By Marcus Leach

Days after the government rejected a third runway at Heathrow a group of MPs has said that the restriction of capacity at the airport is harming the UK's economy.

A report by the All Party Parliamentary Group on Aviation said efforts should be made 'to ensure the UK retains and grows hub capacity' at Heathrow or a new purpose-built hub airport.

Contrasting views have come from the government this week, with Chancellor George Osborne admitting the government understood there was a need for additional airport capacity, whilst Transport Secretary Justine Greening has said that the government remained against the idea of a third runway.

At present it is the coalition agreement that is preventing any developments at Heathrow before the next election.

"Over the next few months we will be talking to people about where that capacity should be," Mr Osborne said.

"I am very clear; we are an open trading nation and just as we don't want to shut down our ports or our railways, we don't want to shut down our airpsace."

Meanwhile the All Party Aviation Group has said the UK was being left behind on aviation capacity.

"In order to achieve the greatest possible economic and social contribution from aviation, we need two things from government: a forward-looking aviation policy that allows for aviation growth; and a new approach to the taxation of aviation," Labour MP, and All Party Aviation Group member, Brian Donohoe said.

"Combined, a new approach could not only energise the sector but also provide a firm foundation for the UK's economic recovery.

"In common with all other sectors, aviation must continue to address its carbon emissions and environmental impacts. It has already achieved significant improvements but can and must do more."

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