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	England and Wales High Court (Administrative Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Administrative Court) Decisions >> London Borough of Wandsworth & Ors v Secretary of State for Transport & Ors [2005] EWHC 20 (Admin) (18 February 2005) URL: http://www.bailii.org/ew/cases/EWHC/Admin/2005/20.html Cite as: [2005] EWHC 20 (Admin)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		Friday, 18th February 2005

The following abbreviations are used in this judgement:

"ATMs" Air Traffic Movements

"BAA" BAA Plc, formerly the British Airports Authority

"CAA" Civil Aviation Authority

"DETR" Department of Environment, Transport, & the Regions

"DTLR" Department for Transport, Local Government and the Regions

"EIA" Environmental Impact Assessment

"ES" Environmental Statement

"Essex / Herts" The Claimants in CO/ 1339/2004

"Gatwick" Gatwick Airport

"HACAN" Heathrow Association for the Control of Aircraft Noise

"Heathrow" Heathrow Airport

"LADACAN" Luton and District Association for the Control of Aircraft Noise

"LDDs" Local Development Documents

"LLAOL" London Luton Airport Operations Limited

"Luton" Luton Airport

"mppa" Million passengers per annum

"ODPM" Office of the Deputy Prime Minister

"PPGI" Planning Policy Guidance Note 1: General Policy and Principles

"RSS" Regional Spatial Strategy

"RUCATSE" Runway Capacity to Serve the South East Working Group

"SASIG" The Strategic Aviation Special Interest Group of the Local Government Association

"SEAAF" The South East Airports Appraisal Framework

"SERAS" South East and East of England Regional Air Services Study

"SSE" Stop Stansted Expansion

"Stansted" Stansted Airport

"The first Consultation Document" The Future Development of Air Transport in the United Kingdom: South East Consultation Document, July 2002

"The first / second Questionnaire" The first / second edition of the "Future Development of Air Transport in the United Kingdom: South East Questionnaire"

"The London Boroughs" The Claimants in CO/1314/2004

"The Responses Report" A Report on Responses to the Government's Consultation: South East prepared by Avia Solutions December 2003

"The second Consultation Document" The Future Development of Air Transport in the United Kingdom: South East Consultation Document 2^nd Edition, February 2003

"The White Paper" The Future of Air Transport, December 2003

"The 1986 Act" The Airports Act 1986

"The 1990 Act" The Town and Country Planning Act 1990

"The 2002 Rules" The Town and Country Planning (Major Infrastructure Project Inquiries Procedure) (England) Rules 2002

"The 2004 Act" The Planning and Compulsory Purchase Act 2004

The Honourable Mr Justice Sullivan :

Introduction

1. The Claimants in these two applications for judicial review challenge the lawfulness of certain decisions contained in the White Paper "The Future of Air Transport" presented to Parliament by the Defendant in December 2003.
2. The London Boroughs seek a quashing order in respect of the whole of Chapter 11 of the White Paper which deals with airports policy in The South East of England. Essex / Herts seek a quashing order in respect of the following policies in Chapter 11:

(1) That additional air transport capacity in South East England will be provided by the construction of a "first new runway" at Stansted "to be delivered as soon as possible (around 2011 or 2012)" (para 11.11 of the White Paper);

(2) That "the new runway would be the wide-spaced runway option presented in the Consultation Document as shown on the map" on page 117 of the White Paper (final sentence, para 11.40 of the White Paper); and

(3) That additional airport capacity may be provided at London Luton Airport by extending the existing single runway along its current alignment in accordance with the second indicative map on page 130 of the White Paper (paras 11.87 – 11.92 of the White Paper).

3. For convenience I have called the Claimants in the first application "the London Boroughs". The two London Boroughs are members of SASIG. Heathrow is situated within the London Borough of Hillingdon. Anne Hardy lives in Richmond and is a member of HACAN Clear Skies, which represents the interests of residents under the Heathrow flight paths. Roger Wood lives near Luton and is a member of LADACAN. Norman Mead lives near Bishops Stortford and is Chairman of SSE, which co-ordinates the efforts of local communities to limit the expansion of Stansted.
4. The five local authority Claimants in the second application will all be affected directly or indirectly by the proposals for Stansted and Luton. Stansted is situated within Uttlesford District Council. The runway at Luton extends to the Herts border.
5. Although the Claim Forms contained a large number of grounds (12 in the first application, and 7 in the second) a number of these grounds were not pursued in the light of the evidence filed on behalf of the Defendant, and others were alternative formulations of the same underlying complaint.
6. In summary, the London Boroughs submitted that the Defendant acted unfairly in adopting in Chapter 11 of the White Paper policies which were not foreshadowed in the second Consultation Document. Essex / Herts submitted that the final sentence in paragraph 11.40 of the White Paper was unfairly prescriptive in the light of the consultation exercise. Both groups of Claimants submitted that there was no rational basis for the Defendant's conclusion that the construction of a first new runway at Stansted (to be followed by a new runway at Heathrow) would be commercially viable. Both groups of Claimants further submitted that since the Defendant did not consult upon LLAOL's proposal that the existing single runway at Luton should be extended, the White Paper could not fairly give that proposal any policy support.

Before considering these submissions in detail it is necessary to explain the background to the publication of the White Paper.

Background: National Planning Policy

7. The lengthy delays in reaching decisions on major infrastructure projects have long been recognised as one of the weaknesses of the planning system. This was one of the issues considered in the Ministerial Planning Statement "Modernising Planning" which was published by the DETR in January 1998. The Statement said:

"National projects, and certainly major infrastructure projects, are not generally covered by policies in development plans. In the absence of national policy statements on the benefits of, or the need for, such projects, the whole burden of debate tends to fall on local inquiries. This can make for an unduly lengthy process. There is, however, no obvious relationship between length and thoroughness of process. There can be no justification, in a modern planning system, for procedures which take many years to produce a decision."

8. In May 1999 the DETR published a consultation paper "Streamlining the Processing of Major Projects through the Planning System". This said in paragraphs 4 and 5:

"4. It takes far too long to process major projects through to a decision. The process is lengthy, unwieldy and expensive for all concerned. Delay is costly, leads to uncertainty and brings the planning system into disrepute. The fact that major projects are relatively infrequent does not detract from the need to improve the procedures for dealing with them.

5. The purpose of the proposals in this consultation paper is to achieve significant improvements in the time taken to handle major projects, whilst continuing to ensure that adequate opportunity is given for people to have a say, to test the evidence and to reach a sound decision. It also invites views on the potential for application of the proposals for improving public inquiry procedures to a wider range of projects."

9. Under the heading 'Deciding the Procedures' paragraph 12 said this:

" 'Modernising Planning' considered improvements in the handling of major national projects on three broad fronts;

(a) statements of national policies;

(b) greater use of Parliamentary processes; and

(c) improving public inquiry procedures."

In the event (b) was not pursued, and is not relevant for present purposes.

10. The Consultation Document said this about 'Statements of National Policies':

"16 It is proposed that national policy statements should be published before major projects are considered within the planning system. Such statements would cover policy areas which could embrace a range of individual projects. The focus would be on statements of policy relevant to projects not likely to be subject to Parliamentary processes but their preparation in relation to projects submitted to Parliament for approval is not ruled out.

17 The purpose of such statements (which might take the form of a White Paper, for example) would be to set a clear national policy framework for the considerations of specific projects and thereby avoid unnecessary speculation and debate at subsequent planning inquiries. National policy statements will address such issues as the need for and benefits of major projects, criteria for site selection, relationships with other policies etc. The existence of such statements will help the Inspector ensure that time is not wasted at inquiry going over issues which have been settled."

11. When dealing with 'Improving Public Inquiry Procedures' the Consultation paper stated in paragraphs 29 and 30 that terms of reference and timetables could be set for inquiries into major infrastructure projects.
12. Annex A explained 'The need for change' in these terms:

"1 Processing major projects through the planning system has become increasingly difficult. Current procedures do not adequately address the tension between the natural justice argument that the views of all concerned should be fully aired at an inquiry, and the argument that such an all-embracing process is slow and costly and damages the economy.

2 Major projects, excepting those involving minerals, or waste, are not generally the subject of specific proposals in development plans, even though there may be a number of policies relating to them. There are a number of reasons for this; for instance, it may be difficult to forecast the need for major projects within the timescale of a development plan or in terms of their limited geographical coverage. Thus major projects have not always been covered by development plans for reasons of timing. It is also argued increasingly that the planning system should be more responsive to high priority national needs. In the absence of specific national policy statements, therefore, there tends to be great pressure at public local inquiries to try to debate policy issues such as need. Such debates tend to make inquiries longer and longer.

3 In the last 15 years there have been less than 10 projects which were national in scale and where the inquiry has lasted more than three months. Examples of such projects which have lasted more than 180 sitting days are:

1981 – 83 Stansted (London Airport) Inquiry - 258

1983 – 85 Sizewell B Nuclear Power Station - 340

1988 – 89 Hinckley Point Nuclear Power Station – 182

1995 – 99 Heathrow Airport Terminal 5 - 524"

13. These proposals were repeated in the Green Paper "Planning: delivering a fundamental change", published by the DTLR in December 2001, and confirmed as policy in the statement "Sustainable Communities – delivering through planning", published by the ODPM in July 2002. They were also referred to in paragraphs 230 – 232 of the DETR's consultation document "The Future of Aviation" (December 2000):

"Handling of Major Projects

230. It takes far too long to process major projects through to a decision. The process is lengthy, unwieldy and expensive for all concerned. That is why the Government published a consultation paper in 1999 on streamlining the processing of major projects through the planning system in England. This was part of the modernising planning agenda. It focused on projects of national significance, such as new or expanded airports. The purpose was to cut unnecessary and costly delays in decision-making whilst continuing to ensure that people have an adequate opportunity to contribute their views.

231. One of the proposals in the consultation paper was that statements of national policy should be published before major projects were considered in the planning system. These would set a clear national policy framework for the consideration of specific projects and thereby avoid unnecessary speculation and debate at subsequent planning inquiries.

232. The air transport white paper could provide such a national policy statement for airport development. Consequently, subsequent revisions of RPG, or national planning policy guidelines in Scotland, and structure and unitary development plans in the relevant regions would need to reflect this."

The purpose of the White Paper is explained in Chapter 1, as follows:

"1.1 This White Paper sets out a strategic framework for the development of airport capacity in the United Kingdom over the next 30 years, against the background of wider developments in air transport.

1.4 It is for airport owners and operators to bring forward such proposals, which will need to be considered through the planning system in the normal way. This White Paper does not itself authorise (or preclude) any particular development, nor does it preclude any particular development, [sic] but sets out policies which will inform and guide the consideration of specific planning applications.

1.6 The Government therefore believes that a national strategy framework for the future development of airport capacity, looking forward over a thirty-year time horizon, is needed in order to:

Provide a clear policy framework against which airport operators, airlines, regional bodies and local authorities can plan ahead. The lack of such a framework has been a serious hindrance to the efficient development of airports in this country, resulting in over-lengthy planning inquiries and unnecessary delay;

Give a greater certainty wherever possible to those living close to airports and their flight paths. Again, the lack of a clear long-term strategy and the slow progress of decision-making has helped create unnecessary blight, uncertainty and distress for many people;

Take a view of the long-term demand for air travel and airport capacity, both for the country as a whole and across regions, and of the best long-term strategy to respond to that demand, rather than addressing each separate proposal in a piecemeal and uncoordinated fashion;

Set out a strategic and sustainable approach to balancing the economic benefits of air development, the social benefits of easier and more affordable air travel, and the environmental impacts that air travel generates; and

Ensure that airport development is properly linked in to our wider transport strategy and to our other transport networks."

14. Pausing there, whilst both groups of Claimants disagree with the content of the policies in the White Paper, they have no quarrel with the proposition that national policy guidance should be issued in respect of major projects such as airport developments, and that such statements of policy will inform, and should therefore serve to reduce the length of, planning inquiries into proposals for such development. However, they submit that if issues are to be regarded as 'settled' so that inquiry time is not to be 'wasted' by going over them, it is essential that the process whereby those issues are settled is both fair and proportionate to the level of detail that is 'settled' by the policy. Otherwise, they contend, there is a danger that the statutory procedures of environmental impact assessment followed by thorough examination of all material considerations at a public local inquiry will have been unfairly pre-empted by an inadequate decision making process for national policy. The concern of Essex / Herts is perhaps best expressed by Herts County Council in the Summary of its response to the second Consultation Document:

"2.24 In summary despite the laudable efforts of the Department for Transport there are severe weaknesses in the SERAS consultation. Those highlighted above relate particularly to Stansted and Luton but many will also apply to the other sites, including Gatwick.

2.25 The Government cannot determine which site to develop to any level based on flawed, or at least seriously questionable, information on that site and the alternatives. To do so would create insoluble problems for the planning system when at a Public Inquiry into the subsequent planning application the weaknesses would be exposed but the original decision would be irrevocable.

2.26 The development of the White Paper must follow due process if it is to be acceptable to the wider community. It is this County's view that the consultation process has not been adequate."

Airports Policy

15. Prior to the December 2003 White Paper the last complete statement of Government policy on airports was contained in the White Paper "Airports Policy" published on the 5^th June 1985. In 1990 the Government set up the Runway Capacity to Serve the South East (RUCATSE) Working Group. The report of the Working Group "Runway Capacity to Serve the South East" was published in July 1993 and was followed by a period of public consultation. However, in February 1995 the Government announced that BAA should not take forward the options presented by RUCATSE for runway development at Heathrow or Gatwick and asked BAA to do further work to establish whether there might be less environmentally damaging alternatives such as a close-parallel runway at Gatwick.
16. In May 1996 the Transport Select Committee of the House of Commons published a report on "UK Airport Capacity". The Committee recommended that, inter alia, the Government should produce a new White Paper setting out a framework for airports policy. Such a document would examine whether, and how, future demand for airport capacity should be met looking forward 30 years. The then Conservative Government broadly accepted that recommendation in its response of the 12^th July 1996, but noted that "there are very great uncertainties in attempting to look more than 20 – 25 years ahead".
17. In its White Paper "A New Deal for Transport: better for everyone" published on the 20^th July 1998, the new Labour Government announced its intention to prepare a statement on UK airports' policy looking 30 years ahead in accordance with the recommendations of the Select Committee. "This will develop the application to UK airports of the policies set out in this White Paper of sustainable development, integration with surface transport and contribution to regional growth". It also announced a series of studies of airports and air services in South West England, Scotland, Wales, Northern Ireland, the Midlands and the North of England.

SERAS

18. On the 11^th of March 1999 the then minister for transport (Dr John Reed) announced that the Government intended to commission a study of airports and air services in the South East and East of England (SERAS). This study would complement the 6 regional studies announced in the 1998 White Paper.
19. A wide range of options would be considered and their environmental, economic and social implications appraised. Ministers made it clear that the starting point of SERAS was that nothing was ruled in or out. It was intended that the study would take 2 years to complete and would be followed by public consultation. Ministers undertook to consult key stakeholders about the criteria to be used to assess options. It was envisaged that the results of the UK wide studies would be incorporated into a White Paper.
20. The Government consulted on draft terms of reference for SERAS in September 1999. More than a thousand copies of the draft terms were distributed to individuals and organisations. Around 250 commented on the draft. Also in September 1999 a consortium of consultants led by Baker Associates was commissioned to develop an airports appraisal framework as envisaged in the draft terms of reference. Scott Wilson Kirkpatrick were appointed in October 1999 to carry out a preliminary search of potential sites (both existing and new) for new airport capacity to serve the South and South East of England.
21. An external reference group embracing a wide range of interested organisations was set up to validate the study process. The group met for the first time in November 1999. It commented upon the draft terms of reference for SERAS, and the terms of reference were published in their final form in February 2000. In addition to the terms of reference, a draft appraisal framework for airports in the South East and Eastern Regions of England (SEAAF) was published for consultation.
22. Following consultation, the final version of SEAAF was published in November 2000. It explained that the overall decision making process would involve a number of stages; sift 0, a preliminary site search; sift 1, identifying one or two preferred options at each site; sift 2, intermediate appraisal of packages of site specific options to provide a given level of capacity as well as packages offering different levels of capacity; and sift 3, detailed appraisal of a shorter list of preferred packages (including no development beyond that already envisaged in the land use planning system).
23. Paragraph 5.9 stated that:

"whilst key components of the overall decision process, sifts 0 and 1 are effectively precursors to the main appraisal study which encompasses sifts 2 and 3. The approach to sifting therefore differs at the early stages."

24. Paragraph 5.16 said:

"the progression towards the small number of packages of schemes from which Ministers would make their choice has to withstand scrutiny. The performance of each package in terms of indicators needs to be exposed and clearly presented. Ministers following public consultation will take final decisions based on the factual appraisal and views expressed by interested parties. Response to the consultation will be particularly relevant in helping Ministers come to a view on what weight they should attach to conflicting considerations and how to balance those. The weight Ministers put on each indicator will be evident when their final choice is made."

25. Earlier in the document paragraph 5.4 had explained:

"the framework provides information about options, not the answers. A degree of judgement and consultation will be required in making decisions based on the framework. Weights used in assessing trade-offs between objectives should not be predetermined. The framework does not make judgements on the relative value to be put forward on different objectives and does not provide a mechanistic way of reaching decisions."

26. Paragraph 5.7 stated that the assessment of a scheme based on the relevant indicators (which were set out in a table) should be summarised in an appraisal summary table (AST). The AST would be "an aid to decision makers, setting out all the significant consequences of a policy option concisely so as to provide decision takers with a clear and reliable basis for their decisions. Any weights used in comparing the assessments against the various indicators rest with the decision taker".
27. The key element of SERAS Stage 0 was the preliminary site search conducted by Scott Wilson Kirkpatrick. From an initial list of around 400 sites, some 30 potential sites were identified and appraised against a range of criteria. The best performers were short-listed and appraised further. To cut a long story short, in July 2000 it was decided that Cliffe was the most promising option for a major new passenger airport, to set alongside the options for expansion at the existing airports.
28. SERAS Stage 1 started in June 2000. The principal focus of this stage was to develop and appraise options for capacity enhancement at individual existing airports and at the new sites. Eventually more than 60 options were appraised at Heathrow, Gatwick, Stansted, Luton and Cliffe. At this stage each airport was considered in isolation. No attempt was made to consider how options at different airports might interact with each other or to make comparisons between different airports.
29. In August 2000 Ministers decided the arrangements for making public the detail of options considered in the study. They decided to consult only on the final short-list of options arising from the study and not to consult upon the very many options which would be considered at the intermediate stages. They did so, principally, because they recognised that releasing site specific information at intermediate stages would result in unnecessary and lengthy anxiety and controversy, not least because there would be relatively little hard information available at that stage to judge the relative merits of options until the more detailed appraisal in the later stages of the study had been completed. Thus earlier consultation would have had the potential to result in very extensive blight.
30. Stage 1 of SERAS took longer than expected to allow a wider consideration of individual development options than had originally been envisaged. This also allowed time to develop more complex modelling tools for use in Stage 2. As a result of the longer programme, in March 2001 Ministers agreed to a revised study timetable that included combining stages 2 and 3 into a revised Stage 2. Since it had been decided that there would be no public consultation until the later stages of the study had been completed, this decision, and other decisions made prior to the publication of the first Consultation Document in July 2002, were not made public.
31. In his first Witness Statement, dated 17^th September 2004, Mr Fawcett (who was head of the airports policy division within the DfT from September 1996 until January 2004, during which time he was responsible for providing advice to Ministers on Government policy with regard to the development of airports in the United Kingdom) explained that decisions based on the findings of Stage 1 were taken by Ministers in July 2001. Ministers were invited to select the most promising development options at each airport or new site to take forward for more detailed appraisal in Stage 2 of the study. Ministers were also invited to agree how the options at the major locations might be grouped into packages or combinations of development at one or more airports providing different amounts of total capacity by 2030 for further appraisal. Mr Fawcett said that when reaching their decisions Ministers had been advised of the "broad nature of the assessments in Stage 1 and in particular, the lack of detailed information about noise and air quality impacts". Ministers agreed that 22 packages of airport development should be studied in Stage 2.
32. In November 2001 the DfT's consultants, Halcrow, reported the findings of the Stage Two studies in the "Stage Two Appraisal Findings Report". The Report contains over 500 pages of text and tables and 280 separate figures.
33. Following the end of Stage Two, the DfT's SERAS consultants were commissioned to undertake a number of sensitivity tests (taking account of alternative assumptions) and to consider some refinements of options and packages appraised in Stage Two. One refinement was the development of an alternative (wide-spaced) single new runway option at Gatwick. The results of this work were set out in a supplementary report referred to as the Stage Three Report.
34. The Stage Two and Stage Three Reports were considered by Government between December 2001 and June 2002. The Government examined the benefits and disadvantages of each of the options and packages as described in the Stage Two and Stage Three Reports. Mr Fawcett explained that in the process of selecting the final short-list two general considerations had to be balanced against each other. Firstly, it was considered desirable to offer in the consultation a range of options in respect of both the total amount of runway capacity and the location of that capacity; and secondly it was also considered desirable to focus the consultation on a limited number of options so as to keep to a minimum the number of locations at which people would suffer uncertainty and anxiety in the period between the publication of the Consultation Document and the publication of the White Paper.

The first Consultation Document

35. The first Consultation Document was published on the 23^rd July 2002. It was accompanied by a summary document and a questionnaire designed by NOP. Alongside the publication of these documents, the department published 65 technical reports which had been produced as part of the SERAS study or which had otherwise informed the decision making process for the consultation. These documents were listed in Annex C to the first Consultation Document.
36. The first Consultation Document was challenged in judicial review proceedings upon the basis that it did not include any option for new runway capacity at Gatwick. SERAS had not excluded Gatwick options, and had indeed considered options for extra runway capacity there. Until publication of the first Consultation Document there had been no indication from the DfT that further consideration of Gatwick options was to be excluded.
37. On the 26^th of November 2002 in R (on the application of Medway Council, Kent County Council, Essex County Council and Mead and Fossett) v. Secretary of State for Transport [2002] EWHC (Admin) 2516, [2003] JPL 583 ("the Medway Case"), Maurice Kay J as he then was, allowed the applications upon the basis that the decision to exclude Gatwick options from the consultation process was irrational and / or unfair. The Secretary of State did not appeal against that judgement, but made a statement in Parliament on the 28^th November 2002 that the Government would publish a further consultation paper that would include options in relation to Gatwick.

The second Consultation Document

38. The second Consultation Document was published on the 27^th February 2003, and the closing date of the consultation exercise was extended from 30^th November 2002 to 30^th June 2003. The DfT distributed over 125,000 copies of the South East Consultation Document and 190,000 South East summary documents during the consultation period. A second edition of the NOP Questionnaire was also distributed. The DfT received over 500,000 responses to the consultation exercise: some were detailed submissions, there were many thousands of individual letters, and over 66,000 completed NOP questionnaires were received by the Department.
39. In the Introduction to the Second Edition the DfT referred to the publication of the first Consultation Document and to the High Court's decision in November 2002. The Introduction stated that the structure and most of the content of the second Consultation Document were essentially the same as the first Consultation Document. The main difference was the inclusion of the options for new runways at Gatwick. The Introduction said:

"We have taken the opportunity of a second edition to correct some small typographical errors. Where it has become evident that clarification would be helpful we have expanded the earlier text. Finally, where things said in the July 2002 text have been overtaken by events since then, we have mentioned this in a footnote".

40. The new text was helpfully identified by magenta type. The final paragraph of the Introduction stated:

"This is an open consultation. No decisions have been taken. Anyone in the country can express their views on the options put forward in the Consultation Documents, but it is also open to anyone to submit alternative ideas; several new proposals have already been put forward. We will consider all consultation responses".

Save where it is necessary to distinguish between the two editions I will simply refer to the "Consultation Document".

