Gatwick Airport’s £2.2 billion second runway plan could create thousands of jobs and help “kickstart the economy”, Chancellor Rachel Reeves said.

In the privately-financed project, the West Sussex airport will move its emergency runway 12 metres north, enabling it to be used for departures of narrow-bodied planes such as Airbus A320s and Boeing 737s.

This will enable it to be used for about 100,000 more flights a year.

Ms Reeves said: “This Government promised to kickstart the economy – and we are.

“A second runway at Gatwick means thousands of more jobs and billions more in investment for the economy.”

The Chancellor views the plan as a signal of the Government’s commitment to back “the builders, not the blockers”.

She said: “By slashing red tape and transforming the planning system to get Britain building again we are investing in this country’s renewal and building an economy that works for working people.”

Ms Reeves is keen to seize on any positive news for the economy as she prepares for her November 26 Budget against a backdrop of sluggish growth and inflation remaining stubbornly above target.

The Gatwick scheme has been given the go-ahead by Transport Secretary Heidi Alexander.

She backed the scheme as a “no-brainer” for economic growth, a Government source said, suggesting flights could take off from the new full runway before 2029.

The Cabinet minister is satisfied with adjustments made, covering issues such as noise mitigation and the proportion of passengers who would travel to and from the airport by public transport.

It comes after the Planning Inspectorate initially rejected the airport’s application and earlier this year recommended Ms Alexander should approve the project if the changes were made.

New commitments include Gatwick’s management setting its own targets for the proportion of passengers who travel to the airport by public transport, rather than a legally binding target.

Residents affected by more noise will be able to ask Gatwick to cover the costs for triple-glazed windows.

Homeowners living directly beneath the new flight routes who choose to sell could have their stamp duty and reasonable moving costs paid, as well as estate agent fees of up to 1% of the purchase price.

Gatwick says its plans will create £1 billion per year in economic benefits, and generate an additional 14,000 jobs.

A Government source told the PA news agency: “With capacity constraints holding back business, trade and tourism, this is a no-brainer for growth.

“This Government has taken unprecedented steps to get this done, navigating a needlessly complex planning system, which our reforms will simplify in future.

“It is possible that planes could be taking off from a new full runway at Gatwick before the next general election.”

The source said the expansion must be delivered in line with climate change commitments and meet strict environmental requirements.

Local campaigners opposed to expansion are concerned about the impact on surface transport, noise, housing provision and wastewater treatment, but the airport insists it has conducted “full and thorough assessments” of those issues.

CAGNE, an umbrella aviation community and environment group for Sussex, Surrey and Kent, said it stands ready to serve a judicial review funded by residents and environmental bodies.

The group said: “We know this Government cares little for the environmental impact aviation is having on our planet and Gatwick’s neighbours, but not to demand that Gatwick pays for the infrastructure, the onsite wastewater treatment plant, and noise impact is unlawful in our book.”

The Labour Government’s backing of a third runway at Heathrow Airport in its bid to grow the economy has also drawn criticism from environmental groups and opposition politicians.

The move was welcomed by shadow transport secretary Richard Holden, who accused Labour of delaying the “key” decision.

He said: “This decision should have been made months ago. Labour pledged to go ‘further and faster’ on growth, yet they’ve dithered and delayed at every turn.

“Pushing key decisions down the road has only created uncertainty for businesses and local communities.”

But Green Party leader Zack Polanski said: “Labour keeps wheeling out the same nonsense about growth, but at what cost? What this really means is more pollution, more noise for local communities, and no real economic benefit.”

Stewart Wingate, Vinci Airports managing director for the UK and former Gatwick chief executive, said: “After a lengthy and rigorous planning process, we welcome the Government’s approval of plans to bring our Northern Runway into routine use, ahead of the expected deadline.

“This is another important gateway in the planning process for this £2.2bn investment, which is fully funded by our shareholders and will unlock significant growth, tourism and trade benefits for London Gatwick and the UK and create thousands of jobs.

“As we’ve said previously, it is essential that any planning conditions enable us to realise the full benefits of the project and do not impose unnecessary constraints that make it uneconomic to invest in.

“We now need to carefully examine the details of the planning consent. Once we have done that, we will be able to comment further.”

New Delhi: Ahead of the beginning of GST rejig from Monday, the Finance Ministry issued another detailed explanation of the cut in tax rates on goods and services announced as part of the reforms, which aim to simplify rates, remove anomalies, and make the system easier for both businesses and consumers. 

1. Which life insurance policies are covered under the GST exemption?

The exemption applies to all individual life insurance policies, including term plans, endowment policies, and ULIPs. Reinsurance of these individual policies is also exempt.

2. Which health insurance policies are covered under the GST exemption?

Individual health insurance policies, including family floater and senior citizen plans, are exempt from GST. Reinsurance of such individual policies is also exempt under this decision.

3. Will passenger transportation services be taxed at 18 per cent?

No. Passenger transport by road will continue at 5% without ITC, though operators may opt for 18 per cent with ITC. In the case of air travel, economy class is taxed at 5 per cent, while other classes remain at 18 per cent.

4. What is the applicable GST rate on multimodal transport of goods?

If the multimodal transport does not include any air leg, it is taxed at 5 per cent with limited ITC (restricted to 5 per cent of the value). If any portion involves air transport, the applicable rate is 18 per cent with full ITC.

5. Who is liable to pay GST on local delivery services provided through an ECO?

If local delivery services are provided through an e-commerce operator (ECO) by an unregistered person, the e-commerce operator is responsible for paying GST. If the service provider is registered, then that provider is liable to pay the tax.

6. What is the GST rate applicable on local delivery services?

Local delivery services are taxed at 18 per cent.

7. Is it necessary to recall and re-label the MRP on medicines already in the supply chain before September 22, 2025? How will the re-labelling be carried out?

No recall of stock is required. Manufacturers only need to issue revised price lists and share them with dealers, retailers, and regulators. Stock already in the market can continue to be sold, provided billing reflects the new prices.

8. Why haven’t all medicines been fully exempted from GST?

Exempting medicines would prevent manufacturers from claiming ITC on raw materials and inputs, raising their production costs. These costs would eventually be passed on to consumers. Keeping medicines at a concessional 5 per cent rate (except those specified at nil rate) ensures affordability while allowing ITC to flow through the supply chain.

9. Why hasn’t GST been removed on raw cotton?

Cotton is taxed under reverse charge, so farmers do not pay GST directly. This system keeps the input tax credit chain intact for the textile industry, which helps keep costs stable and benefits consumers.

10. What is the tax treatment for leasing or renting services without an operator?

Majority of leasing or renting without operator is taxed at the same rate as the goods themselves. For example, if a car is taxed at 18 per cent, then renting or leasing that car without a driver is also taxed at 18 per cent. The same rule applies to other goods; the tax on renting matches the tax on buying.

11. Will the revised GST rates also apply to imported goods?

Yes. IGST on imports will be levied at the revised GST rates from 22nd September, except where a specific exemption has been provided.

12. UHT (Ultra High Temperature) milk has been exempted. Does this exemption also apply to plant-based milk?

No. The exemption is only for dairy UHT milk. Plant-based milk drinks (like almond milk) earlier attracted 18 per cent GST, and soya milk drinks 12 per cent. Now all plant-based milk drinks, including soya milk, will be taxed at 5%.

13. Why has GST on face powders and shampoos been reduced, and will this not also benefit MNCs and luxury brands?

Face powders and shampoos are common household items used across all sections of society. While premium or luxury brands will also see the benefit, the main purpose of the rate cut is to simplify the GST system. Having separate rates based on brand or price would make the tax structure complicated and difficult to administer.