George Osborne is secretly pushing for a third runway at Heathrow airport in a dramatic move that threatens to break apart the coalition and overturn a Conservative manifesto promise.
To the anger of Liberal Democrats and environmental campaigners, the Chancellor has persuaded David Cameron to place expansion at Heathrow "back on the table", The Independent on Sunday has learnt, claiming it is essential to Britain's economic future.
The IoS understands that the Chancellor introduced Heathrow as an option for airport expansion at a cabinet meeting earlier this month, to the fury of Nick Clegg, the Deputy Prime Minister, and Justine Greening, the Transport Secretary and MP for nearby Putney, who in opposition campaigned against a third runway.
But, crucially, Mr Osborne refused to rule out Heathrow expansion because, allies say, it is key to Britain's "hub status" for flights between Asia and the Americas. While building would not take place until after the next election, a strategy review on aviation, coupled with a paper on "hub status", is due later this summer.
Secret plans being drawn up in Whitehall include the possibility of transforming the runway at RAF Northolt, a tiny airport six miles from Heathrow used by the Queen and military top brass, into an effective third runway, which would not involve the destruction of neighbouring villages.
An option to expand Gatwick airport would be less controversial but undermines the case for a global hub, which would be better positioned in west London, senior figures say. A third option, to build an entirely new airport in the Thames estuary, has been relegated because it would take too long to build. The attraction of rebuilding and extending the runway at Northolt, with a 20-minute rail link running from Heathrow, is that it could be completed within a few years and could be labelled part of Heathrow.
In a keynote speech on infrastructure last week, the Prime Minister said: "I am not blind to the need to increase airport capacity, particularly in the South-east. We need to retain our status as a key global hub for air travel, not just a feeder route to bigger airports elsewhere, in Frankfurt, Amsterdam or Dubai." But in private, Mr Cameron has gone further by allowing Heathrow to become a point of serious discussion.
Both Tory and Lib Dem 2010 manifestos promised there would be no third runway at Heathrow, while the coalition agreement commits both parties to "the cancellation of the third runway at Heathrow" and "the refusal of additional runways at Gatwick and Stansted".
Yet several factors have significantly changed the situation, say sources, including the risk that Britain is being left behind by European rivals competing for business from China and Brazil. For example, Frankfurt in Germany has four runways and Schiphol in Amsterdam has six. Key to the argument in favour of extra capacity in the South-east is the fact that flights from Chongqing, China's biggest city, do not go direct to any of London's four airports. Mr Osborne has privately admitted it was a "mistake" to rule out Heathrow expansion.
Whitehall figures believe there is environmental "cover" for Heathrow expansion after the EU imposed a cap on aviation emissions earlier this year, meaning that ministers could claim that any expansion would not be at the expense of limitless emissions.
In his Autumn Statement last November, the Chancellor said he would explore "all the options" for South-east airport expansion, with the exception of Heathrow. Yet in his Budget statement last week he made no mention of Heathrow.
Boris Johnson, in an interview yesterday, suggested he had changed his position supporting the Thames airport. He said: "Contrary to popular belief I am not the slightest bit wedded to some remote archipelago in the Thames estuary" – indicating he could support expansion at Heathrow or Gatwick. Tim Yeo, chairman of the Commons environmental audit committee, said recently it was "more practical to build a third runway".
But the senior Greenpeace campaigner Joss Garman said: "David Cameron and Nick Clegg both personally promised not to allow new runways at Heathrow, Gatwick or Stansted, and that promise was written in to the coalition agreement. Any U-turn on this would be a totemic betrayal and would signal two fingers to the millions of people living under flight paths and a thumbs up to a gigantic jump in carbon emissions. How could anybody trust them with any promise they make again?"
Zac Goldsmith, the Tory MP for Richmond Park and North Kingston, which is under the airport's flight path, and a leading environmentalist, said yesterday that any U-turn on expansion at Heathrow would be a betrayal and threatened to resign as an MP if it went ahead.
A Department for Transport spokesman said of the strategy paper and "hub status" review: "We remain committed to having a final policy in place by next spring at the latest, but we have taken the decision to wait until both documents are ready and intend to publish them in the summer."
Mr Osborne has ordered a major overhaul of the planning system, which will be published on Tuesday. Ministers will defy opposition from campaign groups including the National Trust by introducing a presumption in favour of sustainable development to the National Planning Policy Framework, clearing the way for major new developments.
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