41. Chapter 1 provides an executive summary of the Consultation Document. The introduction is as follows:

"This Chapter summarises the Government's objectives for its consultation on new airport capacity for the next 30 years. The Government welcomes your views on three key questions: how much demand for air travel should be met, where to locate any new airport capacity, and how to manage the environmental impacts of any airport growth. The chapter goes on to outline how the document has been structured to help address these key issues. The questions we would like consultees to answer are set out in Annex A."

Under the heading 'A Sustainable Airports Policy' paragraphs 1.1 – 1.5 said:

"1.1 The Government is committed to ensuring that the long-term development of aviation is sustainable. This will mean striking a balance between the social and economic benefits of air travel and the environmental effects of any development. The Government believes that, in principle, its policy for airports in the South East should aim both to maximise the significant social and economic benefits that growth in aviation would bring whilst trying to minimise the environmental impacts. However, the Government wants to consider the responses to this consultation before coming to a view on how to strike the right balance.

1.2 The purpose of this consultation is to set out our appraisal of both the benefits and the disbenefits of the options for additional airport capacity, and to seek views on those options in the light of this information. Your responses will help the Government decide how much weight to give to the various factors that will determine the final decision on airport capacity.

1.3 In the South East consultation, we are seeking your views on the following three questions:

should new airport capacity be provided in the South East over the next 30 years and, if so, how much? A particular issue is whether there is a case for having at least one major hub airport.

where should any additional runway capacity be provided? A particular issue is whether or not Heathrow should be developed further.

what controls, mitigation measures and compensation should be put in place to limit and manage the adverse impacts of any additional airport development on people and on the natural and built environment?

1.4 We have not taken any decisions on the solutions to these issues. This consultation invites you to comment on the arguments for and against providing different amounts of new airport capacity at different locations. Your comments will be used to help the Government take decisions in the White Paper.

1.5 The Government wishes to set out in the White Paper its policy about where it would be willing to contemplate new airport / runway provision over the next 30 years. Implementation will be a matter for private sector investment and will remain subject to the land use planning system."

The twenty-one questions in Annex A were grouped in three sections: how much capacity should be provided; where to provide any new airport capacity; and managing the impacts of airport growth.

42. Annex B described SERAS. Under the heading 'The Appraisal Framework' it said:

"The approach to airport appraisal follows that in the then DTLR's Guidance on Methodology for Multi-Modal Studies which sets out the Government's five objectives for transport investment – safety, economy, environment, accessibility and integration. A further consideration is commercial viability, which is a hurdle that must be passed for airport developments on both existing and new sites. A policy that relied on options that could not be funded by the private sector for the bulk of a major airport investment would not have been a useful outcome.

The appraisal framework enables decisions to be made on the basis of trade-offs between indicators for each of these considerations. The framework does not make judgements on the relative value to be put on different considerations and does not provide a mechanistic way of reaching decisions. The weight Ministers put on each consideration will be made clear in the decisions set out in the air transport White Paper." (p163 – 164)

43. Annex C listed the many documents comprising SERAS and other useful supporting documents. In the main body of the Consultation Document a separate chapter was devoted to each of the airports: Heathrow, Gatwick, Stansted, Luton and Cliffe. Chapter 14 described the various combinations of airport options. Table 14.3 listed 25 possible combinations, giving the capacity of, and anticipated traffic at, each of the options in 2030. In order to avoid repetition I will deal with those passages in the second Consultation Document which specifically refer to Stansted, Heathrow and Luton when considering the Claimants' cases in respect of those airports.
44. The White Paper was presented to Parliament by the Defendant in December 2003. Paragraph 1.8 said:

"In preparing this White Paper the Government undertook an extensive consultation exercise involving people and organisations with an interest around the country. The results of that consultation have closely informed our conclusions".

The consultation process was summarised in a text box on page 18 of the White Paper.

45. I have described the SERAS study and the consultation process in some detail because, in considering the force of the Claimants' criticisms of the policies in Chapter 11 of the White Paper, it is important to appreciate that the White Paper and the Consultation Document are but the tip of a very large iceberg. To the best of my knowledge, the scale of SERAS and the extent of the consultation exercise are unprecedented in the planning field. Those who criticise the outcome must acknowledge that, in terms of process, this was a serious attempt to grapple with the immensely difficult problem of devising an airports policy for the South East of England.
46. Paragraph 19.3 of the Consultation Document rightly said that:

"A clear statement of policy in the White Paper will be an essential component of the subsequent authorisation process, whatever form that may take under revised planning procedures."

The Statutory Framework

47. It is helpful to outline the role of Government policies, such as those contained in the White Paper, in the development control process. The starting point is section 70(2) of the 1990 Act. When dealing with a planning application, the decision taker (whether the Secretary of State or a local planning authority)

"shall have regard to the provisions of the development plan so far as material to the application and to any other material considerations".

48. Other material considerations include statements of Government policy: see paragraph 52 of PPG1. The role of the development plan in decision making was enhanced by section 54A (added by the Planning and Compensation Act 1991):

"Where, in making any determination under the Planning Acts, regard is to be had to the development plan, the determination shall be made in accordance with the plan unless material considerations indicate otherwise"

49. What constitutes the development plan for an area has been changed by the 2004 Act. Under the previous system, in non-metropolitan areas the development plan usually comprised the Structure Plan prepared by the County Council and the Local Plan prepared by the District Council. In some areas there is a Unitary Development Plan. Authorities preparing Structure Plans were required in formulating their general policies to have regard to various matters including:

"(a) any regional or strategic planning guidance given by the Secretary of State to assist them in the preparation of the plan; and

(b) current national policies" (see s31(6) of the 1990 Act).

The Local Plan had to be "in general conformity" with the structure plan (s 36(4) of the 1990 Act).

50. Under the 2004 Act the development plan outside Greater London is the RSS for the region in which the area is situated and the development plan documents (LDDs) taken as a whole which have been adopted or approved in relation to that area. The 2004 Act prescribes the matters to which regional planning bodies and local planning authorities are required to have regard in preparing RSSs and LDDs respectively.
51. Section 1 (2) of the 2004 Act states that "the RSS must set out the Secretary of State's policies (however expressed) in relation to the development and use of land in the region". Section 19(2) states that "in preparing a local development document the local planning authority must have regard to (a) national planning policies…(b) the RSS for the region in which the area of the authority is situated…". Section 24(1) requires that "the local development documents must be in general conformity with the RSS".
52. The significance of the development plan in the development control process is maintained by Section 38(6) of the 2004 Act, which replaces s54A of the 1990 Act (now repealed), and which states that:

"If regard is to be had to the development plan for the purpose of any determination to be made under the planning acts, the determination must be made in accordance with the plan unless material considerations indicate otherwise".

53. It will be seen that one of the effects of these amendments will be to give added formal status to statements of Government policy, such as the White Paper. They will cease to be one of the "other material considerations" to which regard must be had in development control decisions or in the formulation of development plan policy, and will instead be incorporated into the RSS (with which the LDDs must be in general conformity) which will itself be part of the development plan, and will thus be given added weight in the determination of any planning application by virtue of section 38(6).
54. The 2002 Rules which came into force on the 7^th June 2002 prescribe the procedure for public local inquiries relating to major infrastructure projects, such as airport developments. They amend the "normal" procedure rules (which are contained in the Town and Country Planning (Inquiries Procedure) (England) Rules 2000) to take account of the particular characteristics of inquiries into such projects. For example, rule 8(1) provides that the Inspector must propose a timetable for the proceedings at such an inquiry at the pre-inquiry meeting. That timetable must be approved by the Secretary of State and may not be varied by the Inspector without the Secretary of State's approval (rule 8(2)). In addition to the normal power to refuse to permit irrelevant or repetitious cross-examination, rule 17(7) provides that "the Inspector may refuse to permit the cross-examination of persons giving evidence or may require such cross-examination to cease, if it appears to him that permitting such cross-examination or allowing it to continue (as the case may be) would have the effect that the timetable referred to in rule 8(2) could not be met".
55. DTLR Circular 02/02 explains the new procedures. Paragraph 2 of the Circular states that the new procedures were "part of the package of measures announced by the Secretary of State on 20^th July 2001 to streamline the processing of major infrastructure projects through the planning system".

"3. In summary the package comprised:

Up to date statements of Government policy before major infrastructure projects are considered in the planning system to help reduce inquiry time spent on debating the policy

An improved regional framework which will assist consideration of individual projects, for example through the revised arrangements for regional planning guidance…

Improved inquiry procedures for major infrastructure projects;…

4. The purpose of the new inquiry procedures is to achieve significant improvements in the time taken to handle major infrastructure projects by streamlining the process and reducing unnecessary delays whilst continuing to ensure adequate opportunity is given for people to have a say, to test the evidence and to make a sound decision".

56. The role of Government policy statements in this new statutory framework was explained by Mr Ash, the Deputy Director and Chief Planner in the Town and Country Planning Directorate in the ODPM, in a witness statement dated 16^th September 2004, served on behalf of the Defendant.

"It is important to recognise that statements of policy (whether at national or regional levels) cannot pre-empt a decision on an application for planning permission. The purpose of the Government's reforms to the system has been to provide a clear policy framework within which decisions can be taken as expeditiously as possible. Every future decision maker's consideration of matters raised by the White Paper will, of course, have to be on a basis which is compatible with the statutory framework.

The Government's view is that where need is established by a national policy statement, a planning inspector at a planning inquiry should not have to consider whether a need for the development exists but should consider whether the need identified is outweighed by other relevant factors. The establishment of need for a type of development in a policy statement does not mean that an inspector, and ultimately the decision-maker, will be precluded from considering the need for the proposed development, but this will be done in the context of what is said about need in the national policy statement. Persons interested in the application will have the opportunity to make representations as part of the inquiry process. It will be up to those that are opposed to a development to present their arguments against a specific development and it is right that they should have the opportunity to do so."

Justiciability

57. In the Medway case it was submitted on behalf of the Defendant that the challenge to the first Consultation Document raised "matters of such high policy" that they were "challengeable only on the basis of bad faith". That submission was rejected by Maurice Kay J, who concluded (para 18) that the decision not to include Gatwick options in the first Consultation Document was "reviewable on traditional judicial review grounds" although he accepted that they had to be approached with "particular care".
58. In his Summary Grounds of Defence it was submitted on behalf of the Defendant that the White Paper was not amenable to judicial review: the Defendant was answerable to Parliament for the policies in the White Paper, but not to the Court. This position was not maintained in the Defendant's Detailed Grounds. It was no longer contended that the White Paper was not in principle amenable to judicial review, rather it was submitted that there was a spectrum of decisions, ranging from answers to questions of primary fact, where the Court would be as well equipped to answer the question as the decision-taker, to questions of political and economic judgement, where the Court's approach to judicial review would acknowledge that it was singularly ill-equipped to answer such questions: see R (Javed) v. Secretary of State for the Home Department [2001] EWCA Civ 789, [2002] QB 129, paragraphs 47 – 50. Where a decision is based upon the evaluation of political or economic considerations there will be a heavy evidential onus upon a claimant for judicial review to establish that such a decision is irrational, absent bad faith or "manifest absurdity". It was submitted on behalf of the Defendant that the policy decisions in the White Paper were very much at the latter end of the spectrum.
59. Subject to their submissions as to the fairness of the process, the Claimants did not dissent from the generality of this proposition and accepted that certain policy decisions in the White Paper, for example the decision that the first priority was to make the best possible use of existing runways, fell at the latter end of the spectrum. However, they submitted that within the White Paper itself there was a spectrum of decisions ranging from the broad proposition in paragraph 2.18 that "A balanced and measured approach to the future of air transport is needed", which could not sensibly be challenged, to the particular, that the new runway at Stansted "would be the wide-spaced runway option presented in the consultation document", which was challenged as being unduly prescriptive (see "Stansted" below).
60. The existence of such a spectrum in the context of public inquiries into proposals to build new motorways was recognised in the speech of Lord Diplock in Bushell v. Secretary of State for the Environment [1981] AC 75, at page 98B-H:

" "Policy" as descriptive of departmental decisions to pursue a particular course of conduct is a protean word and much confusion in the instant case has, in my view, been caused by a failure to define the sense in which it can properly be used to describe a topic which is unsuitable to be the subject of an investigation as to its merits at an inquiry at which only persons with local interests affected by the scheme are entitled to be represented. A decision to construct a nationwide network of motorways is clearly one of government policy in the widest sense of the term. Any proposal to alter it is appropriate to be the subject of debate in Parliament, not of separate investigations in each of scores of local inquiries before individual inspectors up and down the country upon whatever material happens to be presented to them at the particular inquiry over which they preside. So much the respondents readily concede.

At the other extreme the selection of the exact line to be followed through a particular locality by a motorway designed to carry traffic between the destinations that it is intended to serve would not be described as involving government policy in the ordinary sense of that term. It affects particular local interests only and normally does not affect the interests of any wider section of the public, unless a suggested variation of the line would involve exorbitant expenditure of money raised by taxation. It is an appropriate subject for full investigation at a local inquiry and is one on which the inspector by whom the investigation is to be conducted can form a judgment on which to base a recommendation which deserves to carry weight with the minister in reaching a final decision as to the line the motorway should follow.

Between the black and white of these two extremes, however, there is what my noble and learned friend, Lord Lane, in the course of the hearing described as a "grey area." "

Against this background I turn to the grounds on which the Claimants challenged the policies in Chapter 11 of the White Paper.

Heathrow

61. Heathrow needs no introduction. As the White Paper said in paragraph 11.47:

"the South East consultation document recognised the central role that Heathrow has played in the United Kingdom's aviation industry for several decades. For many people around the world Heathrow is London airport, a long established and widely recognised global brand".

Its history of seemingly inexorable, incremental growth was summarised in Chapter Two of the Report of Mr Roy Vandermeer QC, the Inspector appointed on 29^th March 1994 to hold an inquiry into proposals for a fifth terminal at the airport. Mr Vandermeer reported to the Secretary of State for the Environment, Transport and the Regions on 21^st November 2000. It is clear that the difficulties he faced in the absence of any clear statement of Government policy relating to airport development in the South East were a powerful spur to the preparation of the White Paper.

62. In a White Paper issued in 1978 before the start of an inquiry into BAA's proposal for a fourth terminal at the airport, it had been stated that Heathrow's ultimate development would be limited to not more than four terminals. The Inspector at that inquiry, Mr (later Sir) Iain Glidewell commented in paragraph 4.1.17 of his report:

"I regard the clear statement of Government policy in the White Paper that there will not be a terminal five as being as categorical a statement of Government policy as one is ever likely to come across. But I also take the view that no Government can ever say that it, or some successive Government, will not adopt a different policy at some unknown period in the future. Therefore my tentative approach is that this is a commitment that is put so categorically that there would have to be very strong, compelling reasons for any later Government to adopt a different policy. But one must have at the back of one's mind that there is such possibility, however remote."

Planning permission was granted for the fourth terminal on the 17^th December 1979. On the same day in the House of Commons the Secretary of State for Trade, when announcing that decision stated unequivocally that a fifth terminal should not be provided.

63. As time moved on, so the ATMs at Heathrow continued to grow: from about 221,000 in 1982 to approximately 419,000 by the time Mr Vandermeer started his inquiry. When describing the current situation paragraph 7.1 of the Consultation Document said:

"In 2000 Heathrow handled around 64 million passengers and 460,000 ATMs."

Mr Vandermeer was satisfied that the history of developments at Heathrow explained in part the extent of the concern of those who opposed the proposals for the fifth terminal. Having noted that "there was considerable mistrust of Government", he added that:

"it is important for the foreseeable future there a clear policy and that the public should have confidence in it. I am comforted to know that subsequent to the receipt and consideration of my report, the Government will be producing an airports' policy for the next 30 years".

64. Planning permission was granted for the fifth terminal in November 2001. Paragraph 7.2 of the Consultation Document explains that the permission was subject to:

"several important conditions including an annual limit of 480,000 on the number of flights at Heathrow from the opening of the new terminal and a restriction of the area enclosed by the 57 decibel noise contour to 145 square kilometres as from 2016".

65. The White Paper's proposals for Heathrow must be considered against the Government's "main conclusions" in Chapter 11 which were as follows:

"11.6 Our first priority is to make the best possible use of the existing runways at the major South East airports.

11.7 Making best use of existing runways in the South East will provide some much needed additional capacity. But on its own it would fall a long way short of providing a lasting solution. Facilitating the growth of airports in other regions will also reduce the pressure on the major South East airports, but this will not substantially reduce the long-term pressure on London airports.

11.8 Having considered all the information before us, we believe, on balance, that two new runways will be needed in the South East over the next three decades. It is clear that a first new runway is needed as soon as possible, although it would take up to a decade to put in place. Beyond that there are large uncertainties, which increase the further ahead we look, for the reasons set out in Chapter 2. But we believe that work has to start now on planning for a second new runway to be built probably around 2015 – 2020.

11.9 Each of the potential locations for additional runways identified in our consultation has significant environmental, practical and other constraints. We also recognise that, wherever we identify a need for another runway, this will cause concern, even if it might be fifteen to twenty years or more before such a runway is built.

11.10 Taking all these factors into account, including the longer-term uncertainties, we propose to take a balanced and measured approach, based on the principles set out in Chapter 2 and Chapter 3. We therefore intend to identify now where we believe the first new runway should be located, and to start to plan for a second new runway, including safeguarding the necessary land.

11.11 In summary, our principal conclusions about new runway capacity in the South East are:

(1) we support making best use of the existing runway at Stansted and development to its full use of a single runway at Luton;

(2) we support the provision of two new runways in the South East in the thirty year period to 2030;

(3) we do not believe that there is a strong case for attempting to create a second hub airport in the South East;

(4) we support development as soon as possible (we expect around 2011 / 2012) of a wide-spaced second runway at Stansted, with strict environmental controls, as the first new runway to be built in the South East;

(5) we support development at Heathrow provided that stringent environmental limits can be met, including a new runway as soon as possible after the new runway at Stansted (our assessment is that there is a substantially better chance that the limits could be met in the 2015 – 2020 period);

(6) we propose an urgent programme of work and consultation to find solutions to the key environmental issues at Heathrow and to consider how we can make best use of the existing airport;

(7) we have concluded that we should not take action to overturn the 1979 planning agreement that prevented construction of a second runway at Gatwick before 2019;

(8) we believe that there is a strong case on its merits for a wide-spaced second runway at Gatwick after 2019 and that land should be safeguarded for such a runway, in case it becomes clear in due course that the condition that we wish to attach to our support for the construction of a third Heathrow runway cannot be met;

(9) the policies set out above provide for the two new runways which are needed; we do not, therefore, support development of two or three additional runways at Stansted, or development of two new runways at Gatwick;

(10) we do not support the option of a new airport at Cliffe, or any of the proposals for alternative locations put forward during the consultation

(11) we support, in principle, development of smaller airports in the South East to meet local demand subject to relevant environmental considerations; and

(12) we do not support development of Alconbury for passenger or freight services, but we recognise the potential for relocation there of aircraft maintenance operations from Cambridge Airport."

[I have numbered the bullet points in paragraph 11.11 for ease of reference]

66. When discussing Heathrow, the White Paper noted that "the demand for Heathrow is extremely strong (11.48)", and that "additional capacity at Heathrow would generate the largest direct net economic benefits of any new runway option" (11.50).
67. Paragraph 11.51 stated:

"The Government believes there is a strong case for seeking to secure the large economic benefits achievable through the addition of a third runway at Heathrow. At the same time, however, we recognise that these strong economic arguments must be weighed against the serious environmental disadvantages of Heathrow."

The "serious environmental disadvantages" were then discussed in paragraphs 11.52 – 11.60. Paragraph 11.54 noted that the most serious issue confronting the expansion of Heathrow was compliance with the mandatory EU limits for air quality that will apply from 2010. Paragraph 11.57 stated that the Government's overall assessment was that within the 2015 – 2020 timescale there would be a substantially better prospect of avoiding excedences of the mandatory air quality limit values.

68. Against this background, the Government's policies for Heathrow were set out in more detail in paragraphs 11.61 – 11.67, as follows:

"11.61 The Government recognises the economic strength of Heathrow and the direct and wider benefits to the national economy that will be lost if additional capacity cannot be provided there for many years, or at all. At the same time, on the basis of the evidence available, we cannot be confident that air quality limits at Heathrow with the addition of a third runway will be met, even with aggressive mitigation measures.

11.62 The Government supports a third runway, which would bring substantial benefits for this country, at Heathrow, once we can be confident that the key condition relating to compliance with air quality limits can be met. We judge that there is a substantially better prospect of achieving this with a third runway and terminal capacity built in the 2015 – 2020 period, as long as we take action without delay to tackle the NO₂ problem. The Government's support would also be conditional on measures to prevent deterioration of the noise climate and improve public transport access as set out above.

11.63 We will therefore institute immediately, with the airport operator and relevant bodies and agencies, a programme of action to consider how these conditions can be met in such a way as to make the most of Heathrow's two existing runways and to enable the addition of a third runway as soon as practicable after a new runway at Stansted.

11.64 Compliance with air quality limits for NO₂ will require a concerted effort by the airport operator and the aviation industry to identify ways of reducing emissions from aircraft, from other airport activity, and from airport-related road traffic. They will need to take account of the scope to increase the use of public transport and manage the demand for road access. The Government will examine the contribution from vehicular traffic on the surrounding road network.

11.65 The airport operator argued in its consultation response that the full potential of a third runway could not be realised without a sixth terminal to the north of the A4. They suggested four possible options for new facilities. In all cases more land would be needed than allowed for in the consultation option, which assumed that terminal capacity would be provided within the airport boundary. In principle, we recognise the force of these arguments and suggest that the operator should carry out further work on proposals for terminal capacity an appraisal of the impacts, on the basis of which a further consultation would be required.

11.66 Our current assessment is that a new runway at Heathrow could not come into operation before some time in the period 2015 – 2020. It is important, therefore, to consider the scope for greater utilisation of the two existing runways. For example, mixed mode operation in peak hours might be introduced, while retaining runway alternation for the rest of the time. The impacts and benefits of any such proposal would have to be studied in detail, and there would need to be a full public consultation. We expect the airport operator, working with the Civil Aviation Authority, National Air Traffic Services and the Government, to develop proposals to form the basis of such a consultation. The proposals will need to take account of air quality and noise implications, including review of existing procedures such as westerly preference and the 'Cranford Agreement', as previously indicated in the decision on the Heathrow Fifth Terminal.

11.67 We look to the airport operator to take steps to safeguard the land needed for the option for a third runway at Heathrow. We welcome the amendments suggested by the operator to the layout for a third runway that would reduce impacts on Harmondsworth. The map below reproduces that shown in the consultation document, but has been revised to take account of those proposals by the airport operator."

69. Although the London Boroughs profoundly disagree with these policies they accept that in these proceedings the Court is not concerned with the merits of the policies set out in the White Paper. Their central complaint was encapsulated in paragraph 1.2 of their skeleton argument:

"The publication of the White Paper in December 2003 revealed that key parameters on which the consultation exercise had proceeded no longer applied and that instead a strategy was being promulgated to respond to a fundamentally new landscape. The solutions arrived at in the White Paper had, in a number of crucial respects, not been foreshadowed in the consultation exercise. By the time of the publication of the White Paper the responses of those who answered the questions asked of consultees were no longer addressing the material issues which were now driving the decision-making process."

The London Boroughs contend that because the 'landscape' fundamentally changed between the second Consultation Document and the White Paper, fairness required there to be a further round of consultation. There is no dispute between the London Boroughs and the Defendant as to the relevant legal principles. Having embarked on a substantial non-statutory consultation process, the Defendant accepts the proposition that the fairness of that process is amenable to judicial review. The Defendant further accepts that if there had been a fundamental change in the "landscape" and therefore a fundamental difference between that which the Defendant consulted upon in the Second Consultation Document and the conclusions and policies set out in Chapter 11 of the White Paper fairness would have required the Defendant to carry out further public consultation before resolving upon those conclusions and policies: see R (on the application of Carton and Larad) v. Coventry County Council [2001] 4 CCLR 41 per Sir Richard Tucker (sitting as a Deputy High Court Judge) at 44E.

