The government will also review the so-called Green Book rules – guidance issued by the Treasury on how to appraise policies, programmes and projects – which it said have in the past biased infrastructure spending to already fast growing areas, mainly in the south.

The third runway at Heathrow has yet to receive planning permission and is likely to face fierce opposition from environmental campaigners, as well as some senior Labour figures such as London mayor Sir Sadiq Khan.

But Reeves said she wanted to see a full proposal for expanding the airport by the summer and was determined to see it built.

Sir Sadiq said he would study the proposals but added: “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.”

Heathrow chief executive Thomas Woldbye described the chancellor’s speech as “the bold, responsible vision the UK needs to thrive in the 21st century”.

Downing Street said a new runway at Heathrow was already part of the government’s “carbon budget assumptions”.

The PM’s official spokesman told reporters the aviation industry had made “great strides” to boost its green credentials including the use of sustainable fuel.

At prime minister’s questions, Kemi Badenoch took aim at the government’s Employment Rights Bill, which aims to strengthen workers’ rights.

The Conservatives claimed it would “hammer” businesses and destroy growth, and urged the PM to scrap the parts that will extend entitlement to statutory sick pay.

“Government itself, his government itself, estimates that these changes will increase business costs from £600m to £1bn in sick pay,” she told Sir Keir.

“That will mean higher prices, fewer jobs, less growth.”

The prime minister insisted the new laws would be “good for workers and good for growth” and accused the Tories of being “a coalition of blockers”.

Lib Dem leader Sir Ed Davey called on Sir Keir to drop his objections to a UK-EU customs union and other “growth damaging trade barriers” on an upcoming trip to Brussels.