesman Andrew Griffith said: ‘Labour talk a big game on cutting red tape whilst simultaneously piling on more environmental regulations and propose their job-destroying Employment Bill. They must support, not punish, those who do the right thing.

‘Businesses and high streets are bleeding out right now… Only business creates jobs and growth in the economy. It would serve Labour well to learn this basic lesson.’

Green MP Sian Berry said: ‘The Chancellor talked about the ‘costs of irresponsibility’ but expanding airports in the face of a climate emergency is the most irresponsible announcement from any Government I have seen since the Liz Truss budget.’

Tom Behan, founder of sports clothing firm Castore, said this morning that the business climate is ‘incredibly challenging’ and ‘concrete plans’ were needed to get confidence back.

He complained that up to now the government had been lacking ‘clarity and leadership’.

‘It still very much feels that we’re at the stage of hearing words rather than actions,’ Mr Behan told BBC Radio 4’s Today programme.

‘Businesses in the UK are currently operating under the highest tax burden I think in history.

Keir Starmer invoked Thatcher’s 1980s drive to deregulate the City as he pledged to slash red tape – saying it could have a similar impact on the country’s fortunes

He said ministers had to be ‘honest’ about trade- offs between growth, the environment and workers’ rights.

‘In my opinion the government need to be very honest with themselves first and foremost and then very honest with the electorate about the difficult decisions that they need to make,’ he said.

‘Look at the US. They’ve got a president that’s been in place not much more than seven days and they’ve found a deal to invest $500billion in AI infrastructure.

In the UK we’ve got a government that have been in place over seven months and have just decided in the last couple of days that maybe we need to start thinking and talking about growth.’