70. The relevant authorities on the need for re-consultation were helpfully considered by Silber J in Smith v. East Kent Hospital NHS Trust & another [2002] EWHC 2640 (Admin), [2003] 6 CCLR 251. It is clear from those authorities that what fairness requires in any particular case is bound to be a matter of degree. As Silber J said in paragraph 43:

"clearly if all the fundamental aspects of the decision under challenge had not been consulted on but ought to have been, that would indicate a breach of the duty to consult. While at the other extreme, trivial changes do not require further consideration. In approaching this issue, it is necessary to bear to mind not only the strong obligation of the Defendants to consult, but also the dangers and consequences of too readily requiring reconsultation, as those dangers also flow from the underlying concept of fairness, which underpins the duty to consult."

71. In paragraph 45 he said:

"the concept of fairness should determine whether there is a need to re-consult if the decision-maker wishes to accept a fresh proposal, but the Court should not be too liberal in the use of its power of judicial review to compel further consultation on any change. In determining whether there should be further reconsultation a proper balance has to be struck between the strong obligation to consult on the part of the health authority and the need for decisions to be taken that affect the running of the health service. This means that there should only be reconsultation if there is a fundamental difference between the proposal consulted upon and those which the consulting party subsequently wishes to adopt."

The Code of Practice on Written Consultation published by the Cabinet Office in November 2000 is to the same effect. Paragraph 6 on page 17 states:

"If significant new options emerge from consultation, it may be right to consult again on them (though a shorter consultation period may be justified…)"

72. In summary, the Defendant's position is that there was no fundamental change in the landscape between the second Consultation Document and the White Paper. The landscape in Chapter 11 of the White Paper had essentially the same topography as the landscape about which the public had been consulted.
73. Against this background, I turn to the alleged changes in the landscape. The London Boroughs contend that the landscape in the second Consultation Document contained five "main identifiable and linked elements" namely:

(1) The hub aspect;

(2) The radical change;

(3) The seeding assumptions;

(4) The economic regulatory context; and

(5) Heathrow's "maximum use" was presumed to exclude mixed mode and off-site terminals.

74. I will deal with each of these elements of the landscape in turn. Although it is necessary for the purposes of analysis to deal with them separately, I bear in mind Mr Smith's submission on behalf of the London Boroughs that the issues are inter-linked, and that it is their cumulative impact which must be considered in deciding whether there was a fundamental change in the landscape.

(1) The Hub Aspect

75. The London Boroughs contend that in the second Consultation Document the Defendant was actively focussing his attention on the postulated need for a further hub airport. They rely upon, inter alia, paragraph 2.20 which discussed "the benefits of hub airports", and on paragraphs 4.1 and 4.2 in Chapter 4 which, under the heading 'A Hub Airport in the South East', said:

"4.1 There are two fundamental issues that the Government wishes to address to help it to decide whether new capacity should be provided in the South East and, if so, where:

Does the UK need one or more major hub airports in the South East?

Should we develop Heathrow further?

4.2 The two questions are in fact closely linked. We need to consider what the benefits are to the UK of having a strong hub airport and, if maintaining a hub airport is a desirable objective of our aviation policy, whether the best way to achieve it is to maintain Heathrow's role as our premier airport. If Heathrow is not to be developed then we should consider other possible alternatives."

76. Under the heading 'Does the UK need one or more large hub airports in the South East?' the benefits of hub airports were further discussed in paragraphs 4.8 – 4.10. Under the heading 'Alternatives to Heathrow' paragraph 4.19 stated (in part):

" 4.19 If the impacts at Heathrow meant that further development could not be justified, possible alternatives would be to expand another existing airport sufficiently to allow for hub operation or to construct a new, purpose-built airport at Cliffe. Gatwick is already the second largest airport in the UK, it serves a large catchment area and with the addition of two new runways it could play a major role as a hub…"

77. Paragraph 4.20 discussed the implications of an entirely new airport at Cliffe which "could be designed from the outset to be suitable for hub operation". Paragraph 4.21 discussed the expansion of Stansted into a major hub airport. Paragraph 4.22 said:

"One of the major challenges facing the creation of a major hub at either Cliffe, Gatwick or Stansted would be attracting sufficient traffic to make the development financially viable. This issue would be particularly serious in the case of Cliffe, because of the high construction costs, and the fact that a large proportion of the costs would need to be committed up-front, before the airport could start operating…"

78. Under the heading 'Two large airports in the South East?' paragraph 4.23 stated that "the underlying demand that we are forecasting by 2030 would be large enough to support two large airports. Another possible approach might therefore be to expand Heathrow and also to develop a second South East airport into a hub." Paragraph 4.24 noted that "Heathrow, even with a new runway, would not be large enough to support the hub operations of two alliances; so one alliance would need to shift to another airport."
79. In Annex A question 2 asked: "Should the Government aim to maintain at least one large hub airport in the South East? Is a second hub plausible, and if so, should Government seek to promote one, and what would it need to do to achieve this?" Question 8 asked: "If you think either Gatwick, Cliffe or Stansted should be developed as a hub airport, should the Government take action to ensure such development can be financed and subsequently fully utilised and if so what form should any action take?"
80. Question 5 in the second questionnaire asked respondents to indicate: "To what extent do you agree or disagree with the following statement: our future UK airports' policy should, in principle, provide for at least one major hub airport in the South East". Question 6 said: "Listed below are some possible reasons for maintaining at least one hub airport somewhere in the South East, please indicate how important you feel each of these are." Various reasons were set out including, for example, "to benefit UK air travellers by providing a wider range of destinations and more frequent services than a smaller airport".
81. Pausing there, it was, or should have been, plain from these questions that the Defendant was not postulating that there was a need for a further hub airport in the South East. He was expressly asking whether there was such a need, and if so, how it should be met.
82. The White Paper answered these questions in paragraphs 11.12 – 11.17:

"A South East hub airport

11.12 We sought views from consultees about the value to the UK of having one or more major hub airports in the South East. This is an important prior consideration for any decision about the long-term provision of airport capacity.

11.13 Large airports are able to support a wider range of destinations and greater frequency of services than could be supported by local demand alone. Major airports attract passengers connecting from one flight to another and, because of this concentration, airlines can operate routes and frequencies that would not otherwise be viable. This is well illustrated at Heathrow, which has the highest number of international transfer passengers of any airport in the world.

11.14 At the same time, our assessment suggests that the greatest economic benefits are obtained by providing capacity in locations which are convenient for as much as possible of the total demand. That is better achieved by a more dispersed pattern of capacity than by concentrating all additional capacity at one location.

11.15 There is evidence to suggest that a combination of liberalised air markets, changing aircraft design and growing demand will increasingly mean that airlines will want, and be able, to fly point-to-point to a greater number of destinations. Demand in the South East will be strong enough to support more point-to-point services without the reliance on connecting traffic. However, some long-haul services will continue to be reliant on feed from connecting passengers. This suggests that long-haul airlines will continue to be attracted to major airports.

11.16 A South East hub can deliver substantial benefits to the whole of the UK, and most believe that Heathrow is the only candidate for that role. There is very little support for the concept of a second or alternative hub, which most felt was impractical and would carry high risks. Indeed, many airlines believe that an alternative South East hub would only work if Heathrow were to close.

11.17 We recognise the immense value to the UK of Heathrow's status as an international hub airport and we want to see that continue. However, we do not believe that there is a strong case for attempting to create a second hub airport in the South East, whether or not additional capacity is created at Heathrow."

83. I do not accept that this represents any change in the "landscape" presented in the second Consultation Document, much less a fundamental change. The Consultation Document did not proceed upon the basis that there was a need for a further hub airport. Rather, it stated that the question – "Does the UK need one or more major hub airports in the South East?" – was one of the "two fundamental issues that the Government wishes to address" (see para 4.1). The second fundamental issue was "should we develop Heathrow further?" Paragraph 4.2 recognised that those two questions were closely linked and that it would be necessary to consider what the benefits were to the United Kingdom of having a strong hub airport, and if maintaining a hub airport was a desirable objective, whether the best way to achieve that objective would be to "maintain Heathrow's role as our premier airport". The remainder of Chapter 4 asked, "does the UK need one or more large hub airports in the South East", discussed the question "should we develop Heathrow further", and discussed alternatives to Heathrow.
84. Against that background it was, or should have been, obvious to the London Boroughs that a possible, if unwelcome, response to the two fundamental questions posed in paragraph 4.1 would be that Heathrow should be developed further, and that a major new hub airport should not be developed. Indeed, the London Boroughs acknowledge that among the consultation responses there were those (including LLAOL) who argued that undue emphasis had been placed on the need for one or more hub airports. In its response, British Airways had said bluntly that "the Government has not made the case for a new hub airport". The London Boroughs had been able to make representations to the contrary.
85. Although the response to this issue in the White Paper is most unwelcome to the London Boroughs, it could easily have been foreseen as a possible outcome of the consultation process. There was no change in the landscape.

(2) The Radical Change

86. This issue is inextricably linked to issue (1) above. The only "radical change" discussed in the second Consultation Document was the possibility that a new purpose-built hub airport might be developed in the South East as an alternative to developing Heathrow further. The SERAS reports had identified Cliffe as the most promising option for a new hub airport. Cliffe was discussed in Chapter 11 of the second Consultation Document.
87. By way of introduction paragraphs 11.1 – 11.3 described the proposal and the reasons for its choice.

"11.1 Building a new airport on the Hoo Peninsula in North Kent would represent a radical change to airport provision in the South East of England. It offers the prospect of a purpose-built hub airport providing a large amount of new runway capacity, but at the same time minimising a number of negative impacts on people – although there would be major environmental impacts.

11.2 Cliffe was identified following a detailed study of potential sites for a new airport. The main reasons for this were:

sufficient land available for a major new airport;

potentially good surface transport links with London and other parts of the South East and the UK;

relatively few people would be displaced by the airport's construction for the amount of new capacity provided;

relatively low numbers of people would be affected by aircraft noise;

the potential for 24-hour operation to meet the needs of air freight; and

development of an airport in this location would support regeneration policies in the Thames Gateway.

11.3 The success of a new airport would depend crucially on its ability to attract airlines. Airport development costs are estimated at just over £9 billion in today's prices for a two runway airport and around £11.5 billion for a four runway airport. In order to remunerate this expenditure, the airport would need to attract, quickly, a large number of air services."

88. The options considered at Cliffe were described, and the implications of developing a hub airport at that location were discussed under a number of sub-headings grouped under two main headings: "Impacts on road and rail networks", and "Impacts on people and the environment". Under the latter heading, the impacts discussed included those on ecology. It was noted in paragraph 11.16 that:

"A new airport at Cliffe would impact on several nationally and internationally designated areas, notably the Thames Estuary and Marshes Special Protection Area (SPA) and the Northwood Hill Site of Special Scientific Interest (SSSI) / National Nature Reserve."

89. Paragraph 11.17 discussed the importance of the SPA, and paragraph 11.18 said:

"The presence of large bird populations raises the risk of birds colliding with aircraft which is an important safety issue for any airport. A preliminary assessment was made of this risk at Cliffe. The consultants noted the potentially significant hazards of the Cliffe location and identified some options for mitigating the risks in the design and layout of the airport and in measures in the surrounding area. They acknowledge that further research would be needed to assess fully both the risk and the best mitigating measures. The Department will be commissioning work during the consultation period. More information about impacts of the Cliffe proposals on ecology can be found in the report mentioned in the previous paragraph."

90. A footnote to paragraph 11.18 stated "It is intended that the final report of this further work will be published during the extended consultation period". The report "Study on safety risks from birds and safety measures around Cliffe Marshes" was published on the 7^th April 2003 ('The Bird Strike Report'). It is a lengthy document. The concluding paragraph in the executive summary said:

"In conclusion, the study found that the environment around the Cliffe airport option contained substantial numbers of birds hazardous to aircraft. Without a comprehensive and aggressive bird management programme in place, incorporating careful and considered airport design, appropriate habitat management and active bird control, an airport could not operate safely in this location. Even with such world class management and mitigation measures in place, as identified in this report, it is not considered possible to reduce the risk to a level similar to that experienced at other UK airports."

91. The White Paper dealt with Cliffe as follows:

"11.18 Early in the process leading up to this White Paper, the Government was urged by a range of interested parties to consider an option for a new airport as an alternative to incremental development of existing airports. Many believed that a new, purpose-built airport could provide the best long-term solution to the need for more airport capacity in the South East.

11.19 A detailed site search considered some 400 possible locations in the South East and other parts of the country, including some offshore. The site near Cliffe, on the Hoo Peninsula in Kent, emerged from this selection process as the leading candidate. In particular it offered enough land for large-scale development, the potential for good transport connections to key markets in and around London, support for regional planning objectives in the Thames Gateway, and the potential for 24-hour operation (of particular value to freight operators), with relatively low numbers of people affected by noise.

11.20 The Government recognised in the consultation document that the potential benefits of developing a major new airport at Cliffe would need to be considered in the context of its significant impacts on important wildlife habitats. Moreover, the internationally important status of some of the habitats under European law mean that any potentially adverse effect would require the Government to demonstrate that it has considered all reasonable alternatives. In the light of the consultation, the Government is satisfied that there would be reasonable alternatives to Cliffe.

11.21 The Government has also taken careful note of the conclusions of the report by the Central Science Laboratory and British Trust for Ornithology [The Bird Strike Report], who were commissioned to address in more detail concerns that had been raised in the consultation paper about the potential safety risk from bird-strikes at this location and about the feasibility of effective mitigations.

11.22 Our analysis shows that in the right conditions, an airport at Cliffe could attract a substantial number of passengers and generate large economic benefits. However, it also showed that, because of high capital costs, the net benefits of Cliffe were lower than for any of the combinations of additional capacity at existing airports involving more than one new runway, including the four-runway option at Stansted. The high up-front construction costs also presented a risk that the commercial viability of the project would be threatened if demand proved to be less strong than forecast, or if airlines and passengers simply did not use the airport.

11.23 Taking all factors into consideration, the Government does not support the option of a new airport at Cliffe."

92. The London Boroughs do not challenge these reasons for rejecting Cliffe, and do not advance Cliffe as the solution to Heathrow's problems. Their complaint is that following receipt of The Bird Strike Report it should have been clear to the Defendant that there was an obvious and fatal flaw in the Cliffe proposal. Yet the consultation process continued with Cliffe being presented as the only realistic option for a new hub airport and with members of the public left under the misapprehension that it did not suffer from a fatal flaw.
93. In my view, just as it was foreseeable that in the light of the responses to the second Consultation Document the Government would decide not to proceed with a new purpose-built hub airport, so it was foreseeable that the Government would decide that Cliffe should not be supported, not least because of the ecological concerns set out in paragraphs 11.16 – 11.18 of the Consultation Document, and in the light of the further work contained in The Bird Strike Report.
94. The decision not to support Cliffe for reasons which were clearly foreshadowed in the Consultation Document cannot sensibly be described as a change in the landscape. The implication of the London Boroughs' complaint under this head would appear to be that some other 'radical alternative' should have been considered. It would appear that the London Boroughs have in mind certain alternative proposals for new hub airports in the Thames Estuary which were put forward during the consultation process and appraised by the DfT's consultants.
95. Under the heading 'Alternative Proposals', paragraph 11.106 of the White Paper stated:

"In the second edition of the consultation document and elsewhere the Government made clear it was open to, and would consider any serious and worked-up alternative ideas. The following proposals were considered".

96. A list of proposals was set out. So far as is relevant for present purposes, those proposals included:

• "Goodwin Sands - a new island airport east of Deal in Kent comprising two sites each with two runways, with a total capacity of 120mppa.

• Marinair - a new four-runway island airport in the Thames Estuary north east of the Isle of Sheppey.

• Sheppey - a new two-runway airport on the Isle of Sheppey in Kent with a capacity of 75mppa and the potential to grow to four runways beyond 2030.

• Thames Reach - a new four-runway airport on the Hoo Peninsula in Kent (close to the Cliffe option), with a potential on 120mppa."

97. Paragraph 11.108 stated that in reaching its view on the merits of these alternative proposals, the Government's assessment had been informed by two broad considerations. The second of these considerations was as follows:

"it was evident from responses to the consultation that development of a major new airport – especially as an alternative or a second South East hub – would very probably be viable only with substantial financial support of some kind from the Government."

98. It had been explained in Annex B to the Consultation Document that:

"A further consideration is commercial viability, which is a hurdle that must be passed for airport developments on both existing and new sites. A policy that relied on options that could not be funded by the private sector for the bulk of a major airport investment would not have been a useful outcome." (p.163)

99. I will deal with the Claimants' challenge on the ground of commercial viability later in this judgement. At this stage, I merely observe that the Government's reluctance to provide "substantial financial support" for the development of a new hub airport was entirely foreseeable in the light of what had been said in Annex B to the Consultation Document. Paragraph 4.36 of the White Paper repeated this approach:

"The great majority of airports in the UK are operated on a commercial basis whether privately or publicly owned. At these airports we will look to the operators to determine the exact form of development needed and to bring forward proposals for investment in new capacity, in a timely manner, to be funded commercially."

100. Subject to their submissions as to fairness, the Claimants accept that a decision as to whether "substantial financial support" should be provided by the Government is very firmly at the extreme policy / economic judgement end of the spectrum.
101. The White Paper considered the Thames Estuary proposals in paragraphs 11.109 – 11.116:

"11.109 A number of consultees called on Government to consider new airport options in the Thames Estuary or similar locations, on the basis that the impacts would not be as great as development of existing airports. The Government has considered the proposals put forward during the consultation, in addition to the two estuarine sites for large new airports that were considered at various stages of the SERAS study: Cliffe and The Cant (an island site in the Thames Estuary). Although, the Cliffe option was taken forward for further detailed study, The Cant option was dropped at the preliminary stage of the study.

11.110 Our analysis identified a number of issues of concern common to all proposals for offshore or coastal airports, noting that:

construction costs would be significantly higher than for onshore sites and less certain. The additional costs would be incurred largely in the early phases of development before any revenues are generated;

construction might be several years longer for an offshore site;

costs of related transport infrastructure could be very high. The further the distance from the key London markets, the more heavily an airport would depend on dedicated, high-speed rail access and sufficient terminal capacity in Central London. A new railway would be expensive and difficult to provide. There is little spare capacity at the London terminals. Substantial addition road infrastructure would also be required;

some impacts (such as noise), would be reduced but damage to sensitive habitats is often more likely, and some new environmental impacts would need to be considered, such as marine ecology, and effects on tidal flow. Land-take at the site would be less than for onshore locations, though land might still be required for associated facilities and for new road and rail links. Risks posed by bird strike would expected to be greater at estuarine sites, especially those on or close to the shoreline;

forecasting suggests that the commercial viability if a new estuarine airport would be likely to depend on government intervention to try to ensure early take up of new capacity by passengers and airlines. Although offshore airports have been built elsewhere in other parts of the world, none of them is part of a multi-airport system as would be the case in the South East. The level of intervention required to ensure success would almost certainly entail significant costs to the public sector.

11.111 Additionally, Goodwin Sands would deliver poor economic benefits in relation to its high costs. The airport would be a long way from key centres of demand.

11.112 Insufficient information was supplied by the promoters of the Marinair proposal to enable a meaningful comparative appraisal of its potential costs and benefits. However, from the limited information provided it would appear likely that the Marinair project would be prohibitively expensive, both in terms of airport construction and road and rail links.

11.113 The Sheppey proposal would generate significantly lower net economic benefits than a combination of one new runway at each of Stansted and Heathrow. The promoters' heavy reliance on high speed rail access with limited road connections was considered to be highly optimistic. There are also uncertainties as to whether the site proposed is adequate to handle the assumed level of traffic.

11.114 Although the Thames Reach promoters managed to mitigate some of the drawbacks of Cliffe, a substantial part of the airport site would impact, as did Cliffe, on areas of very high ecological value that are protected under the EC Habitats Directive, and we have doubts whether the passenger numbers envisaged could be handled within the land-take given the likely demand for air travel over the day. We were concerned that the surface access proposals were not robust and over-dependent on rail. In the light of the appraisal of the Cliffe option, there remain significant concerns about the risk of bird strike and the efficacy of the measures proposed to address it. The capital costs assumed by the promoters are much less than those for Cliffe, including for surface access…

11.116 In the light of these particular concerns, the evidence currently available to the Government, and all other relevant factors, the Government does not consider that any of the above proposals can be considered to offer a solution that is both superior to the preferred options for development of existing major airports, as previously described, and clearly viable within the timescale concerned."

102. Although the London Boroughs contended that some of the issues identified in 11.110 were not common to all the Thames Estuary proposals, because they were not all for offshore, as opposed to coastal, sites, they did not contend that it was unlawful for the Defendant to reject the various proposals in the Thames Estuary for the specific reasons set out in paragraphs 11.111 – 11.114.
103. Of greater significance, they did not suggest that the Defendant could not reasonably have reached the conclusion set out in 11.116, that none of the proposals was "clearly viable within the timescale concerned". In so far as there is any force in their objections to the proposed new runway at Stansted on the ground of 'commercial viability' those objections would apply with even greater force to the Thames Estuary alternatives. The London Boroughs have not challenged Mr Fawcett's evidence that, whatever the position may be as to the commercial viability of Stansted,

"It is vital to bear in mind that the commercial viability of Stansted is much more likely than that of Thames Reach, or Cliffe…using DfT assumptions, the 'standalone' airport charge at Cliffe, at £13.70 per passenger would be almost twice that for an additional runway at Stansted. At estuarial sites, capital costs per mppa are likely to be much higher…"

104. At one point in his submissions Mr Smith contended that new non-hub airport options had not been sufficiently considered, but that submission is academic since all of the Thames Estuary alternatives were promoted as new hub airports. In simple terms, a new non-hub airport, even if viable, would not have offered sufficient additional capacity to effect "The Radical Change". Since the Defendant concluded that there was not a strong case for attempting to create a second hub airport in the South East, whether or not additional capacity is created at Heathrow (11.17), no practical purpose would have been served by requiring further consultation on this issue, even if rejection of the 'Radical Alternative' had not been a foreseeable response to the second Consultation Document.

(3) The Seeding Assumptions

105. This issue is also linked to issues (1) and (2) above. The London Boroughs contend that in the Consultation Document it was anticipated that 'seeding' would play an important part in any development of either Stansted or Cliffe as a hub airport. Paragraph 15.12 of the Consultation Document said this:

"For Cliffe (in particular) or a large Stansted to be funded by the private sector, the new airport capacity would have to be substantially used from the time the new capacity became available. The most likely way of achieving that would be if a major airline alliance could be attracted to set up a hub operation at the airport; for this reason, routes in our modelling have been 'seeded' at Cliffe and at a large Stansted (see paragraphs 9.10 and 11.6, the respective airport chapters). Such high use of capacity at Cliffe or at a large Stansted would also, of course, be necessary if the overall policy objective was to create a new hub, either to replace Heathrow as the UK's main hub or to become a second hub alongside Heathrow."

106. Paragraph 9.10 said:

"For Stansted to be viable as a hub airport, a significant amount of traffic would need to move there at the outset to create a network of services and frequencies. To replicate this we have in our forecasting 'seeded' the airport. Seeding effectively means that an operator or operators move a major tranche of services to an airport as a new runway opens. Long-haul scheduled services are seeded – to the extent of 40 per cent at Heathrow's 1998 scheduled services in these markets – from the opening of a new runway in 2011. Otherwise it would take a long time for Stansted to build up significant capability in these markets."

107. Paragraph 11.6 said:

"For Cliffe to be viable as a hub airport, a significant proportion of traffic would need to move there at the outset to create a network of services and frequencies. To replicate this in our forecasting we have 'seeded' the airport. Seeding effectively means that an operator or operators move a major tranche of services to an airport as a new runway or airport opens. The seeded service frequencies at Cliffe amount to 40 per cent of Heathrow's 1998 scheduled services, 23 per cent of Gatwick's 1998 charter services and 11 per cent of Stansted's 2000 low cost services."

108. The London Boroughs submit that the Defendant's approach to seeding changed fundamentally in the White Paper and that no explanation was given for the change. Again, this point is academic. Since the Government has decided that there is to be no new hub airport it follows that there will be no need to seed such an airport. In any event, the explanation for the change in the Defendant's position is to be found in a document which is referred to in the White Paper.
109. Annex A to the White Paper discussed UK air travel forecasts up to 2030. The introduction stated that the DETR's document "Air Traffic Forecasts for the United Kingdom 2000" May 2000, presented the national forecasts for the future demand for air travel, by passenger numbers, at UK airports as a whole between 1998 and 2020. It was explained that the estimates were based on unconstrained airport and air-space capacity, and included United Kingdom and foreign passengers broken down into business and leisure services, long-haul, short-haul and 'no frills' carriers (NFCs). Annex A also referred to the DfT's air passenger forecasting model. This is an airport allocation model which is used to forecast how air passengers might make use of different amounts of new capacity at different airports around the United Kingdom.
110. Paragraph 22 of Annex A explained that the second Consultation Document had used a version of the DfT model which kept to forecasts for NFCs in line with "Air Traffic Forecasts for the United Kingdom 2000". Paragraphs 23 and 24 brought the reader of the White Paper up to date:

"23 The most recent version of the DfT's air passenger forecasting model takes more account of changes in the aviation market since 2000. It remains controlled to the national forecast inputs in terms of total mid-point throughputs for 2020 and 2030 (400mppa and 500mppa respectively) and in the balance between UK / foreign residents, business / leisure passengers, international / domestic sectors, and between the South East and the other regions of the UK.

24 The principal features of the most recent version of the model are:

a total of 103mppa of NFCs in 2030 in the unconstrained case;

explicit modelling of the implementation of Government policy that aviation meets its external costs. However, this effect is offset by the judgement that airlines will be more successful in reducing their costs; through the stimulus of NFCs, the competitive response of scheduled airlines, and liberalisation of long-haul markets."

111. The Conclusion in Annex A referred to the fact that "the NFC short-haul market has experienced continued growth".
112. Although dated December 2003, the more recent version of the DfT's air passenger forecasting model was published in February 2004 under the title 'Passenger Forecasts – Additional Analysis'. Mr Fawcett explained in his evidence that it had been hoped to publish all of the supporting documentation contemporaneously with the White Paper, but because of the sheer number and weight of the documents, some of them had to be published in the months following publication of the White Paper in December 2003.
113. The 'Additional Analysis' expanded on the information available in Annex A of the White Paper. Under the heading 'Potential interactions between Stansted and Heathrow', paragraphs 6.43 and 6.44 explained:

"6.43 With older versions of the DfT passenger forecasting model there would have been concern about the fundability of a Stansted runway as the first additional runway in the South East if a subsequent Heathrow runway had NOT been ruled out. This concern centred on the 'seeding' of long-haul services, an assumption that was made at the time a new runway opened at Stansted with the prospect of a Heathrow runway it would have been less likely that a significant amount of long-haul capacity would have willingly started up operations at Stansted.

6.44 'Seeding' at the time of the new runway is no longer required to get long-haul to Stansted. A key point in the forecasts is that Heathrow will strengthen further as a business airport while Stansted will continue mainly as a leisure airport. Recovery of long-term trend growth would lead to a major boost in foreign leisure long-haul markets. Like the larger airports in the regions, Stansted should serve some second tier leisure oriented long-haul. Heathrow and Stansted would not have completely differentiated markets, but funders could well see the commercial case for a leisure oriented additional runway at Stansted and a business oriented and premium runway at Heathrow."

114. Seeding would still be required if it was proposed to develop a new hub airport (see the final bullet point in paragraph 11.110 of the White Paper). Paragraph 9.4 of the Consultation Document had said that options for one, two and three extra runways were proposed at Stansted. It added "For the larger options it is assumed that the role of the airport would change", i.e. to a hub airport. The White Paper does not propose that Stansted shall be developed as a hub airport. Thus the only material change for present purposes is that seeding is no longer a pre-condition for the development of a new runway at Stansted as the first additional runway in the South East. This change was referred to in a footnote to paragraph 11.27 of the White Paper. Having stated that it was expected that there would be strong demand for additional capacity at Stansted, and stated that "traffic would therefore grow rapidly, and the new runway would generate substantial net benefits to the national economy", the footnote explained that:

"These were reported at over £5 billion. It is likely to be a significant underestimate because that calculation assumed some intervention in the market to direct airlines to Stansted ['seeding'] so as to build up a hub there. However, it seems likely that natural traffic growth at Stansted will be strong enough in line with market demand without such measures and this will provide higher economic benefits of the order of 9 billion".

115. Subject to the Claimants' commercial viability objection (see below), the conclusion that seeding was no longer required for a non-hub airport development at Stansted could not reasonably be described as a fundamental change as between the Consultation Document and the White Paper. The reason for the change is explained in the footnote and in the additional analysis referred to in Annex A to the White Paper.
116. I accept Mr Drabble's submission that it was reasonable for the Defendant to take into account up-to-date data such as that contained in the Additional Analysis document. Fairness did not require re-consultation in the light of the revised forecasts in the Additional Analysis. In particular, the changed approach to the need for seeding did not affect the prospects for the provision of a new hub airport or for the 'radical change' option, whether at Cliffe or at any of the other Thames Estuary proposals. The implications of the revised forecasts for Stansted are dealt with under the heading 'Commercial Viability' below.

(4) The Economic Regulatory Context

117. The charges levied by BAA for the use of its airports in the South East are regulated by the CAA. In November 2002 the CAA published a report proposing certain changes to the regulatory system for 2003 – 2008. For present purposes the most significant proposal was a change from the 'system approach' to a 'stand alone' approach. In simple terms the former approach permits a degree of cross subsidy from, for example, Heathrow to Stansted; whereas the latter approach requires each airport to be self-financing without reliance on cross-subsidy.
118. The issue of 'Funding airport development' was discussed in Chapter 15 of the Consultation Document. Paragraph 15.3 said that:

"In recent years, the great majority of airport projects have been undertaken on a fully commercial basis, without public sector subsidy. This applies both to airports which are privately owned and those which are owned by local authorities. The Government expects this pattern to continue and does not expect to commit public funds"

The regulatory regime was discussed in paragraphs 15.4 and 15.5, and in a footnote the CAA's consultation document was referred to.

119. On the 28^th February 2003, the day after publication of the second edition of the Consultation Document, the CAA published its final decision on the new regulatory regime: "Economic Regulation of BAA London Airports (Heathrow, Gatwick and Stansted) 2003 – 2008". The CAA had decided to opt for the stand alone approach:

"on the substantive question of whether the system approach or a stand alone approach should be preferred having heard the views of interested parties, the CAA's view is that the stand alone is best calculated to meet its statutory objectives. The CAA is not persuaded by the concerns of the no-frills carriers that they will have to finance an unaffordable runway…" (3.18)

120. Both the DfT and BAA had made strong representations in favour of the system approach. In its representations to the CAA dated 31^st December 2001the DfT had said:

"…It is possible that in next autumn's White Paper, Ministers may, after taking account of the large range of relevant factors, favour investment in a new runway which could not be financed solely from charges at that airport. Such a runway could bring substantial benefits to users of the other airports in the London system, for instance in reducing the very large costs which airlines are currently incurring because of delays and congestion. But with your proposals, it is not clear to us how such a runway could be financed."

BAA's response to the Consultation Paper stated:

"We currently believe that the option of one new runway at Stansted would be financially viable, subject to the scale of the additional costs calculated in SERAS, but the charges needed to remunerate the investment would need to be shared across the users of the London system as a whole rather than applied to Stansted users only…"

121. The implications of this regulatory change for the commercial viability of a new runway at Stansted are dealt with below under the heading 'Commercial Viability'. In considering this ground of challenge I am simply concerned with the question whether this regulatory change amounted, either on its own or in combination with all or any of the other factors, to a fundamental change in the landscape about which there should have been further consultation. I accept Mr Drabble's submission that it was, or should have been, plain to all consultees that the Defendant's assessment of the various options put forward in the second Consultation Document would have to take account of this regulatory change. In particular, it was highly likely that the Defendant would consider it appropriate to examine whether the commercial viability hurdle was passed in respect of any particular option on the basis of a stand alone, rather than a system approach.
122. It would certainly not have been reasonable for consultees to assume that the Defendant would simply ignore this significant and controversial change in the regulatory regime. It was obvious that there had been a change in the landscape. Since the CAA's final decision was made public in February 2003, consultees had ample opportunity to address the implications of the change in regulatory policy during the consultation period which had been extended until the 30^th of June 2003. Both the BAA and the CAA dealt with the implications of this regulatory change in their public responses to the second Consultation Document. There was nothing to prevent the London Boroughs from making such representations as they wished about the implications of the change from the system approach to a stand alone approach. In these circumstances, fairness did not require that there should have been a further round of consultation to enable them to make representations about this change in the landscape.

(5) 'Maximum Use' of Heathrow

123. The London Boroughs complain that in respect of Heathrow itself there were a number of changes between publication of the Consultation Document and the White Paper. When describing the options at Heathrow the Consultation Document said this in paragraphs 7.4 – 7.6:

"7.4 At Heathrow, the maximum use case does not provide any more capacity than the base case which already assumes the construction of Terminal 5. Neither maximum use nor the new runway option presented below assumes any alteration to operation in segregated mode on the existing runways or to the number of night flights.

7.5 In Stage 2 of the SERAS study, options for a single new runway (either 2000m or 4000m long) were considered. The Government has rejected the option of a new 4000m runway, because, while the benefits of short and long runways are comparable, the disbenefits of a long runway (particularly in terms of property demolition) were very much greater than for the 2000m runway.

7.6 The additional terminal capacity (beyond Terminal 5) which would be required to support a new short runway is assumed to be provided through reconfiguration of the Central Terminal Area (CTA) – Terminals 1, 2 and 3 – and the space between the existing runways at Heathrow and to the south of the airport site near Terminal 4."

124. Under the heading 'One additional runway' paragraph 7.7 said this:

"A new 2000m long runway would be built to the north of the existing airport (see Figure 7B). This is about half the length of the existing runways, and could be used only by smaller narrow-body planes. The new runway would be used both for landings and take-offs (known as 'mixed mode') throughout the day. The existing runways would continue to operate in segregated mode with alternation as they do now. Over time, it might be possible to achieve more intensive use of the existing runways through advances in air traffic control technology and / or by introducing mixed mode operation on those runways. Such developments could increase Heathrow's total capacity in this option from 116mppa to about 128mppa, assuming the construction of additional terminals and other facilities."

125. The proposals for Heathrow in paragraphs 11.61 – 11.67 of the White Paper are set out above (para. 68). The London Boroughs contend that:

a) Contrary to the clear indication in the Consultation Paper, the White Paper expressly contemplates the use of mixed mode to plug gaps in capacity that may arise in the short and medium term (11.66).

b) The need for a sixth terminal to make use of the contemplated runway was introduced in paragraph 11.65 of the White Paper as a result of representations made by BAA.

c) The text of the White Paper does not limit the runway contemplated for Heathrow to the short runway which was consulted upon, although the Claimants accept that the indicative diagram on page 124 of the White Paper does show a shorter runway.

d) The Consultation Document did not envisage the adoption of an "inverted SERAS option 12" (one new runway at Stansted followed by an additional runway at Heathrow). Combination 12 in Table 14.3 in the Consultation Document proposed a new runway at Heathrow by 2011, followed by one new runway at Stansted by 2021.

126. Dealing with these complaints in reverse order, the implications of inverting SERAS option 12 for the funding of the proposed new runway at Stansted are dealt with under 'Commercial Viability'. For the reasons set out in paragraph 158 below in relation to the Stansted challenge the adoption of an "inverted SERAS option 12" could reasonably have been foreseen as a possible outcome of the consultation exercise. The list of possible combinations in Table 14.3 in the second Consultation Document included, in addition to option 12 (one new runway at Heathrow in 2011 followed by one new runway at Stansted in 2021), an option which provided for one new runway at Heathrow in 2011, with no further runway provision by 2030.
127. However, the problems of providing additional capacity at Heathrow, particularly in terms of air quality, were flagged up in Chapter 7 of the second Consultation Document, as explained in paragraph 157 below. Given these problems, which were no doubt forcefully elaborated by the London Boroughs in their responses to the consultation exercise, and the statement in paragraph 7.29 of the Consultation Document that:

"Another runway at Heathrow could not be considered unless the government could be confident that levels of all relevant pollutants could be consistently contained within EU limits",

it was reasonably foreseeable that the acknowledged environmental problems at Heathrow might either prevent altogether, or alternatively delay, the provision of additional runway capacity at that airport.

128. The London Boroughs would no doubt have welcomed a decision that the environmental problems were such that it was impossible to provide an additional runway at Heathrow in the period up to 2030. They cannot realistically contend that it was not at least within their contemplation that the Government might conclude that though the environmental problems were very serious, they might be capable of being solved within the latter part of the 30 year period.
129. Turning to the length of the new runway, paragraph 7.5 of the Consultation Document stated that the Government had rejected the option of a new 4000m runway at Heathrow (para 123 above). The one additional runway proposed in the Consultation Document was a new 2000m long runway which would be built to the north of the existing airport (see paragraphs 7.6 and 7.7).
130. The Claimants acknowledge that the indicative map on page 124 of the White Paper shows a shorter runway. While it is true that there is no express reference to a 2000m runway in the White Paper, paragraph 11.67 asked the BAA to take steps to safeguard the land needed for the option for a third runway at Heathrow. The amendments to the layout for a third runway suggested by the BAA in its response to the Consultation Document were welcomed, and paragraph 11.67 stated that "the map below reproduces that shown in the Consultation Document, but has been revised to take account of those proposals by the airport operator".
131. The map shown in the Consultation Document is entitled 'Heathrow layout new 2000m runway'. One would have hoped that this would have been sufficient to allay the London Boroughs' concern, but if there was any remaining doubt it should have been removed by the footnote to paragraph 11.67, which identified the amendments suggested by the operator:

"These were set out in the first bullet of paragraph 5.18 of the airport operator's consultation response, Responsible Growth, essentially, moving the runway 100m to the east and a revised runway and taxiway layout".

132. Four possible layouts were shown in 'Responsible Growth'. Paragraph 5.17 explained that they shared a number of key features. Those features included the fact that there would be "a new 2000m runway". Paragraph 5.18 said that further assumptions, common to all four layouts had been made, the most significant being that the option shown in the Consultation Document would be moved 100m to the east, to reduce the impact on Harmondsworth.
133. On any sensible reading of the White Paper it is plain that what is being referred to is a 2000m runway, and there has been no change in the landscape in this respect.
134. Turning to the need for a sixth terminal, paragraph 11.65 of the White Paper said this:

"The airport operator argued in its consultation response that the full potential of a third runway could not be realised without a sixth terminal to the north of the A4. They suggested four possible options for new facilities. In all cases more land would be needed than allowed for in the consultation option, which assumed that terminal capacity would be provided for within the airport boundary. In principle, we recognise the force of these arguments and suggest that the operator should carry out further work on proposals for terminal capacity and an appraisal of the impacts on the basis of which a further consultation would be required."

135. Fairness cuts both ways. The Defendant had to be fair to the London Boroughs, but he also had to be fair to BAA. He could not in fairness have ignored the fact that the BAA had made a proposal for a sixth terminal to the north of the A4 in its consultation response. Suggestions that changes should be made to the "landscape" are to be expected in any consultation exercise. Indeed, one of the purposes of conducting such an exercise is to elicit such suggestions. Thus the Defendant cannot be criticised for mentioning the BAA's proposal. Having mentioned the proposal the Defendant has expressly recognised that since this proposal had not been consulted upon and would take more land than allowed for in the consultation options, it should be the subject of further public consultation in its own right. Contrary to the London Boroughs' submission, the Government's support for a (2000m) new runway at Heathrow as soon as possible after the new runway at Stansted, does not depend upon the full potential of that runway being realised as a result of the provision of a sixth terminal to the north of the A4. Against the background that "the demand for Heathrow is extremely strong, and always likely to be far in excess of its capacity" (para. 11.48), the White Paper expresses the Government's belief that "there is a strong case for seeking to secure the large economic benefits achievable through the addition of a third runway at Heathrow". That belief does not depend upon the provision of a sixth terminal to the north of the A4. Whether such provision would be necessary in order to realise the full potential of a third runway, and if so, whether it would be desirable to construct a sixth terminal to the north of the A4, are to be the subject of a further consultation exercise.
136. I can see no unfairness in this approach. The Defendant expressly recognises that before such a change could fairly be made to the landscape there would have to be further consultation. Realistically, the London Boroughs could expect no more. Indeed, their submission is not that fundamental changes may not lawfully be made to the landscape, but that if fundamental changes are proposed there should be further consultation. That is precisely what they have been given in respect of BAA's proposal for a sixth terminal to the north of the A4.
137. Similar observations apply to the suggestion in paragraph 11.66 of the White Paper that "for example mixed mode operation in peak hours might be introduced whilst retaining runway alternation for the rest of the time". Whether the Defendant was persuaded that the environmental problems at Heathrow were such that they prevented, or merely delayed, the provision of a new runway, it was reasonably foreseeable that a possible outcome of the consultation exercise would be that consideration would have to be given to the scope for greater utilisation of the two existing runways. Although the London Boroughs disagree with the policy, the Government was lawfully entitled to conclude that "our first priority is to make the best possible use of the existing runways at the major South East airports" (11.6). Realistically, the alternative would have been to provide yet more new runway capacity, if it was decided that additional capacity was required.
138. Against this background, it was not unreasonable for the Defendant to give an example of one way in which greater utilisation of the existing runways at Heathrow might be obtained. Paragraph 7.7 of the Consultation Document had mentioned the possibility of introducing mixed mode operation on the existing runways "over time" (para 124 above). The London Boroughs' complaint is that this was not consulted upon as a possibility for the short term. It is precisely because the new runway option considered in the Consultation Document did not assume any alteration to operation in segregated mode (paragraph 7.5), that the White Paper makes it clear in paragraph 11.66 that "the impacts and benefits of any such proposal would have to be studied in detail and there would need to be a full public consultation".
139. I accept that any alteration from segregated to mixed mode would be highly controversial. In paragraph 3.4.7 of his Report Mr Vandermeer said:

"Even if it were policy simply to make the best use if existing runway capacity, this would not remove the problem in relation to Terminal 5. While BAA argued throughout the inquiry that Terminal 5 required no change to the way in which the runways are operated at present, there was evidence that the capacity of the runways would be significantly increased if they were operated in mixed mode with arrivals and departures on each runway throughout the day. This would involve the loss of runway alternation which guarantees residents periods of relative quietness for part of each day and would be fiercely resisted on environmental grounds".

140. Because he accepted that a change from segregated to mixed mode in the short term would be a significant change to the landscape about which there had not been consultation, the Defendant accepted that there would need to be another round of "full public consultation". The London Boroughs' complaint under this heading is that there should have been a further round of public consultation. That is precisely what paragraph 11.66 of the White Paper states must happen in respect of any proposal to change from segregated to mixed mode operation.

Combined Impact

141. I realise that the London Boroughs rely upon the combined impact of the five alleged changes to the landscape, but I have already concluded that fairness did not require further consultation in respect of 'The hub aspect', 'The radical change', 'The seeding assumptions', and 'The economic regulatory context'. In all of these cases the landscape presented in the Consultation Paper envisaged that such changes might occur (there might not be a new hub airport); or the change was foreseeable and could have been the subject of representations (the need to respond to stand-alone regulation). Insofar as possible changes were mooted at Heathrow itself, which were not foreshadowed in the Consultation Document (mixed mode and a sixth terminal north of the A4), the White Paper expressly stated that further consultation must be carried out. For these reasons I reject this ground of challenge.

Stansted

142. Stansted currently has a single runway and passenger terminal. In 1985 following a lengthy public inquiry before an Inspector, Mr (later Sir) Graham Eyre QC, the Secretaries of State for the Environment and Transport granted outline planning permission subject to conditions for the expansion of the airport to a total capacity of 15mppa. A number of applications for approval of reserved matters have subsequently been granted and implemented. In 2000 12 million passengers used the airport and there were approximately 133,000 ATMs. On the 12^th May 2003 a further planning permission was granted (subject to conditions and a section 106 agreement) for development increasing the capacity of the airport to 25mppa. That figure is significant in the view of Essex / Herts. In the "Summary of Overall Conclusions" in his report, Mr Eyre had stated:

"The future contribution of Stansted

9. Only Stansted can provide capacity to meet additional demand in the early to mid 1990s. Subject to an unequivocal declaration of intention on the part of the Government to limit the future growth of Stansted and the imposition of appropriate conditions, the necessary planning permissions to enable Stansted Airport to be developed to a capacity of 15 million passengers per annum should be granted as expeditiously as possible.

10. From the outset, the development of Stansted Airport should be planned so as to be capable of providing an ultimate capacity equivalent to that which can be accommodated on the airport's single runway. Such capacity is likely to be approximately 25 million passengers per annum.

The limit on development at Stansted

11. There are compelling reasons which are now manifest as to why a second runway at Stansted should not developed under any circumstances and Government should make an unequivocal declaration of intention that a second main runway will not be built. No planning permission should be granted in the absence of or prior to the making of such a declaration."

143. Elsewhere in his Report, Mr Eyre stated that:

"13.1 To expand the airport by fully developing the safeguarded area with a second runway and all the necessary ancillary operational works and buildings would be an unprecedented and wholly unacceptable major environmental and visual disaster which would not be capable of being mitigated to any material degree by additional landscaping.

13.2 A statement should be made of behalf of the Government in unequivocal terms that the principle of developing Stansted beyond the capacity of its single runway has now been abandoned and that it would never be brought forward again. "

144. As to the visual impact of building a second runway at Stansted, Mr Eyre said (at para 2.29):

"The construction of a second runway and further airport development in the safeguarded area would constitute an unprecedented and grotesque invasion of a large area of pleasant countryside with grievous visual and other environmental consequences and would be wholly unacceptable."

145. He added (at para 2.33):

"Whilst I accept the general principle that demand for additional airport capacity should be met in the south east as and when it arises, the construction of a second runway at Stansted and further development of the safeguarded area would involve such identifiable and enormous costs, penalties and consequences over a wide spectrum of material considerations that the prospect of such development must be unequivocally ruled out now."

146. In his Formal Recommendations (in Part VIII of his Report), Mr Eyre stated that his recommendation that BAA's application for permission for the expansion of Stansted Airport by the provision of a new passenger terminal complex with a capacity of 15mppa should be granted was "wholly contingent upon Government making an unequivocal declaration of intention either prior to or contemporaneously with the grant of any planning permission that a second main runway will not be constructed at Stansted Airport in the future". He added that in the "absence of such a declaration or other mechanism designed to demonstrate and ensure that a second runway at Stansted Airport will not be constructed" he would recommend that BAA's application should be refused.
147. The 1985 White Paper was published on the 5^th June 1985, the same day as the Secretary of State's decision letter granting outline planning permission subject to conditions for the expansion of Stansted airport to a total capacity of 15mppa.
148. Under the heading 'Future Development', paragraph 5.36 of the 1985 White Paper said this:

"The Inspector also recommended as a condition for the grant of planning permission that the Government should make an unequivocal declaration of intent that a second main runway would not be constructed. On current demand forecasts, it is very doubtful whether such a runway would be justified in the foreseeable future, while it is clear that it would give rise to severe environmental pressure. The Government therefore unreservedly accepts the Inspector's recommendation in this respect."

149. All Governments are well aware of the maxim "never say never". It is now 20 years since the 1985 White Paper was published and Essex / Herts do not submit that the present Government is bound by that undertaking in the 1985 White Paper. They do, however, submit that Mr Eyre's conclusions as to the impact of constructing a second runway, and the then Government's recognition that to do so would "give rise to severe environmental pressure", are an important part of the background against which the policies in the White Paper relating to Stansted must be scrutinised.
150. The "main conclusions" in Chapter 11 of the White Paper are set out above (para. 65). So far as material for present purposes, the White Paper said this in relation to Stansted:

"11.26 Because we expect there to be an increasingly severe shortage of runway capacity at the major South East airports over the remainder of this decade, making full use of the available capacity at Stansted will be essential to avoid stifling growth. Making full use of Stansted would generate large net economic benefits. We therefore support growth at Stansted to make full use of the existing runway and expect the airport operator to seek planning permission in good time to cater for demand as it arises.

11.27 Turning to the option for a second runway at Stansted, this would provide a very substantial amount of additional capacity for London and the South East – up to 46mppa. We expect that there will be strong demand for this capacity, especially as there will be little runway capacity available at other major South East airports by the time that the new runway could open (around 2011 / 2012). Traffic would therefore grow rapidly, and the new runway would generate substantial net benefits to the national economy. The space available for expansion means that the development of the airport could be phased in an efficient way such that terminals and stands could be added as and when needed."

Paragraphs 11.28 to 11.38 discussed such issues as regional and sub-regional growth, transport links, noise impact, NO₂ limits and urbanisation. Paragraphs 11.39 to 11.41 said:

"11.39 The option for a new runway at Stansted would require substantial land take and the loss of around 100 properties. The loss of two Scheduled Ancient Monuments and 29 Grade II listed buildings was a cause of particular concern in the consultation. The precise land boundary of a proposed development of Stansted will be a matter for the airport operator in the first instance in developing a detailed design for planning approval. However, the Government would wish the operator to consider positively how any listed buildings that would be affected might be relocated.

11.40 On balance, taking into account all relevant factors, and in the light of the responses to consultation, the Government now supports the development of a second runway at Stansted as the first new runway to be built in the South East. We expect it could be completed by around 2011 or 2012. The new runway would be the wide-spaced runway option presented in the consultation document, as shown on the map below.

11.41 The airport operator will need to put in place a scheme to address the problem of generalised blight resulting form the runway proposal (see paragraphs 12.13 to 12.17)."

151. The map shows the "One new runway" option that was illustrated in the Consultation Document. There is the following note above the map:

"it must be stressed that this map is only indicative pending detailed design work and the submission of a planning application by the operator. The map should not therefore be taken to be a formal safeguarding map".

152. Under the heading 'Taking Forward Development at Stansted' the White Paper says this on page 118 ("the Text Box"):

"The East of England Regional Assembly is currently finalising its draft Regional Planning Guidance (RPG) which will set out the development strategy for the region to 2021. It is doing so on the assumption that Stansted will expand to the capacity of the existing runway. Planning for a second runway at Stansted will require more detailed consideration of airport development and transport issues, beyond what will be possible in RPG14. This may require a limited review of the RPG. The Government supports the view that development of a second runway should be done in a way that respects the character of the countryside around Stansted.

The Government will not promote or pay for the development of Stansted. New airport capacity should be paid for by airport users. We look to the airport operator to take it forward in a way that is responsive to users, and to provide necessary funding. It is a responsibility of the regulator, the CAA, amongst its statutory duties, to encourage timely investment. The Government expects both parties, regulator and airport operator, to secure an appropriate framework to bring the development to fruition. It expects this process to be guided by the decisions in this White Paper, as well as by the regulator's duties towards users of airports, towards the operation of airports, and towards investment in new facilities at airports.

The Government will work with the airport operator, the SRA, and a range of regional and local partners in taking forward work urgently to identify robust and affordable surface transport solutions that would support growth of the airport and across the region. The airport operator will be expected to contribute to the costs of rail and road improvement to the extent that these are required to cater for airport-related traffic. Their contribution is likely to be substantial, in particular for increased rail capacity."

153. In paragraphs 11.42 – 11.46 the White Paper rejected the options for two new runways and for three new runways at Stansted that had been proposed in the Consultation Document.
154. Although they profoundly disagree with the Defendant on the merits of the policies in the White Paper, Essex / Herts accept that following the second Consultation Document the White Paper could lawfully contain policies concluding:

a) That the best use should be made of the existing runway at Stansted;

b) That two new runways should be provided in the South East in the 30 year period to 2030; and

c) That one of those new runways should be provided at Stansted.

155. In their Skeleton Argument Essex / Herts contended that the Defendant had acted unfairly and / or unreasonably in adopting the "inverted SERAS package 12" (see paragraphs 125 and 126 above) because such a package had not been consulted upon. However, Mr Hill did not pursue this argument in his submissions, save as an aspect of his challenge under the heading of 'Commercial Viability' (see below).
156. In my view he was right not to do so. While at first sight it might appear to be somewhat curious that the option which was eventually adopted in paragraph 11.11 of the White Paper was not one of the 25 combinations or 'packages' which had been set out in Table 14.3 in the Consultation Document, the list of airport packages included one new runway at Stansted with no new runways at Heathrow or Gatwick; one new runway at Heathrow with no new runways at Stansted or Gatwick; and options for a new Stansted runway preceding a new runway at Gatwick, and vice versa; in addition to option 12 in which a new runway at Heathrow by 2011 would be followed by a new runway at Stansted by 2021.
157. The problems of providing additional capacity at Heathrow were flagged up in the Consultation Document. Chapter 7 dealt with Heathrow. Under the heading 'Air Quality' there was a discussion of the "Population exposed to an excedence of EU limits". The number of people who would be exposed to an excedence of NO₂ in 2015 was set out in Table 7.4. Paragraph 7.29 warned that:

"Another runway at Heathrow could not be considered unless the Government could be confident that levels of all relevant pollutants could be consistently contained within EU limits".

158. Against this background, it was reasonably foreseeable that this, or other environmental problems might either prevent altogether, or delay the provision of, additional runway capacity at Heathrow, thus placing either Stansted or Gatwick at risk of being chosen as the location for the first new runway if the Government decided that additional runway capacity in the South East in the 30-year period to 2030 should be provided, and that it should be provided at one of the existing airports, rather than at a new hub airport. Mr Fawcett pointed out in his first Witness Statement, the option chosen – one new runway at Stansted followed by one new runway at Heathrow – would be very similar in environmental terms to the impacts of the one new runway at Stansted option, about which the Claimants had been consulted, and had taken the opportunity to make representations.
159. Subject to the question of commercial viability (see below), the principal complaint made by Essex / Herts is that the White Paper in paragraphs 11.11, 11.27 and 11.40 is unduly prescriptive in stating not merely that the Government supports development as soon as possible of a second runway at Stansted, as the first new runway to be built in the South East, but that it supports "a wide spaced second runway at Stansted" and "the new runway would be the wide spaced runway option presented in the Consultation Document as shown on the map below" (para 11.40, my emphasis). That wide-spaced option would increase Stansted's capacity by up to an additional 46mppa (para. 11.27).
160. The Claimants contend that this policy is unduly prescriptive. In a nutshell, Mr Hill submitted that the level of prescriptive detail was an unfair and disproportionate response to the consultation process which preceded it. The Claimants had understood that the aim of the consultation process was to assist the Government in developing broad policies which would subsequently be published in a White Paper. Such policies could fairly and reasonably have supported the provision of a new runway at Stansted as the first new runway to be provided in the South East, but the Claimants did not appreciate that the White Paper would be prescribing a particular form of runway at Stansted.
161. In order to assess the force of this complaint, it is necessary to consider the objectives of the consultation exercise as described in the Consultation Document and to consider what it said about the options for Stansted. To what extent did it put the Claimants on notice that a policy as prescriptive as the policy which has been adopted might be an outcome of the consultation process?
162. Paragraph 41 (above) sets out the relevant extracts from Chapter 1 of the Consultation Document, which explained the Government's "Objectives for its Consultation on new airport capacity…" As mentioned in paragraph 41, the twenty-one questions in Annex A were grouped in three sections: how much capacity should be provided; where to provide any new airport capacity; and managing the impacts of airport growth.
163. By way of example, in the second section of the Questionnaire, question 5 asked: "To which criteria should the Government attach the most and the least weight in reaching decisions about the location of any new capacity and why?" Question 6 asked: "What are the relative merits of these alternative combinations of possible airport development as set out in Chapter 14?" Question 7 asked consultees: "Giving reasons for your answer which combinations do you prefer and which do you not favour. If the combinations on which you comment include one new runway at Gatwick, please make clear if you have any preference for or against the two options for one runway (close parallel or wide spaced) and why." In section 3, Question 15 asked: "Are there any impacts reported in the chapters on individual airport options that you consider unacceptable?"
164. In addition to the questions in Annex A to the second Consultation Document, there were the questions in the second Questionnaire. In the Introduction to that document the three "key issues" were repeated. Under "Issue 3 – Where to Provide Airport Capacity", consultees were asked in Question 10 to indicate their level of support for: "maximum use of existing runway – no new runways", "1 new runway", "2 new runways" or "3 new runways", at Stansted. At Gatwick the options included (in addition to no new runways and two new runways) "1 new runway (close parallel)", and "1 new runway (wide-spaced)".
165. Chapter 6 of the Consultation Document provided an "Introduction to airport options":

"In the previous section we described the forecast growth in the demand for air travel over the next 30 years and described the benefits of providing new runway capacity. This chapter introduces options for adding capacity at each of the main South East airports as well as a potential new airport by the Thames Estuary, in North Kent and explains in broad terms how the impacts of the runway options were appraised"

166. Under the heading 'Description of Options' paragraphs 6.5 and 6.6 said:

"6.5 In the SERAS study, options were developed in some detail to allow a robust appraisal of their impacts to be made. But it is important to remember that the Government is not at this stage bringing forward definitive proposals – that will be for the relevant airport developer in due course.

6.6 The layout plans of the options at each airport in the following chapters are not detailed design proposals. The location of new runways and the new boundary of each airport have to be reasonably precise to allow their impacts to be appraised; but they are not definitive. New road and rail access is also shown but is illustrative. We are not attempting to say where other facilities such as terminal buildings, car parking and maintenance facilities might be, but adequate space for these has been allowed within the airport boundary. To give an understanding of the scale of the options at each location, the layouts shown are overlaid with Ordnance Survey grids, all at one kilometre spacing."

167. Stansted was dealt with in Chapter 9. After a description of the current situation at Stansted there was a 'Description of options':

"9.4 Options for one, two and three runways are proposed. For the larger options it is assumed that the role of the airport would change. Stansted is currently a major airport for low cost carriers and serves a relatively local catchment. With expansion there, and particularly if there were no significant increase in capacity at other South East airports, Stansted would have the infrastructure to become a second international hub airport.

9.5 The base case assumes the current capacity of 15mppa (i.e. it does not assume the additional 10mppa increase to 25mppa for which BAA is seeking planning permission).

Maximum use

9.6 The assumed capacity of the existing runway is 35mppa".

168. The options for one, two and three new runways were then described in paragraphs 9.7- 9.9, and illustrated in figures 9B - 9D. Table 9.1 set out forecasts of demand for, and use of, the three options. The capacity of one new runway was given as 82mppa (an increase of 47mppa from the maximum use of one runway at 35mppa); two new runways as 102mppa; and three new runways as 129mppa. The difference between the apparent increase of 47mppa in Table 9.1 and the reference to "up to 46mppa" in paragraph 11.27 of the White Paper is of no significance for the purposes of this judgement and the parties were agreed that it should be ignored.
169. In Chapter 14 under the heading 'Airport Development up to 2030', the Consultation Document described:

"[the] potential combinations of airport development options on which the Government is consulting the public. One is based on options for maximum use of the existing number of runways (but no additional runways). The others contain proposals for a total of one, two, three or four new runways at a range of locations, including the possible new site at Cliffe in North Kent. We report the results of the economic appraisal of the various potential combinations of development".

170. The combinations were then summarised. As mentioned above, they included options providing for a total of two new runways, one at Heathrow and one at Stansted; and for one new runway at either Heathrow or at Stansted; for two new runways at Stansted; and for three new runways at Stansted. Capacities and demand forecasts in 2030 were given, and the various packages, 25 in all by this stage, were set out in Table 14.3. Forecast traffic at the main South East and other UK airports in 2030 was set out in Table 14.4, and the economic benefits and costs of the various combinations were set out in Table 14.6.
171. Annex B described 'The SERAS Study':

"This Annex explains the background to the SERAS study that was commissioned by the Government in 1999 to examine the demand for airports up to 2030 and consider options for airport capacity to meet that demand. It goes on to explain how SERAS was carried out including the different criteria that were used to appraise the various airport development options."

172. The objectives of the SERAS study were summarised, and Annex B explained that:

"There are a number of lengthy reports and a larger number of supporting technical documents. A complete list of study documents is in Annex C. This consultation document contains the key information from those reports needed to understand the choice of packages of airport development and the options at each airport. But for a full understanding of the complex appraisal process you will need to look at the relevant supporting documents."

173. SERAS Stage One was described in these terms:

"The principal objective of Stage One was to establish the feasible options for the development of capacity at each airport in the South East and to appraise those options in order to determine which should be carried forward to Stage Two. In Stage One each airport was considered in isolation. "

174. Annex C listed the key documents. The SERAS documents were divided into eight Tier 1 documents and forty-six Tier 2 documents. The former were identified as the "key background reports" for SERAS and were made available in a variety of formats. The latter were "other reports that had been produced as part of the SERAS study" and were available in paper format only. Many of the documents comprised more than one volume. The Tier 1 documents included the SERAS Stage Two Methodology and SERAS Stage Two Appraisal Findings Report. Among the numerous Tier 2 documents were to be found the SERAS Stage 1 Methodology Report and the SERAS Stage One Appraisal Findings Report.
175. Essex / Herts contend that there is no hint in the Consultation Document that following the consultation process the Government would make prescriptive decisions about the precise form, as opposed to whether there should be any, and if so what number, of new runways at Stansted by 2030. The Consultation Document indicated that it was intended to assist the Government in taking broad decisions, such as how much new airport capacity should be provided in the South East, and where that capacity should be provided.
176. They submit that there was nothing in the Consultation Document to suggest that the illustrative figures were anything more than representative examples of possible one, two or three new runway developments at the airport, and there was nothing in the document which invited respondents to express any view about the detail of a one runway solution at Stansted. By contrast, at Gatwick where options for one additional runway and for two additional runways were presented, the two options for providing one additional runway, a close parallel runway or a wide-spaced runway, were described in paragraphs 8.10 – 8.12, and consultees were asked whether they preferred the close parallel or wide-spaced option: see question 7 (para 163 above) in the second Consultation Document, and Question 10 in the second Questionnaire (para 164 above).
177. In consequence, Essex / Herts submit that the second Consultation Document was a wholly inadequate basis for the policy contained in the last sentence of paragraph 11.40 of the White Paper. They contend that if a new runway is to be provided at Stansted as the first of the two new runways to be provided in the South East in the period to 2030, then the characteristics of that new runway, its alignment and capacity, and in particular whether it should be a wide-spaced runway, and if so how widely spaced, should be determined only after a full EIA followed by a thorough examination in the public inquiry process.
178. If the second Consultation Document and the second Questionnaire are considered in isolation there is considerable force in this submission. The documents must be read as a whole. If that is done the emphasis is very much on broad strategic questions: how much demand for air travel should be met; where should any new airport capacity be located. That impression is reinforced by the questions, both those in Annex A, and those in the second Questionnaire. While consultees' views were invited on possible combinations of airport development (listed in Table 14.3), they were being invited to express their views on broad questions: if additional capacity was to be provided, should the first runway be at Heathrow, Stansted, Gatwick or Cliffe; should one, two or three new runways be provided at Stansted by 2030, etc. When the Consultation Document wished consultees to express their views on different options for a single new runway, at Gatwick, it expressly did so: in the text (paras 8.10 – 8.12); in question 7 in Annex A; and in the second Questionnaire, where Question 10 asked respondents to indicate their level of support (ranging from strongly support to strongly oppose) for development at each of the airport sites. At Gatwick respondents were given two choices for the one new runway option (close parallel or wide-spaced); at Stansted respondents could choose between one, two or three new runways. At both airports respondents could choose a "no new runway" option.
179. The position at Luton was somewhat different, since no options for additional runways were considered, and the two options presented considered how best to maximise the use of a single runway (see below). Nevertheless, the second Consultation Document described the two options, and question 10 in the second Questionnaire asked respondents to indicate their level of support for a "new southern runway", or a "realigned runway".
180. I realise that the final paragraph of the Introduction to the second Consultation paper said that "This is an open consultation…"(para. 40 above). But this statement has to be considered in the context of the remainder of the Introduction, which made it clear that the reason for publishing the second Consultation Document was the Court's decision in the Medway case that it had been unreasonable not to include Gatwick options. Apart from this change, the Introduction explained that the second Consultation Document was essentially the same as the first with minor typographical errors corrected, some clarification where necessary, and updating by way of footnotes. Against this background the statement that the consultation was an "open" one would not have been sufficient to put consultees such as Essex / Herts on notice that if they wished to make representations about the form of the new runway at Stansted (if an additional runway was to be provided there) they should do so. The Consultation Document carefully focussed consultees upon a number of specific questions. There is a clear distinction between the questions posed in respect of Gatwick, if one new runway was to be provided there, and Luton, if maximum use was to be made of a single runway there; and those in respect of Stansted.
181. This conclusion is merely the starting point, since Essex / Herts accepted that the second Consultation Document should not be considered in isolation. The SERAS documents were listed in Annex C and they included the Stage One Appraisal Findings Report in Tier 2, and the Stage Two Appraisal Findings Report in Tier 1. The Defendant contends that it should have been clear to Essex / Herts from those documents that a number of options for a single new runway at Stansted had been examined in Stage One, and that options other than Option 5 had not been taken forward to Stage Two. Details of the options which had not been taken forward could have been found by reading the Stage One Appraisal Report. Thus, it would have been open to any consultee during the consultation period to make submissions about the specific disadvantages of any possible approach producing the same amount of capacity as Option 5, and to argue that if one new runway was to be provided at Stansted, it should be provided in a different way, e.g. by a close parallel runway. Moreover, it should have been apparent that the selection of Option 5 to be taken forward into Stage Two had taken place by July 2002 when the first Consultation Document was published listing the SERAS documents. There had been no challenge to this aspect of the Consultation Document.
182. Essex / Herts complained that the "vast array" of reports comprising SERAS was "difficult to obtain and difficult to analyse, with access to the consultants responsible for completing these reports difficult if not impossible". In a Witness Statement dated 8^th November 2004, Mr Bailes, A Special Projects Officer in the Environment Department of Hertfordshire County Council said that:

"The limited consideration of other "one new runway" options at SERAS Stage 1 is buried deep in the voluminous supporting material. This proved difficult for the local authorities to obtain and analyse and, in my opinion, would have been quite beyond the abilities of most lay consultees."

183. I accept the proposition that analysing the mass of detail in the SERAS material would have been beyond the abilities of most lay consultees, but it would not be fair to criticise the Defendant on that account. There is a "voluminous amount of data" in SERAS, and even with the assistance of technical expertise, analysing it would have been a painstaking and difficult process, but that is simply a reflection of the thoroughness of the study and the complexity of the subject matter. The Defendant would no doubt have faced criticism if the reports had been less voluminous.
184. Since the SERAS documents are referred to in the Consultation Documents, I accept the Defendant's submission that respondents to the consultation process in the position of Essex / Herts, with access to the necessary professional expertise, could reasonably have been expected to have made their representations in the light of a careful examination of the material contained in the SERAS documents. It is therefore necessary to consider the relevant SERAS reports in some detail to see what message would have been conveyed to Essex / Herts by such an examination. Lengthy though they are, the extracts below, of necessity, are highly selective.
185. Starting with the Stage One Methodology Report, the Claimants would have read in paragraph 2.4.7 under 'Level of Analysis' that:

"the level of option planning and analysis applied in this first stage has to be appropriate to the number of options to be dealt with. The objective is to do sufficient work to allow meaningful appraisal and comparison between options at each site. Subsequent stages will better define and refine capacities and facility requirements for selected options; a degree of approximation is necessary and deemed acceptable at this stage..."

186. Under the heading 'Environment', paragraph 7.1.5 said this:

" As for all parts of the SERAS study, the appraisal method is constrained by the requirement not to compromise the confidentiality of the study. Thus the methods proposed can only draw on existing, publicly available data and any data collection can be only by literature review, plans review and desktop studies with no consultation..."

187. Given the number of options under consideration at that stage it is understandable that there was a desire to maintain confidentiality in order to prevent widespread uncertainty and blight in the period prior to publication of the Consultation Document itself. This explains why the very large number of SERAS documents were published contemporaneously with the first Consultation Document.
188. When explaining the 'Appraisal Methodology', paragraph 7.2.8 said:

"At Stage 1, the effects of Airport Induced Urbanisation have not been included as induced urbanisation has yet to be defined. It will be included at later stages. At Stage 1 the assessment of effects of Airport Related Surface Access changes on resources has been confined to a limited commentary on the proximity of proposed new or modified surface access infrastructures (road and rail) to nationally or internationally designated nature conservation sites, AONB's and residential areas. Effects associated with existing surface access links subject to airport induced changes in traffic flows are not considered."

189. The Stage One Appraisal Findings Report, Table 4.2 set out the options which had been considered for Stansted. There were eleven options together with three variant options, making a total of fourteen options. Options 1 and 2 were close parallel runway options, Option 1 having a capacity of 57mppa and Option 2 a capacity of 67mppa. Options 3,4 and 5 were wide-spaced parallel runway options. Options 3 and 4 each had a capacity of 67mppa, whereas Option 5 had a capacity of 82mppa. Option 5 was said to be:

"Essentially the same as Option 4 in runway layout terms but is operated in mixed mode. This enables full advantage to be taken of the land area enclosed between the runways for terminal / apron development. There are three terminal units, which BAA estimated would each have to be capable of handling up to 35mppa."

The remaining Options, 6 – 11, and the three variants, were different ways of either providing two or three new runways at Stansted.

190. Paragraph 4.4.1 explained that the environmental issues considered at Stage 1 were covered in four sections; land use, ecology, heritage, landscape and townscape; water; noise; and air quality. In the section of the report dealing with land use, ecology, heritage and landscape / townscape, the existing conditions were briefly described, and then each of the options was discussed in six paragraphs which described the proposal in outline, and then dealt with land use, ecology, heritage, landscape and construction. Each option was covered in a little over a page of text. Paragraph 4.4.16 explained:

"the threshold criteria used to appraise the significance of effects have been derived from existing guidance in additional to professional judgement. These will be further developed at subsequent stages of the appraisal. At Stage 1 negative effects have been categorised as of High (HA), Medium (MA) or Low (LA) adverse significance and potential beneficial effects have also been identified, although they have not been ranked at this stage. The thresholds for allocating HA, MA or LA significance to effects identified in the Stage 1 study are higher than would normally be use in an EIA since at this stage only relatively high-level effects are being considered and are as follows:

HA – an effect which in isolation could have a material influence on the decision making process

MA – an effect which on its own could have some influence on decision making, particularly when combined with other similar effects

LA – an effect which on its own is likely to have a negligible influence on decision-making, but when combined with other effects could have a more material influence

In addition a category of HA* has been included for effects which in isolation could have a substantial bearing on decision-making. This is applied at commentary level."

191. Comparing Options 1 and 5 by way of example: in the case of Option 1, the cumulative effect on land use was considered to be MA; the cumulative impact on ecology was considered to be MA – HA; under heritage the effects "are likely to be at least HA as a result of the loss of 21 listed buildings…"; "Effects arising from noise and changes in character of historic resources are likely to be LA"; the cumulative effects on landscape were considered to be LA; as were the cumulative effects of construction. In the case of Option 5: the cumulative effect on land use was considered to be HA, as were the cumulative effects on ecology, on heritage resources and on landscape. The cumulative effects of construction were considered to be LA.
192. Under 'Heritage', the Stage One Appraisal Findings Report said this in respect of Option 5:

"the effects are likely to be at least HA as a result of the loss of 12 listed buildings…" (4.4.44)

These findings, and many others, were set out in tabular form in Tables 4.20 – 4.22. Again by way of example, Table 4.20 stated that in terms of agricultural land take, Option 1 would have a medium adverse impact with 240 ha being lost, and that there would be a low adverse impact on landscape with 90 ha being lost; whereas Option 5 would have a high adverse impact under both of these heads with 675 hectares of agricultural land, and 590 ha of Area of Special Landscape being lost. As envisaged in SEEAF (paras 25 and 26 above), the Stage One Appraisal Findings Report did not attempt to draw any conclusions as to which of the options at Stansted or elsewhere should be preferred.

193. Moving on to SERAS Stage Two, the Stage Two Methodology Report explained in paragraph 1.2 under the heading 'Appraisal of options and packages':

"Stage 2 of SERAS has been asked to appraise a number of options at the principal South East airports including new sites. Expected future scenarios at other smaller airports have to be identified to establish the contribution they might make to accommodating commercial aviation activity.

The options at each of the main sites fall into the following categories:

A base-case option, representing the option and its capacity currently envisaged in the land use planning system

An option which represents maximum use of exiting runways, and

Options which represent additional runway and terminal capacity at each airport"

"The options at the main sites are combined into a number of packages, 22 core packages in total…For each main airport option a 'representative case' has been defined, in terms of the combination of that airport option in a package with appropriate assumptions about the other South East airports. These representative cases, and the resulting usage forecasts and passenger allocation model runs, will form the basis of the appraisal of each option.

The use of representative cases is the preferred approach to the appraisal of a large number of options that can be combined in different ways in a large number of packages the impacts of which will vary from year to year throughout the appraisal period. Full appraisal of all options in all packages in all years would not be feasible…"

194. Under the heading 'Land Take Impacts' paragraph 7.1 stated that "Community Issues and Contamination were not addressed in Stage One. Ecology, Heritage, Landscape / Townscape, Land Use and Construction Impacts were addressed in Stage One but will be re-addressed in Stage Two".
195. Paragraph 7.6.3 described the:

"Key limitations at Stage One.

The Stage One Appraisal was confined to a desk study, based on designations and OS maps, which limited the amount of contextual information that could be included in the appraisal. Effects on landscape character require consideration of context which can only be verified with site visits.

Only designated resources were considered with the value of the resource effectively defined as national, county or district (derived from designating authority). No consideration of effects on undesignated resources or on overall landscape character were been [sic] made. The study therefore was not consistent with an Environmental Capital Approach / GOMMS which requires consideration of both designated and undesignated resources and on cumulative effects on overall character.

Criteria to assess the severity of effect on each designated area were quantitative and defined either in terms of hectares of land take or by distance from the designated landscape to the airport site. They did not take account of qualitative characteristics and features of the landscape. (e.g. pattern, tranquillity, scale, rarity etc.) which are required for an environmental capital approach.

The SERAS Stage One Appraisal did not consider the visual impacts i.e. the impacts on human receptors e.g. in residential or amenity areas."

196. Paragraph 7.7 said that "at Stage Two it was proposed to increase the level of appraisal to incorporate key aspects of good practice, in particular through

• Consideration of non-designated landscape in the assessment (to comprehensively cover all affected areas);

• Incorporation of qualitative considerations in the appraisal; and

• Outline consideration of visual impacts."

Chapters 6, 8, 9 and 10 of the Stage Two Methodology Report explained the further studies that would be undertaken in respect of Land Use and Urbanisation, Impact on Water Resources, Noise Impact and Air Quality Impact.

197. The Stage Two Appraisal Findings Report said in paragraph 1.2.1:

"There have been two main appraisal stages in SERAS. In Stage One a number of development options at different airport sites in South East and East of England were appraised. On the basis of this appraisal, ministers identified a number of options to be taken forward for further appraisal in Stage Two. In Stage Two selected options have been combined into packages which combine different development options at a number of airports. This report presents the main findings of this Stage Two appraisal."

198. Paragraph 1.2.4 of the Introduction said that Chapter 6 described "the appraisal of representative cases of options and the appraisal of packages", and that it set out the principal techniques and assumptions underlying the appraisal process.
199. Chapter 5 dealt with the 'Stage Two Options and Packages'. Paragraph 5.1 said this, under the heading 'Options at each Airport':

"5.1.1 This section summarises the options that have been appraised at each airport in Stage Two of SERAS. It also introduces the concept of the Stage Two appraisal packages which combine individual airport options across the system to provide differing levels of system-wide capacity.

5.1.2 Explicit details of each option are provided under the relevant section for each airport in chapters 7 – 12. In principle, options at each of the airports fall into the following categories:

An option which provides the level of capacity currently envisaged in the land use planning system;

An option which represents the maximum use of existing runways; and

A number of options which represent additional runway and terminal capacity at each airport"

200. In respect of Stansted, paragraph 5.1.7 said:

"The Stansted options appraised in Stage Two are:

Base-case. The current land use planning system;

Maximum Use of the Existing Runway;

Option 5 – one new full-length runway separated from the existing runway by 2450 m and with a large stagger, operating in mixed mode;

Option 11 – adds a further runway to Option 5: a full-length close-parallel runway to the north west of the existing runway and operating as a dependent pair;

Option 7 – adds a fourth runway to the three runways in Option 11: a full-length close-parallel runway to the Option 5 new runway."

201. The High Adverse Impacts of Option 5 were described in paragraphs 9.6.20 to 9.6.23. Paragraph 9.6.22 stated that this option would involve the loss of 29 Grade II listed buildings (cf para 4.4.44 of the Stage One Appraisal Findings Report). Community Structure / Distinctiveness was dealt with in paragraph 9.6.23, and it was stated that "This degree of change would represent a HA on local communities".
202. Pausing there, it will be noted that there is no explanation in these two SERAS Stage Two Reports as to why, from among Options 1 – 5 considered at Stage One, Option 5 had been chosen to go forward to Stage Two. Indeed the fact that Options 1 – 4 had been dropped at Stage One is not expressly mentioned in the Stage Two Reports. No explanation for the choice of Option 5 as the "one new runway" option for Stansted was given in the Consultation Document. Notwithstanding the voluminous SERAS documentation, Mr Drabble accepted on behalf of the Defendant that there was no document, contemporaneous or otherwise, which explained the choice of Option 5. The first and indeed, the only, explanation was contained in Mr Fawcett's Second Witness Statement prepared for the purpose of these proceedings and dated the 17^th September 2004.
203. Under the heading 'Stage 1 Decisions', Mr Fawcett said this:

"22 Ministers met officials in the week of 11 July 2001 to consider the full range of options for each airport considered in Stage One of the SERAS study, and to decide which of these options to take forward for further detailed appraisal in Stage Two,

23 Officials presented the results of the Stage One appraisal for each airport and invited Ministers to select their preferred options. Based on these decisions Ministers were then invited to consider the grouping of different options into 'packages'.

24 Ministers had before them extensive advice, including the Stage One Appraisal Summary Tables. From these, the following conclusions were drawn in respect of comparisons between the options for one new runway at Stansted:

On capacity gain, options 5 and 8 offered the greatest benefits, option 1 the lowest benefits, and the other options an intermediate level of benefits;

On capital costs, Option 5 and 8 were the most expensive, option 1 the least expensive, with the other options having an intermediate level of costs;

On residential property take, options 4 and E4 had the lowest adverse impact, with the other options having a Moderate Adverse impact;

On ecology, option 1 had a Moderate – High Adverse impact, and all the other options had a High Adverse Impact, with option 8, E8a and E8b having the greatest adverse impacts;

On heritage, all the options had a High Adverse impact, with options 8, E8a and E8b having the greatest adverse impacts;

On landscape, option 1 had a Low Adverse impact, and all the other options had a High Adverse impact, with options 5, 8, E8a and E8b having the greatest adverse impacts;

On noise, options 2 and 3 were expected to have the lowest adverse impacts, followed by option 4, then option 1, then options E4 and 5; and options 8, E8a and E8b were expected to have by far the greatest adverse impacts;

On air quality, options 1, 2 and 3 were expected to have the lowest adverse rankings, Option 5 the highest, and the other options intermediate rankings;

On public safety, all the options had a Low Adverse impact; with options 1, 2, 3, 4 and E4 expected to have the lowest impacts; followed by Option 5, then options 8, E8 and E8b;

On Green Belt and planning issues, option 1 had a Moderate Adverse impact, and all the other options had a High Adverse impact, with options 8, E8a and E8b having the greatest adverse impacts.

25 Ministers then considered the weightings to be attached to the different appraisal criteria. They concluded that a high weighting should be attached to the capacity gain criterion, since it was the extra capacity which would produce economic benefits, and bearing in mind the scale of the forecast increase in demand for South East airports.

26 Taking account of this weighting, the tentative conclusion was that Option 5 was the most promising option, followed by options 3 and 1; that options E8a and E8b were the worst; and that options 2, 4, E4 and 8 were in intermediate positions.

27 The robustness of this tentative conclusion was then tested, by applying higher weightings to each of the adverse impacts. The results of these tests were:

Option 5 remained the most promising option when greater weight was given to property take, ecology or heritage, and was joint best when greater weight was given to capital costs or Green Belt and planning issues;

Option 3 might be preferred if greater weight was given to noise, air quality or public safety; and

Option 1 might be preferred if greater weight was given to the landscape impact

28 Taking account of all considerations above, the options chosen for further appraisal in Stage Two were 5, 11 and 7. Option 5 adds one new full length runway 2450 m to the east from the existing runway and with a large stagger; option 11 adds a further full length close parallel runway to the north west of the existing runway, and option 7 adds a fourth runway, in close parallel to the east side of the first new runway, to create two pairs of close parallel runways.

29 Following the conclusion of Stage Two, Ministers decided to consult on all three options. It was recognised that the role of the airport would change with the larger options, from what is now predominantly a low cost carrier airport serving a relatively local catchment to a second international hub airport.

30 The selection of Option 5 the Claimants now seek to challenge was therefore made by July 2002. To my knowledge, no challenge was brought to this choice of option at that stage.

31. I accept that the conclusion that Option 5 should be taken forward rather than any of the other single runway options reflects to an extent the Ministerial view that a high weighting should be placed on capacity issues, but there is nothing inherently unreasonable or wrong about this. In the Stansted context the difference in capacity between Option 5 and the other single runway options was very considerable (82mppa as compared to 67mppa). Ministers were entitled to consider that this was a matter on which considerable weight should be placed."

The Defendant did not disclose any documents dealing with the choice of Option 5. No further information was provided about the weighting process.

204. Relying upon the authority of R (Nash) v. Chelsea College of Art and Design [2001] EWHC (Admin) 538, Mr Hill submitted that such ex post facto reasoning should be approached with great caution. In the Medway case Maurice Kay J had declined to consider a further reason for excluding Gatwick options which had been advanced in Mr Fawcett's evidence on behalf of the Defendant, but had not been included in the first Consultation Document (para 10). Notwithstanding the fact that it was first given more than three years after the event, I see no reason to doubt Mr Fawcett's account of what occurred in July 2001 when Option 5 was chosen to go forward to SERAS Stage Two. It is not surprising that the White Paper did not deal with this particular issue. When considering the adequacy of the reasoning for the policies in the White Paper (upon the assumption for present purposes that reasons must be given for the policy decisions in the White Paper) it should not be equated with a decision letter following a planning inquiry. The topic covered by the White Paper – the future of air transport across the whole of the UK for the next 30 years – is so vast that any reasoning in the White Paper must necessarily be brief and selective. That said, the fact that there was no mention in any of the SERAS documents of the process that had taken place "behind closed doors" in the DfT in July 2001, much less any explanation of the basis upon which Option 5 had been chosen, is relevant in answering the question: should their examination of the SERAS documents have made Essex / Herts realise that if they wished to object to the form of the one new runway option for Stansted presented in the Consultation Document, as opposed to the principle – should there be no new runway at Stansted, or one, two or three new runways either there, or in combination with other airports – then they had to do so in response to the Consultation Document?
205. The starting point for answering that question must be the duty upon any public body that has taken upon itself the task of engaging in a process of consultation to give:

"sufficient reasons for the particular proposals to allow those consulted to give intelligent consideration and an intelligent response."

See R v. North and East Devon Health Authority ex parte Coughlan [2001] QB 213 per Lord Woolf MR at para 108. This passage was cited by Maurice Kay J in paragraph 7 of the Medway case. He also referred to the dictum of Schiemann LJ in R (L) v. London Borough of Barking and Dagenham [2001] 2 FLR 763, para 13:

"consultation axiomatically requires the candid disclosure of the reasons for what is proposed."

206. If Essex / Herts had been told, either in the Consultation Document or in any of the SERAS Reports, that the Defendant had chosen what would appear from Mr Fawcett's explanation (above) to have been the most damaging of the one new runway options in environmental terms, and that he had done so because he had decided that an undisclosed, but nevertheless "high weighting" should be placed on capacity gain, it is reasonable to assume that they would have wished to make vigorous representation about that choice. In the absence of any reasons having been given for the choice it is difficult to see how they could have been expected to give "intelligent consideration", or to make an "intelligent response" to the choice of Option 5.
207. Given the importance attached to the extensive public consultation exercise in the decision making process (see paragraph 1.4 of the Consultation Document), it could not reasonably have been anticipated that the Defendant would have chosen Option 5 as the one new runway option (as opposed to a representative one new runway option)for Stansted without having given some explanation for that choice to enable consultees to give an intelligent response.
208. A careful reading of the SERAS Stage Two Reports would have confirmed Essex / Herts' view that Option 5 was being put forward in the Consultation Document on a representative basis: i.e. as representing a one new runway option at Stansted for the purposes of comparison between that option and the two new runway and three new runway options at Stansted, and for comparative purposes in one or more of the 22 (later 25) "packages" of developments at different airports set out in Chapter 14 of the Consultation Document: see paragraph 1.2 of the SERAS Stage Two Methodology Report (para 193 above), and paragraphs 1.2.4 and 5.1.2 of the Stage Two Appraisal Findings Report (paras 198 and 199 above).
209. This is how LLAOL appears to have understood the Stage Two options. In its written representations to the Court it said:

"(d) The various options for airport development that were examined in SERAS were always intended to be illustrative. By way of example, paragraph 5.1.2 of the SERAS Stage Two: Appraisal Findings Report makes it clear that the options selected for appraisal at each airport were 'representative' of three scenarios:

The level of capacity currently envisaged in planning terms

Maximising the use of the existing runway configuration

Increasing runway and terminal capacity

(e) The inclusion of options for [Luton in the White Paper and the first and second Consultation Documents] is consistent with this. Paragraph 10.5 of the second Consultation Document states that:

"The options worked up consider how best to maximise the use of a single runway"

(f) Given this, it is difficult to see how the Claimants could have a legitimate expectation of further consultation before the inclusion of reference to the runway extension option in the White Paper when such an option was simply illustrative of a policy principle."

I will deal with the implications of this for Luton in paras 290 and 291 below.

210. The impression that Option 5 was being put forward on a representative basis would have been strengthened by the realisation that the Stage One appraisal had been confined to a preliminary desk top study of some, but by no means all, of the relevant planning and environmental considerations. It could not reasonably have been foreseen that such a study would have been used as the basis for choosing Option 5 to go forward on anything other than a representative basis.
211. I realise that by the time the Consultation Document was published the information about Option 5 in the Stage One Reports had been supplemented by the further information obtained in the Stage Two appraisal, which resulted, for example, in an increase in the number of listed buildings affected from 12 to 29 (para 201); but the careful reader of SERAS would have realised that the die had been cast on the basis of the limited information in the Stage One Appraisal Findings Report.
212. It is no criticism of the Stage One appraisal to say that it was preliminary in nature. Given the number of options under consideration at this stage spread over numerous sites in the South East, it is understandable that the Stage One appraisal was confined to a desktop study. The limitations of SERAS Stage One were fairly acknowledged in the Stage Two Methodology Report (para 195 above). For the purpose of choosing a representative one runway option to be included in a large number of packages, the level of detail in Stage One was adequate. For the purpose of choosing the definitive one new runway option at Stansted, the information in the Stage One Appraisal Findings Report can fairly be described as limited in the extreme. Information obtained as a result of the desk-top survey was presented in both summary and tabular form, but no published attempt was made to carry out the crucial balancing exercise as between the environmental impacts provisionally identified, and capacity gain. The question can be asked: 'Given the limitations of SERAS Stage One which had been freely acknowledged in SERAS Stage Two, how could consultees reasonably have been expected to regard the choice of Option 5 after Stage One as having been anything other than the choice of a representative example of a one new runway option for Stansted?
213. In summary, because:

a) No reasons were given for the choice of Option 5 after Stage One;

b) Stage One did not purport to be anything other than a desk top study of some, but not all of the relevant planning and environmental issues; and

c) The Stage Two Reports expressly stated that the various options had been chosen as representing additional runway and terminal capacity at each airport;

any consultee carefully reading the SERAS reports would reasonably have concluded that Option 5 was not being put forward as the one new runway option at Stansted, and that he / she was not being asked to answer the question: if there is to be one new runway at Stansted, what form should it take, should it be Option 5 or some other option? It is true that Option 5 was, from Essex / Herts' point of view a "worst case" option for one new runway, but for the purposes of comparing that option with two new runway and three new runway options, and for inclusion in the "packages" in Chapter 14, it would have been reasonable to adopt the option which gave the greatest capacity with one new runway. It is no answer to say that the Consultation Document consulted on a representative wide-spaced runway. When the Consultation Document and the Questionnaire wished consultees to choose between close parallel and wide-spaced options for new runways they both said so, and asked the appropriate questions (paras 163 and 164 above).

214. To test the reasonableness of this conclusion, it is instructive to consider the Responses Report in assessing the extent to which consultees' responses were focussed upon the questions posed in the second Consultation Document. Respondents' attitudes towards development at Stansted were summarised in some detail. The numbers supporting one, two or three new runways were set out. But there is no suggestion that any of the respondents addressed the question: 'If one new runway is to be provided, what form should it take – is Option 5 the right one?' By contrast, the Responses Report stated that "of the Respondents supporting a new runway at Gatwick, there was more support expressed for the close parallel, rather than the wide-spaced runway, but the majority of respondents did not express a preference" (para. 1.143). The relevant figures were set out. When summarising the responses of "some local stakeholders" the Responses Report said that while Crawley Borough Council had rejected the two new runways option and any wide-spaced option: "it considered the arguments for and against a close parallel runway as put forward in the Consultation Document to be more finely balanced, but could not accept this option…" (para 1.131). The Report then summarised the Council's reasons for reaching this view.
215. As mentioned above, if the reasons now given in Mr Fawcett's second Witness Statement for the choice of Option 5 had been made public at the time of the Consultation Document, there seems little reason to doubt that Essex / Herts and many others would have wished to make representations, in particular, about the adequacy of the environmental information, and the appropriateness of the still undisclosed weightings that were attached to the different appraisal criteria. Paragraph 2.4 of the Consultation Document explained under the heading 'A Sustainable Airports Policy':

"The Government is committed to ensuring that the long term development of aviation is sustainable. In practice this will mean striking a balance between the social and economic benefits of air travel and environmental effects of any developments. The Government believes that, in principle, its policy for airports in the South East should aim both to maximise the significant social and economic benefits that growth in aviation would bring whilst trying to minimise the environmental impacts. However, the Government wants to consider the responses to this consultation before coming to a view on how to strike the right balance."

Striking the right balance between the social and economic benefits of capacity gain and the environmental impacts of providing additional capacity was a key issue about which consultees had been told that their views were being sought.

216. Against this background, a public statement that a "high weighting" had been attached to the capacity gain criterion which had resulted in the choice of Option 5 would fairly have put consultees on notice that they should make detailed representations about the striking of that balance and the weighting exercise if they wished to influence the choice of the one new runway option for Stansted.
217. To those unfamiliar with the background set out in paras 142 – 148 (above), it might appear that the issue whether the White Paper could fairly include a policy supporting the development of a new runway at Stansted, rather than "the wide-spaced runway option presented in the Consultation Document as shown on the map below" is a very narrow one. On the ground, the issue is far from being insignificant: the difference between Option 1 and Option 5 in terms of agricultural land-take is measured in hundreds of ha (paragraph 192 above). The possible new airport boundary shown on the "map below" in the White Paper includes much (but not all)of the safeguarded area which was referred to by Mr Eyre in his report. It will be recalled that he had concluded that fully developing the safeguarded area would be "an unprecedented and wholly unacceptable major environmental and visual disaster". It is not apparent from Mr Fawcett's description of the decision making process in July 2001 whether the "high adverse impact" threshold criteria scores for Option 5 were a recognition that a "major environmental and visual disaster" had to be balanced against the capacity gain criterion, or a judgement that the environmental and visual impact would be less severe than feared by Mr Eyre. This is the kind of issue that Essex / Herts might reasonably have been expected to raise if the consultation exercise had put the question fair and square: if there is to be one new runway at Stansted, should it be Option 5 or some other option?
218. Mr Drabble submitted that the Defendant was entitled to adopt the view that a substantial quantum of capacity (i.e. that represented by a wide-spaced runway) should be provided at Stansted. Such a decision was at the "national and economic policy" end of the spectrum in terms of Justiciabilty (para 58 above). He submitted that there would have been no practical difference if the White Paper had not referred specifically to a wide-spaced runway, but had instead contained a policy that substantial additional capacity, up to 46mppa, should be provided at Stansted.
219. The White Paper does not put forward any specific justification for providing up to 46mppa additional capacity (rather than the additional 32mppa (67mppa – 35mppa) which would have been provided by Options 2 – 4), apart from the fact that it is the amount of additional capacity which would be provided by the wide-spaced runway option referred to in paragraph 11.40. I accept that the White Paper could have contained a clear policy statement that the Government had decided that considerable weight should be placed on capacity gain, and (adopting the approach described by Mr Fawcett, paragraph 203 above) that a higher weighting should be placed on the capacity gain criterion, than the environmental criteria. However, no such statement of policy appeared in the White Paper. Instead, paragraph 2.17 explained that:

"The Government does not believe that either of the extremes – failing to provide additional capacity, or encouraging growth without regard for aviation's wider impacts – is an acceptable option for the future. The Government is committed to sustainable development, with four main aims:

Social progress which recognises the needs of everyone;

Effective protection of the environment;

Prudent use of natural resources;

Maintenance of high and stable levels of economic growth and employment."

220. Against this broad policy background, paragraph 2.18 of the White Paper stated that: "A balanced and measured approach to the future of air transport is needed". It will be remembered that Annex B in the Consultation Document, when describing SERAS, had said that the appraisal framework enabled decisions to be made on the trade-offs between indicators, and that:

"The weight Ministers put on each consideration will be made clear in the decisions set out in the air transport White Paper." (para 164)

There is no explicit statement that a higher weighting had been placed on capacity gain.

221. Mr Fawcett said in his First Witness Statement that:

"The policies supported in the White Paper are a clear indication that Ministers attached significant weight to providing new airport capacity, especially in the South East, where 'provision should be made for two new runways in the South East by 2030'. However, it is evident from the White Paper that the Government is not seeking to "predict and provide" for capacity, but taking a balanced and measured approach. In particular, the two additional runways proposed in the South East would not meet the central forecast of unconstrained demand in the South East."

222. Views may differ as to whether the White Paper does live up to the promise on page 164 of the Consultation Document to make clear, or even to give a "clear indication", of the weight Ministers attached to the provision of new airport capacity. Whatever view is taken, it is one thing to give such an "indication" at national level, and quite another to give policy support in a White Paper for a particular form of runway, with a particular capacity, at a particular airport, upon the basis of an unpublicised decision that the advantages of obtaining a capacity gain of up to 46mppa outweigh the environmental impacts described in a desk-top study. The adoption of such a prescriptive policy does encroach upon the proper role of an Inspector at a public inquiry, assisted by the detailed information contained in an EIA.
223. Mr Drabble rightly emphasised the fact that the White Paper did not itself authorise any particular development. The policies would merely "inform and guide the consideration of specific planning applications" (para 1.4). It was inevitable that any application for planning permission for a wide-spaced runway at Stansted as illustrated in the White Paper would have to be accompanied by an EIA. An ES for such a proposal would, as a matter of good practice, consider alternative options, and explain why they had not been adopted: see paragraph 83 of Circular 2/99 Environmental Impact Assessment.
224. Thus, Mr Drabble submitted, it would be possible and legitimate for Essex / Herts, or anybody else, to make a case at any inquiry into an application for planning permission for the wide-spaced runway referred to in paragraph 11.40 of the White Paper that the adverse effects revealed by the EIA were such that planning permission should be refused, notwithstanding the fact that refusal would frustrate national policy. They could also argue that the environmental effects of a different form of runway were so much more acceptable than those for a wide-spaced runway that the former should be preferred, notwithstanding that this too would frustrate national policy to an extent.
225. In a plan-led system the sting is in the tail of that submission. It is only a partial answer to the concerns expressed by Essex / Herts to say that they will be able to argue the case against the wide-spaced runway shown in the White Paper, to put forward alternative options through the EIA process (which is not confined to the ES prepared by the applicant for planning permission), and to argue their merits at any subsequent planning inquiry.
226. In Medway it was argued on behalf of the Defendant that the Claimants would be able to argue the case for any Gatwick options at the inquiry stage. They complained that at that stage "the metaphorical dice would be loaded against them. They would be arguing against Government policy enshrined in the White Paper" (para 29). Maurice Kay J accepted that "it would be 'very difficult if not impossible' to persuade an Inspector, or even more so, the Government itself, to go against such a weighty policy" (para 30). The facts of the Medway case were very different from the present case. If there had been no challenge to the exclusion of Gatwick options from the first Consultation Document, it would have been well-nigh impossible for the Claimants to have argued at a planning inquiry held many years later that they ought to be considered. Nevertheless, the policies in the White Paper will undoubtedly be given considerable weight by the decision taker, not merely because they are expressions of Government policy, and as such would be accorded due respect, but also because they will have been incorporated into the RSS and will therefore have the added weight of policy contained in the development plan: see section 38(6) of the 2004 Act, (para 52 above). Indeed, the policies in the White Paper are likely to be given added weight precisely because they were underpinned by the very many Reports comprising SERAS, and were the subject of an extensive consultation exercise. As paragraph 19.3 of the Consultation Document said:

"A clear statement of policy in the White Paper will be an essential component of the subsequent authorisation process."

227. In approving the timetable for a major infrastructure inquiry under rule 8(2) of the 2002 Rules the Secretary of State will be entitled to have regard to the extent to which issues relating to a second runway at Stansted have been 'settled' by the clear statements of policy in the White Paper.
228. I accept that under the 2002 Rules objectors will still be given a proper opportunity to have their say, but there is a clear intention that the new procedures will be used by Inspectors to ensure that inquiry time is not "wasted" by going over issues that have been "settled". In this context, there is a risk that time spent by Essex / Herts exploring the details of the consultation exercise and the SERAS Reports that led up to the adoption of the policy in the final sentence of paragraph 11.40 would be regarded as "wasted": and the policy would be regarded as having been "settled" by the White Paper.
229. Since Essex / Herts accept that (subject to 'Commercial Viability' below) the White Paper could lawfully include support for the development of a second runway at Stansted as the first new runway in the South East, the eventual decision as to the form of that new runway will inevitably be the result of a balancing exercise: weighing capacity gain against environmental impact. The final sentence of paragraph 11.40 tilts the balance in policy terms in favour of the former. If, for the reasons set out above, the balance was not tilted in a fair manner, there is no reason why in making their case at a future public inquiry Essex / Herts should be placed at a disadvantage by reason of the fact that their alternative would "frustrate national policy to an extent". In a plan-led system that disadvantage would be very real, and might even tip the balance against any alternative option promoted by them.
230. For these reasons I uphold the Essex / Herts challenge on this ground. One unwelcome consequence of doing so will be the danger that a less prescriptive policy may make it more difficult to deal with the problem of "generalised blight" (para 11.41 of the White Paper). In January 2004 BAA published its "Stansted Home Value Guarantee Scheme Guidelines" for those who wished to sell properties falling within the Proposed Airport Expanded Boundary, which corresponds with the Possible New Airport Boundary shown on the indicative map on page 117 of the White Paper. However, BAA will still be free to apply for planning permission for Option 5 if it wishes to do so. The practical effect of upholding this ground of challenge will be that among the various options for a second runway at Stansted, Option 5 will not have been given a "head start" in policy terms.

Commercial viability

231. The starting point for consideration of this ground of challenge, made by both groups of Claimants, is the statement in Annex B to the second Consultation Document that:

"A further consideration is commercial viability which is a hurdle that must be passed for airport development on both existing and new sites. A policy that relied on options that could not be funded by the private sector for the bulk of a major airport investment would not have been a useful outcome." (page 163)

232. "Funding airport development" was dealt with in Chapter 15 of the second Consultation Document. Paragraph 15.3 said:

"In recent years, the great majority of airport projects have been undertaken on a fully commercial basis, without public sector subsidy. This applies both to airports which are privately owned and those which are owned by local authorities. The Government expects this pattern to continue and does not expect to commit public funds."

233. Under the heading 'Funding major airport developments', paragraph 15.6 said this:

"Our analysis shows that by 2011 there will be a substantial excess of demand for runway capacity over supply throughout South East England. Therefore new runway capacity, at any location which is well connected to the major centres of market demand, should attract large number of flights and passengers. However, experience at Stansted in the early 1990s suggests that there is no guarantee of a rapid growth of traffic."

234. BAA's response to the second Consultation Document was contained in 'Responsible Growth' published in May 2003. In Chapter 9 BAA gave its preliminary financial appraisal of the SERAS packages. Chapter 9 contains a great deal of detail, but for present purposes it is sufficient to note that BAA cast doubt on the commercial viability of the SERAS options if a 'stand alone' approach was adopted. In paragraphs 9.30, 9.31 and 9.36 BAA said:

"9.30 In BAA's view, to finance any of the SERAS runway options at BAA airports, it would be preferable, if not necessary, to draw on the overall resources of the South East system. This would mean increasing the level of charges for all passengers using BAA's South East airports to pay for the investment in new facilities. The Government and Competition Commission have consistently adopted this approach over the last 20 years when considering airport charges at BAA's London airports. Maintaining this approach would continue to be justified on the grounds that all users would benefit from the provision of additional capacity in the South East, irrespective of its location, as a result of the reduced congestion, enhanced airline competition and lower airfares. There would be wider public interest benefits to developing airport infrastructure in a way that underpinned the economic health of London, the South East and the UK as a whole.

9.31 There is also a considerable risk that by adopting a stand alone approach, the Government or the regulator would jeopardise the timely provision of additional capacity in the South East. Without financial support from Government, the airport operator would have to wait until demand, and hence airlines' willingness to pay for new capacity, had risen to a level that would justify investment in the new runway. Such a delay in providing new capacity would not be in the interests of airlines, their passengers or the wider economy.

9.36 Until now, investments at BAA's London airports have been remunerated on a system-wide basis. In BAA's view, any shift away from this approach, to financing investments on a stand-alone basis could in many cases jeopardise the timely delivery of new runway capacity. In addition to this important point of principle, the preliminary indications from our work on the DfTs financial appraisal have the following further implications for the future economic framework of BAA's airports that the Government will need to develop to support the delivery of its forthcoming White Paper:

A new runway at Heathrow could be remunerated at 12.5% by maintaining permanently the level of charges which will apply at the end of BAAs next regulatory period (2008/9 – 2012/13), subject to the scale of additional costs associated with design and layout changes, and environmental mitigation and compensation.

A new runway could be provided at Gatwick and / or Stansted, but a system-wide approach to airport charges would make it a substantially more attractive financial proposition than a stand-alone approach.

The scale of costs and the considerable increase in charges needed to remunerate the provision of two runways at Cliffe make this the least financially attractive option.

BAA would almost certainly need to raise new capital from a range of sources to fund new runway development at any of its South East airports, and the expected levels of dividend and interest cover generated by the investment would need to be sufficiently attractive to make it possible to raise new funds on reasonable financial terms.

There would be a need for continued support for the principle of raising the level of aircraft charges prior to any new airport development coming on-stream in order to smooth the increase in airport charges that would be required to remunerate the development over a period of time."

235. The White Paper dealt with this issue in the Text Box on page 118. The relevant paragraph is as follows:

"The Government will not promote or pay for the development of Stansted. New airport capacity should be paid for by airport users. We look to the airport operator to take it forward in a way that is responsive to users, and to provide necessary funding. It is a responsibility of the regulator, the CAA, amongst its statutory duties, to encourage timely investment. The Government expects both parties, regulator and airport operator, to secure an appropriate framework to bring the development to fruition. It expects this process to be guided by the decisions in this White Paper, as well as by the regulator's duties towards users of airports, towards the operation of airports, and towards investment in new facilities at airports. "

236. This led both groups of Claimants to contend that the consultation exercise had not addressed the implications of the regulatory change from a system-wide approach to airport charges to a stand-alone approach. The CAA's policy decision was issued on the 28^th of February, the day after the second Consultation Paper was published. The Claimants further contended that the commercial viability of developing a new runway at Stansted on a stand-alone basis followed by a new runway at Heathrow was not addressed in the White Paper. If the 'inverted SERAS 12 package' was not commercially viable the consequence of adopting it as a policy in the White Paper would be widespread and long-lasting blight in the area around Stansted, and from the point of view of the London Boroughs, additional pressure on Heathrow in the short – medium term. The Claimants contended that in relation to this issue the Defendant had either failed to have regard to a most material consideration, and / or that his decision to support an option which had not been shown to be commercially viable was irrational.
237. In the second and third Witness Statements of Mr Fawcett the Defendant responded to these contentions. Under the heading 'Stansted viability' Mr Fawcett said this:

"87. Paragraph 47 of the Essex claim raises the allegation that the promotion in the White Paper of a second runway at Stansted was perverse and therefore unlawful because of the uncertainty about its funding. Paragraph 108 of the Wandsworth challenge raises similar issues.

88. I do not agree with these propositions. In my view, it was perfectly reasonable for the government to proceed on the basis that a second runway at Stansted would be funded so as to enable its development as the first runway to be built in the South East within the timescale envisaged in paragraph 11.11 of the White Paper, notwithstanding the fact that BAA in its consultation response indicated a strong preference for a 'systems' approach to be adopted. I make the following background points.

89. First, BAA, in their Consultation Response 'Responsible Growth' positively asserted that a second runway at Stansted was commercially viable and could be funded on a systems approach. This is made clear at a number of places, particularly paragraph 9.36 and 14.7.

90. Second, in Responsible Growth (paragraph 9.1) BAA proceed on the same basic assumption as SERAS that airport charges would need to increase in real terms beyond current levels in order to fund new runway development in the South East. Both the DfT (for SERAS) and BAA (for Responsible Growth) appraised the likely level of increase in airport charges required in order to achieve an acceptable rate of return on investment in a new runway development at Stansted and other SERAS options, both on a stand alone and a systems basis (Responsible Growth paragraph 9.15). BAA based its appraisal on less favourable assumptions than those made by the DfT and reported the likely need for a relatively higher level of increase in airport charges in order to fund new runway development both on a stand alone and a systems basis.

91. Third, although the current policy of the CAA is to maintain a stand alone approach, that policy embraces a caveat, recognising that BAA might wish, in the next review, to advance a case that the policy should be modified if there was compelling evidence that this was in the interests of users as a whole. In a speech delivered on 10 March 2004, the Chairman of the CAA, Sir Roy McNulty, said that the working assumption should be that CAA would continue to regulate BAA's designated airports on a stand alone basis up to 2008 (and beyond that date); but that the caveat in current regulatory policy meant that CAA would be prepared to consider modifying it if presented with compelling evidence that to do so would be genuinely in the interests of users as a whole and that such change would not be unduly distortionary or discriminatory as regards other airports in the South East.

92. Fourth, taking account both of BAA's consultation response and of CAA's current regulatory policy, the Department discussed all aspects of the funding of an additional runway at Stansted with Treasury. There were also some discussions of technical aspects with CAA. In the light of those discussions, Ministers were advised and took the view that, under appropriate circumstances, stand alone funding could be achieved for the development of an additional runway at Stansted within the timescale envisaged in the White Paper. I return to this point in paragraphs 104 to 106 below."

238. After a further discussion of the "principles of commercial viability", Mr Fawcett said:

"104. Taking account of BAA's consultation response and of CAA current regulatory policy…, DfT discussed all aspects of the funding of an additional runway at Stansted with Treasury. There were also some discussions of technical aspects with CAA. The discussions were on the basis that stand alone development of an additional runway would be supported by BAA's overall balance sheet including its interest cover. These discussions had regard to the range of cost and revenue assumptions used by DfT and BAA in their respective financial appraisals. 'Demand Risk' (i.e. revenues less than expected given possible levels of airport charges) and 'Cost risk' (i.e. capital costs higher than expected) were considered. DfT's financial appraisal was reviewed and the robustness of its cost and revenue assumptions were considered having regard to the alternative assumptions made by BAA for the purpose of its consultation response.

105. In the light of those discussions, Ministers were advised and took the view that, under appropriate circumstances, stand-alone funding could be achieved for the development of an additional runway at Stansted within the time scale envisaged by the White Paper. Ministers were further advised and took the view that, at this stage policy should at least embrace the option of a systems approach, having regard to the risks and uncertainties. They felt that it was unnecessary and indeed premature at this stage to choose between the two possible approaches to funding; and that the White Paper ought not to pre-empt the decision of the regulator on this matter.

106. For these reasons, the textbox at page 118 of the White Paper did not state a view on whether funding of the additional runway at Stansted should be on a stand alone or on a systems basis."

239. Unsurprisingly, this led the Claimants to seek disclosure of the relevant documents, and an explanation of what was meant by 'appropriate circumstances'. In response, Mr Fawcett exhibited three documents to his fifth Witness Statement, which was dated the 8^th November 2004. The three documents were as follows:

(1) A 40 page internal paper prepared by the DfT entitled 'Funding the first runway development at an airport in the South East of England', undated but produced on the 3^rd November 2003 ('the Long Paper');

(2) A 4 page internal paper prepared by the DfT, undated but produced on the 3^rd November 2003, entitled 'Funding a Second runway at Stansted' ('the Short Paper'); and

(3) A 69 page revised draft final version, dated December 2003, of a confidential report prepared by the CAA at the request of the DfT entitled 'Airport Expansion in the South East' ('the CAA Report').

240. The CAA were asked by the DfT to consider the implications for airport charges and BAA revenues arising from various "development scenarios" identified by the DfT, which envisaged new capacity being provided at existing South East airports. One of those scenarios was a new runway and terminal at Stansted. For each scenario, on the basis of assumptions provided by DfT, the CAA was asked to consider firstly, the implications for airport charges arising from that scenario, and secondly, the impacts on the capital structure and performance of BAA.
241. The CAA's Report was heavily qualified. The CAA made it clear that its analysis relied heavily on capital expenditure and passenger forecasts that had been provided by the DfT:

"Whilst the CAA has incorporated these assumptions into our analysis we take no responsibility for their accuracy. Whilst we have commented on DfT assumptions as appropriate we have not reviewed or audited them. Should these assumptions change, our findings could change materially".

242. Although the CAA was not asked to, and therefore did not, provide any judgement as to the commercial viability of any of the development scenarios which it had been asked to consider by the DfT, the findings in its Report were, to put it mildly, not encouraging. The report stated (inter alia):

"In summary our findings suggest that prices could need to rise considerably at Stansted and Gatwick, at Heathrow incremental costs are spread over a broader passenger base and as such price rises are moderate by comparison."

243. The Long paper considered the implications of BAA's response in 'Responsible Growth' to the prospect of stand alone funding. It therefore considered in some detail the funding of an additional Stansted or Heathrow runway on a stand alone basis. The Executive Summary said (in part):

"In principle, funding an additional runway at either Heathrow or Stansted on a stand-alone basis should be achievable, provided BAA delivers Terminal 5 on time and to cost (as seems to be supported by progress there since construction started), and provided a good business case can be made for the additional runway.

A new runway at Heathrow would cost more than one at Stansted, but Heathrow's 'revenue risk' would be reduced in part by the ability and undoubted willingness of airlines to pay higher airport charges there…The key funding risk of an additional runway at Stansted on a stand-alone basis is if principal airlines using Stansted are unwilling to pay cost-reflective airport charges; comfort on this point is necessary before major investment starts. However, revenue risk in terms of its underlying passenger demand is not a substantial cause for concern given excess demand in the South East system, although market appetite for an additional Stansted runway would be affected if material additional capacity at Luton is coming onstream at the same time. 'Cost risk' should be less at Stansted – with modular development of terminal capacity – than at Heathrow. On balance, an additional runway at Stansted opening in 2012, should be fundable on a standalone basis.

There are implications for an additional Stansted runway as a first additional runway in the South East if a third Heathrow runway (or the adoption of mixed mode at Heathrow) remains a prospect. But this should not be over-emphasised. Using older versions of the DfT Air Passenger Forecasting Model, there would have been concern about the fundability of a Stansted runway as the first additional runway in the South East, if a subsequent Heathrow runway had NOT been ruled out. This arose because of the 'seeding' assumption that was then made for long-haul services at Stansted. In those circumstances, it would have been unlikely that any significant amount of long haul capacity would have started up operations willingly at Stansted.

'Seeding' is no longer required in the modelling to get long haul to Stansted. A key point in the forecasts is that Heathrow will strengthen further as a business airport, while Stansted will continue mainly as a leisure airport. Like the larger airports in the regions, Stansted should serve some second-tier leisure-oriented long haul services as well as a full range of short haul services. Heathrow and Stansted will not have completely differentiated markets, but funders could well see the commercial case for a leisure-oriented additional runway at Stansted and a business-oriented and premium runway at Heathrow.

It would be difficult, however, to fund an additional runway at Stansted opening in 2012, followed by an additional Heathrow runway opening soon after, say 2015. It would be better in funding terms if that Heathrow runway opening was delayed until 2020, by which time demand to travel through South East airports is forecast to be twice current levels. Since an additional Heathrow runway is unlikely to meet EU air quality conditions by 2020 (if at all), any overlap with an additional Stansted runway should not be a problem." (emphasis in original)

244. Mr Fawcett explained that:

"The Short Paper drew on the Long Paper's detailed appraisal of (inter alia) the potential for developing additional runway at Stansted on a stand alone basis. It also drew upon the modelling work carried out by the CAA at the DfT's request and for the purpose of the CAA Report. Reflecting the findings in the Long Paper, the Short Paper concluded that additional runway capacity at Stansted should be fundable on a stand alone basis provided, in particular, that cost-reflective airport charges were in place. The Short Paper set out the principal considerations which led the DfT to that conclusion. DfT recognised the risk that, despite the expected scale of the suppressed passenger demand in the South East within the next ten years, low cost airlines might not be willing to pay such cost-reflective airport charges. Having regard to those considerations, Ministers were advised and took the view that, under appropriate circumstances, stand alone funding could be achieved for the development of an additional runway at Stansted within the time scale envisaged by the Air Transport White Paper."

245. The Claimants noted that although disclosure had been given in respect of the "discussions of technical aspects with CAA" and of the internal consideration of the stand alone issue within the DfT itself, there had been no disclosure in respect of the Department's discussions with the Treasury. Mr Fawcett had said on a number of occasions in his Second and Third Witness Statements that the DfT had "discussed all aspects of the funding of an additional runway at Stansted with Treasury". Since Mr Fawcett relied on the fact that those discussions had taken place, the Claimants, not unreasonably, wished to know what the Treasury had advised, and maintained their requests for full disclosure.
246. Further disclosure was initially resisted by Mr Drabble, but after hearing submissions I indicated that I could see no good reason for not disclosing documents relating to the DfT's discussions with the Treasury, provided that advice to Ministers need not be disclosed. In the light of that indication, Mr Drabble agreed to disclose a document entitled 'Financing new runway capacity at Stansted or Heathrow – Key Messages' ("Key Messages"), a note which summarised the results of the discussion between the DfT and the Treasury. The "Overview" to Key Messages said this:

"There is collective agreement between DfT, [The Treasury] and CAA that we cannot state categorically that a new runway at Stansted is not financeable on a stand alone basis but, due to the higher degree of revenue risk at Stansted (certainly compared with Heathrow), BAA could choose to delay development to allow the financing situation to improve.

There is agreement that there is likely to be sufficient strength in the collective revenue stream from the three BAA London airports to fund a new runway at Stansted for 2011/12. Therefore, financing is likely to be more immediately achievable under the hypothetical 'system approach' to regulation, provided that the investment was allowed in the price control.

(The CAA, as airport regulator, has made its views known on the merits of the current 'stand alone' approach and maintains that this is the most appropriate approach for commercial development. The CAA would need compelling evidence that users in aggregate would be better off to move from a 'stand alone' approach. A change in policy so soon after promulgation could emphasise regulatory uncertainty, something the capital markets would factor in.)"

247. Under the heading 'Revenue Risk – Stansted', Key Messages said this about landing charges:

"[The Treasury] (with CAA support) are concerned that there is a high degree of revenue risk as the required level of increase in landing charges is likely to be difficult to achieve at Stansted (compared with Heathrow), for the following reasons:

As Stansted lacks the market power, BAA may not have the pricing power to increase charges due to monopsony [sic] situation at Stansted, as there are a small number of airlines which use Stansted (compared with Heathrow) resulting in the dominance of Ryanair and Easyjet. This is evidenced by its inability to-date to price up to the cap (£3.10 vs. the £4.89 cap) with incumbent airlines and

Stansted is predominantly used by no-frills carriers to serve the leisure market. The no frills market is a relatively new and growing airline market and likely to be sensitive to substantial price increases. CAA modelling of £3 increase into the low cost airlines cost base is estimated to result in a 25% reduction in current profit for Ryanair.

DfT believe that Stansted airlines are likely to live with cost-reflective airport charges; these can be passed on by airlines to passengers without threatening airlines' underlying business models including fare structures. £3 is a very marginal part of the generalised costs of travel for a passenger. Incumbent airlines also have limited options to move away from Stansted although they may have more alternative locations at which to grow their business. More generally, evidence of the position today does not inform directly the different circumstances that will apply ten years hence when airlines' business models may have changed and there should be substantial excess demand for air travel throughout South East England.

We cannot state categorically that BAA would take a decision to develop a new runway at Stansted for 2011/12 opening. Deferral of development, or incremental development (such as phasing of terminal capacity and delaying surface access improvements), might be required / is likely. Precisely when BAA would begin to develop Stansted is subject to a wide degree of uncertainty and depends greatly on the development of the airline market over coming years. [The Treasury] is concerned about the potential for serious delay."

248. Key Messages was exhibited to a Witness Statement dated the 14^th December 2004 of Ms Sam Beckett, an official in the Treasury whose team was responsible for providing advice to Treasury Ministers on Government policy with regard to the development of airports in the United Kingdom. She was responsible for liaising with the DfT. In her Witness Statement she said:

"It is apparent from the Key Messages document that the Treasury were concerned that a new runway at Stansted might not be financeable on a stand-alone basis by 2012. The Treasury agreed that such a runway was likely to be financeable on a system basis on that timescale. The major concern with 'stand-alone' was the risk of delay.

Clearly, however, DfT's White Paper reflects collective Ministerial agreement. The Treasury agreed the White Paper with DfT, and DfT's White Paper represented the policy of the Government as a whole. The Treasury agreed with the textbox on Stansted at page 118, including the second paragraph in the box regarding the financing of development at Stansted. The Treasury accepted that a second runway at Stansted could be open around 2011/2012 (as stated at paragraph 11.27), that it could be completed by around 2011 or 2012 (as stated in paragraph 11.40)."

249. In his sixth Witness Statement, dated the 20^th of December 2004, Mr Fawcett gave further details of the decision making process at Ministerial level. The Short Paper had been submitted to the Secretary of State and other DfT Ministers for discussion at a meeting with DfT officials on 4^th November 2003. After that date further discussions took place, as explained by Mr Fawcett:

"6. Subsequently, an official level meeting involving DfT, Treasury, No 10 and DEFRA took place on 7 November 2003. This meeting considered both air quality and the financeability of Stansted. Further modelling results at Heathrow were showing that there were severe air quality obstacles that could prevent the development of the first additional runway in the South East there. The meeting then considered whether an early runway at Stansted could be financed. At this meeting, DfT said that it thought an additional runway at Stansted as the first additional runway in the South East could be financed on a standalone basis; the system approach could be used if standalone funding could not be achieved. The Treasury said at this meeting that early expansion could not be financed on a standalone basis rather than on the systems approach.

7. Further bilateral discussions were then undertaken at official level between DfT and the Treasury to find a solution to the key issues around the financeability of Stansted. These discussions led to the key messages paper of 12 November 2003, which is attached to Ms Beckett's Witness Statement. This made clear that, while the Treasury agreed that an additional runway at Stansted was likely to be financeable on a system basis by 2012, their major remaining concern was that a standalone approach could risk delay.

8. An inter-departmental meeting was chaired by the Secretary of State for Transport at Great Minster House on 25^th November 2003. At this meeting, concerns were expressed that a new runway at Stansted might not be fundable on a stand-alone basis by 2012. It was argued that in this case the CAA would be prepared to allow BAA to finance development on a system-wide basis. It was further argued that this would be consistent with them discharging their various statutory responsibilities, provided by the Airports Act 1986, which include the duty to facilitate the timely provision of infrastructure, although this would be contrary to the CAA's current preference for standalone regulation. DfT and colleagues would work to ensure that Stansted could be financed without any delay to construction of a first new runway but this would not involve an explicit reference to system-wide funding on the face of the White Paper. Taking account of the advice that a runway at Stansted might well be fundable on a standalone basis, as referred to in paragraph 6 above, together with the options available to the CAA under the Airports Act 1986, it was concluded that the runway could be funded but that the Government should express no view between standalone and system funding.

9. As an outcome of this meeting, a draft of the text box on page of 118 of the White Paper was prepared. This draft was iterated with contributions from Treasury and CAA. This text box in its final form sets out the Government's position on the terms of financing a second runway at Stansted. It is endorsed by all Government Departments, and the White Paper was agreed collectively agreed by Ministers."

250. It is, to say the least, most unfortunate that the Key Messages document was not disclosed, and the Treasury's concerns were not revealed, at a much earlier stage in these proceedings. It is most unfortunate for two reasons. First, it is most unusual for witnesses giving evidence on behalf of public bodies to be cross-examined in judicial review proceedings. Cross-examination is the exception, not the rule in such proceedings because the Administrative Court relies upon such witnesses, especially those representing Government Departments, to present the background facts in a comprehensive and dispassionate manner. A statement by a witness on behalf of a Government Department that "all aspects of the funding" of a proposal have been "discussed with the Treasury" is bound to leave the Court with the impression that in relation to funding there are no grounds for concern. If during the course of those discussions the Treasury has expressed significant concerns, a bare statement that the matter was discussed with the Treasury, while true as far as it goes, will mislead the Court. It is most important that officials providing Witness Statements on behalf of public bodies, in particular Government Departments, in Judicial Review proceedings, should remember that their obligation to tell the truth to the Court does not mean that the Court need only be told so much of the truth as suits the Department's case, and that inconvenient parts of the truth may be omitted from their evidence. In Court, a witness is not merely obliged to tell the truth and nothing but the truth, but also to tell the whole truth. A statement that is only partially true is as capable of being misleading as a statement that is untrue.
251. In fairness to Mr Fawcett I must emphasise the fact that this was an isolated and uncharacteristic lapse on his part. Both he and his colleagues in the DfT and the ODPM put a huge amount of effort into the daunting task of explaining the factual background to the publication of the White Paper. This is a lengthy judgement, but it refers to only a fraction of the evidence filed on behalf of the Defendant, which eventually amounted to 150 documents containing some 8,000 pages. In a case such as this, putting the Court fully into the picture without losing the wood for the trees is a difficult exercise. The failure to disclose the Key Messages document must be kept in proportion.
252. Secondly, if the whole truth had been told at an earlier stage it would have short circuited a great deal of the very detailed evidence and lengthy submissions on the topic of commercial viability. There was a mass of detailed evidence on this topic to which it is now unnecessary to refer because the position was finally, if belatedly, crystallised in the Key Messages document and Mr Fawcett's sixth Witness Statement.
253. Now that the full factual picture has been presented to the Court, it is possible to deal with the legal issues relatively briefly. Firstly, it is plain that the question of commercial viability was carefully considered within Government. Secondly, there was agreement that the proposal for a new runway at Stansted would be commercially viable on a system approach to regulation. Thirdly, the Treasury's concern with a stand alone system of regulation was confined to the risk of delay. Fourthly, the DfT's view was more optimistic. It considered that a runway at Stansted might well be fundable on a stand alone basis, but it argued that in the event that this did not prove to be possible, the CAA would be prepared to allow BAA to finance the runway on a system wide basis. Fifthly, it was therefore concluded that a new runway at Stansted could be funded, but that the Government should not express any view in the White Paper as between stand alone and system funding. That position is reflected in the Text Box, and was agreed by all Government Departments, including the DfT and the Treasury. Against this background it cannot be said that this collective agreement was either perverse, or that the Defendant failed to take account of relevant considerations.
254. The CAA's position is clear. In paragraphs 3.24 and 3.25 of the CAA decision dated February 2003, it said:

"3.24 The CAA's position, as set out in the proposals, was qualified by the statement that "in order to modify its current view that stand-alone regulation should be adopted, the CAA would expect compelling evidence to demonstrate that users in aggregate were genuinely better off as a result, and that the impact was not unduly distortionary or discriminatory as regards other airports in the South East." The CAA considers this allows BAA to present a case justifying subsequent modification of a strictly stand-alone approach consistent with the objectives under the Act, addressing in substance the points made by the Department for Transport and BAA.

3.25 The CAA therefore confirms its position that, subject to this qualification, regulation will be based on a stand-alone basis..."

255. In a speech on the 10^th March 2004, Sir Roy McNulty, the Chairman of the CAA, reaffirmed this approach. He began his speech by saying that the White Paper had been generally welcomed by the aviation industry. He then explained the CAA's position:

"The continuing build up of demand foreseen by the White Paper, supported on the supply side by the development of new business models and increased efficiency, provides a favourable commercial backcloth for new airport development. Ensuring that this leads to viable airport projects requires airport developers everywhere to adopt approaches that match what is developed with users' needs. That is the essence of a sound investment programme. However, before, during and since the publication of the White Paper, there has been speculation about how the development of an additional runway at Stansted will be funded. Interest has principally focussed on whether an additional runway could be viable, given the CAA's approach that BAA's London airports should be regulated on an individual, or stand-alone basis…

The central rationale for this stand-alone policy is that it helps to encourage efficient future investment. It is a policy designed to provide BAA with a strong incentive to match the development at Stansted closely with what current and future users at Stansted want and will be prepared to pay for. In practice this approach to regulation represents no more (or less) stringent a test than that which would apply in any other normal commercial situation. A key principle is that investments – particularly large investments – have to pay for themselves.

Admittedly there is a caveat to the current stand-alone policy, the CAA acknowledged that it would be prepared to consider modifying it if there was compelling evidence that to do so would be genuinely in the interests of users as a whole and that such a change would not be unduly distortionary or discriminatory as regards other airports in the South East."

Sir Roy acknowledged that it was possible that the policy would have to be re-examined, but added:

"any such review would need to take into account that the policy is designed to improve the efficiency of investment and therefore – to that extent was – intended to apply long term…"

He concluded the section of his speech dealing with regulatory policy by saying:

"Against this background it seems entirely reasonable that the working assumption should be that the CAA will continue to regulate BAAs designated airports on an individual - or stand alone – basis both up to 2008 any beyond. Equally it would be reasonable for BAA and users to work on the basis that in setting the maximum prices that BAA might charge at Stansted, the CAA will take account of its duty to encourage investment just as we have done in the past."

256. Pausing there, since the CAA is the regulatory authority it was entirely appropriate that the White Paper should express no view in the Text Box as between stand alone and system funding. It is important to bear in mind the nature of the CAA's statutory duties when imposing airport charges conditions under sections 40 and 46 of the 1986 Act. Section 39(2) provides that:

"The CAA shall perform its functions under [these] sections in the manner which it considers is best calculated

(a) to further the reasonable interests of users of airports within the United Kingdom,

(b) to promote the efficient economic and profitable operation of such airports,

(c) to encourage investment in new facilities at airports in time to satisfy anticipated demands by the users of such airports…"

257. Put simply, CAA is not in the business of frustrating investment by BAA in the development of a new runway at Stansted. It believes that a stand alone approach is the best way to incentivise such investment: see Sir Roy's speech above. Against this statutory background, it is important to stand back from the mass of detail that was provided by both Claimants in support of their challenges under this head. There is no suggestion that a proposal to construct a second runway at Stansted as the first new runway to be built in the South East would not pass the commercial viability hurdle on a system approach to regulation. The Claimants' challenge is founded solely upon the CAA's change in regulatory policy to a stand alone approach. If the Claimants' concerns about the commercial viability of a second runway at Stansted and the Treasury's concerns about the potential for serious delay prove to be well founded, then the CAA's own policy expressly "allows BAA to present a case justifying subsequent modification of a strictly stand alone approach…" If BAA did present a sound case there is no reason to believe that it would be rejected by the CAA, given the latter's responsibilities under the 1986 Act (above).
258. It is readily understandable that concerns such as those expressed by the Treasury were not paraded in the Text Box: to do so might have resulted in a self-fulfilling prophecy. Since the CAA is the regulator, the Text Box rightly did not attempt to pre-empt its statutory role by expressing any preference for a system or a stand alone approach. I appreciate that the Claimants' profoundly disagree with the DfT's conclusions as to viability, but in the light of the CAA's position it cannot be said that the approach to taking forward development at Stansted as set out in the Text Box is irrational. It follows that I reject this ground of challenge.

Implications of Financial Appraisal

259. However, the most recent evidence produced by the Defendant in response to the commercial viability challenge does tend to reinforce Essex / Herts' contention that the final sentence of paragraph 11.40 in the White Paper is unduly prescriptive. It will be recalled that in his first Witness Statement Mr Fawcett explained that decisions based on the findings of SERAS Stage One were taken by Ministers in July 2001. At that stage Ministers selected the most promising options at each airport and decided upon how they might be grouped into packages: "i.e. developments at one or more airports providing different amounts of capacity by 2030". We now know from Mr Fawcett's evidence that a "high weighting" was attached to the capacity gain criterion. He specifically drew attention to the "very considerable" difference in capacity (82mppa as compared to 67mppa) between Option 5 and the other single runway options at Stansted.
260. At that stage there was nothing to suggest that the whole of this capacity gain would not be obtained within the period to 2030. Thus, Table 14.3 in the Consultation Document set out the capacities of the various combinations in 2030 in mppa. The capacity of Stansted with one new runway was given as 82mppa. The traffic in 2030 varied between 74 – 76mppa depending on whether, and if so where, and when, a second runway was provided. The SERAS Stage One Appraisal Findings Report gave the airport development costs of Option 5 as £3.7 bn, and the costs of associated surface access schemes as £2.2 bn. A more detailed breakdown was contained in the Stage Two Appraisal Findings Report. Table 9.2 gave the airport development costs as £3,185m and the costs of associated surface access as £785m, a total of £3,970m.
261. When the Long Paper considered the question of funding an additional runway at Stansted, the capital costs were reduced. Paragraph 8.6 explained:

"At Stansted capital costs up to 2017 are £2.8 billion (measured in 2000 prices) and up to 2060 are £3.6 billion. These costs are less than the £4 billion estimated in the original costings of a Stansted runway [for a capacity increase from 35mppa to 82mppa] because of two factors; a revised assumption on surface access costs (now £500 million) and also because the original costs accounted for terminal capacity reaching 82mppa. Passenger throughput in the current modelling is capped at 2030 levels beyond 2030 (at 68mppa) and hence the ultimate terminal requirement is lower an extra 32mppa as opposed to an extra 47mppa."

262. Paragraph 6.16.3 of the Stage Two Appraisal Findings Report explained that terminal costs were fed in by the model in tranches of 10mppa capacity as the available terminal capacity was filled up. Because the "current modelling" used for the purposes of preparing the Long Paper capped passenger throughput at 68mppa it did not trigger another tranche of terminal costs. Mr Thompson, the Economic Advisor in the DfT responsible for the economic and financial supporting studies leading up to the White Paper, explained in a second Witness Statement dated 16^th December 2004:

"The 'Long Paper' reports that 'current modelling capped passenger throughput at Stansted with a new runway at 2030 levels beyond 2030, at 68mppa. That is a reference to the CAA's assumption for the purpose of preparing its Report. The DfT's expectation, however, is that passenger throughput will continue to rise after 2030 until capacity is reached at 82mppa. On the basis of the passenger forecasts in 'Passenger Forecasts – Additional Analysis' that stage is reached in the mid 2030s, because there is no other capacity available in the South East. The final tranche of capital expenditure needed to provide terminal facilities for that post 2030 growth in passenger throughput is not material to the key funding question, which relates to pressure on financial ratios in the period before 2020. The Key Messages paper gives a capital cost for the second runway and association facilities at Stansted of £2.6 billion for 62.6mppa in 2030. This compares with the 'Long Paper' figures of £2.8 billion for 68mppa over the major period of investment up to 2017 and £3.5 billion for the full increment of capacity from 35mppa to 82mppa. "

263. I readily accept the proposition that postponing the final tranche of capital expenditure needed to provide for post 2030 passenger growth from 68mppa to 82mppa was not material to the key funding question that was being addressed in the Long Paper and the Key Messages document. However, when one compares the basis on which Ministers had chosen Option 5 in July 2001 – that this option would provide substantial capacity gain, resulting in a capacity of 82mppa at Stansted by 2030, the goal posts have been moved: on the revised assumptions a significant part of that capacity gain need not be obtained until after 2030, when additional terminal facilities will be needed to accommodate the increase in passenger throughput from 68mppa to 82mppa. I realise that on the basis of the "Additional Analysis" forecasts the passenger throughput is expected to reach 82mppa in the mid 2030s, but this was not the basis on which Option 5 was chosen in July 2001. No documents have been disclosed relating to that decision making process, but there is nothing to suggest that Ministers then appreciated that provision of a substantial amount of the additional terminal capacity would be postponed until after 2030.
264. The potential significance of this postponement has to be considered in the light of the "considerable" weight that was attached to the capacity gain criterion in July 2001, and the fact that the principal difference between Options 4 and 5, and the reason why the latter takes so much additional land (675ha of agricultural land rather than the 480ha taken by Option 4, see Table 4.21 in the Stage One Appraisal Findings Report), is the need to accommodate a third terminal building and associated facilities: see para 4.4.4.1 of the Stage One Appraisal Findings Report.
265. Following disclosure of the Long paper and the Key Messages document it has become clear that the statement in paragraph 11.27 of the White Paper, that the option for a second runway at Stansted would provide a very substantial amount of additional capacity – "up to 46mppa", does not mean that the whole of that 46mppa additional capacity must be provided by 2030, rather it is a recognition that significantly less than that capacity may well be provided by 2030. The commercial viability of an option with both the runway and the terminal capacity to accommodate an additional 46mppa by 2030 was not tested. In this context, the observations of Sir Roy McNulty in his speech on the 10^th March 2004 are of interest. After discussing regulatory policy (see above) he said:

"Government policy on the other hand deals with the bigger picture which is as it should be. Government has stated that it will support the development as soon as possible of one additional wide-spaced runway at Stansted and that it expects it could be completed around 2011 or 2012. The Government – wisely in our view – has avoided specifying any particular airport development in detail."

266. He then said that the challenge for BAA was to develop plans for Stansted that were compatible with both Government policy and regulatory policy and asked what that could be expected to mean in practice:

"In practical terms the key challenge for BAA will be to develop plans for expansion that meet both their customers and their shareholders needs. BAA Stansted customers will only use the airport if it matches what they want and are prepared to pay for. Shareholders – on the other hand – will only want to proceed with the investment if there evidence that there is a good business case. Both sides – in our view – should be interested in exploring all of the possible alternative developments to determine which options are best…in more detail we would expect BAA to do five things".

267. Amongst those things were:

"(1) BAA should develop plans that are grounded in the reality of demand at Stansted. This means taking as the starting point the nature of the passengers and airlines currently operating out of Stansted, the proportion of leisure passengers is somewhat higher than that for London airports as a whole, but more critically 84% of air traffic is from so called low-cost carriers compared to 23% across London airports as a whole. Of course the nature of demand may change over time and BAA has to plan developments on the basis of the best possible information on likely future use, but as a starting point we would expect BAA to initiate their planning by taking full account of the needs of its current users.

(2) BAA should recognise and embrace as far as possible the flexibility within the Government's conclusions. The Government has wisely left considerable room for manoeuvre in its White Paper. In particular it has left open what precisely should be built and when in terms of supporting infrastructure to an additional runway (particularly in relation to terminal development). This poses some important questions for BAA about the precise nature and functionality of the development…In setting out the relevant trade offs BAA should have regard to the option to postpone or bring forward certain development in order to match the emerging picture of future demand. The Government has indicated a challenging target date for the completion of an additional runway and supporting infrastructure at Stansted however, the Government has been careful not to set a precise deadline. In our view this gives BAA the freedom to follow a timetable which ensures there is adequate effective consultation on the plans for development including a planning inquiry. It also gives them the freedom to phase development in line with demand. Developing an airport in stages may well carry additional costs compared to single phase development, however, such benefits need to be properly weighed against the risks of building capacity too far in advance of demand. We would expect BAA to want to share these trade offs with users before decisions are taken."

268. One can well understand that from the point of view of BAA and the CAA a policy which made provision for the maximum amount of potential additional runway capacity, but left BAA with a considerable degree of flexibility as to the amount of additional terminal capacity that should be provided by 2030, might well be welcomed. Essex / Herts on the other hand might wish to argue that if the additional terminal capacity was not needed and / or was not commercially viable until after 2030, then one of the other options, close parallel or wide-spaced, providing less additional capacity by 2030 should be preferred. In simple terms, it is one thing to prefer an option which gives a capacity of 82mppa as compared to 67mppa by 2030. It is another thing to prefer an option which gives a capacity of 68mppa by 2030, with the potential for further additional capacity reaching 82mppa at some time post 2030. Since both SERAS and the Consultation Document, presented the arguments on the basis of the additional capacity being provided by 2030, it would be unfair if this issue was regarded as closed by the final sentence of paragraph 11.40 of the White Paper.
269. I realise that leaving this issue open will have implications for Heathrow. Mr Smith submitted that any delay in the provision of additional capacity at Stansted because of uncertainty as to its commercial viability would tend to increase the pressure on Heathrow. However, in view of the Government's policy decision that substantial financial support would not be forthcoming from public funds, the London Boroughs were not able to point to any alternative proposal which might have provided additional runway capacity any sooner than a second runway at Stansted.

Luton

270. Luton airport is situated on the South Eastern edge of the borough of Luton. It is owned by the Borough Council and operated by LLAOL. The airport has a single runway and passenger terminal. When describing the current situation, the first Consultation Document said that "in 2000 over 6 million passengers used the airport and there were around 55 thousand air transport movements (ATMs). In terms of passengers carried, it is the seventh busiest airport in the United Kingdom". The Bedfordshire Structure Plan provides for the airport to seek an increase in capacity of up to 10mppa subject to meeting a number of environmental conditions. The capacity of the current runway is constrained particularly by the absence of a parallel taxiway which limits the number of ATMs achievable to around 100,000 per annum carrying around 10mppa.
271. The first Consultation Document explained that no options for additional runways at Luton were considered "due to the severe physical constraints at and around the site". The options worked up considered how best "to maximise the use of a single runway" (10.5). Paragraph 10.6 stated:

"there are 2 options for maximum use at Luton, a new southern runway and a new realigned runway."

272. These two options were described in paragraphs 10.7 and 10.8, and illustrated in figures 10B and 10C. The new southern runway would be built 200m to the south of, and parallel with, the existing runway. The new realigned runway crossed the existing runway and would be on a NNE-SSW alignment. Both options would have the same runway capacity of 240,000 ATMs supported by a terminal capacity of up to 31mppa. The impacts of the two options on road and rail networks, and on people and the environment, were discussed. Tables showed the areas and numbers of people exposed to different levels of noise in 2015 and 2030 as a result of the two options, and figures 10D and 10E showed the projected noise contours for 2015. In addition there was an analysis of the possible impact of the two options on air quality (10.24). The proposals in the Consultation Document were the subject of a public exhibition locally on the 27^th – 28^th September 2002.
273. In its response dated November 2002 LLAOL said that:

"a further option is contained in the SERAS Stage 2 appraisal findings report for an extension to the existing runway at Luton which LLAOL believes has a multitude of benefits which are described below". (3.12)

The benefits of this further option, which LLAOL believed was "a more deliverable option in financial, operational and amenity impact terms", were then described. LLAOL believed "that this scenario is worthy of consideration by government" (3.21).

274. In the second Consultation Document, paragraph 10.6 was revised as follows:

"SERAS considered two options for the maximum use at Luton: a new southern runway and a new realigned runway. Chapter 14 shows that the forecast use of Luton is strongly influenced by the amount of airport capacity elsewhere in the South East. So, in practice, the extent of development at Luton and any requirement for additional land to facilitate it will be affected by decisions about those other airports. Increased use of the airport might, for example, be based on the existing runway alignment."

Apart from this revision (and one other minor alteration), Chapter 10 of the Consultation Document dealing with Luton was not altered between the first and the second editions.

275. In its response dated June 2003 LLAOL said that it welcomed:

"the following amendments:

The inclusion of Gatwick options in the consultation process

Further clarification of the term maximum use with respect to Luton

Further clarification that increased use at Luton could be based on the existing runway alignment (and extension)".

276. In paragraphs 3.4 and 3.5 of its response LLAOL stated:

"In SERAS 2 (February 2003), Government took the opportunity to provide further clarification with respect to runway provision at Luton, stating:

'Increased use of the airport might, for example, be based on the existing runway alignment'.

In our view, subject to further detailed appraisal, Government should consider the runway extension option (Option 1, SERAS: Airport Optioneering, Final Report, February 2002) for delivering maximum use at Luton."

277. LLAOL did not hide its preference for the runway extension option. It published its responses to the first and second editions of the Consultation Document. LADACAN was well aware of LLAOL's preference and was concerned that the second Consultation Document had not invited the public to comment upon it. In a letter dated the 10^th June 2003 to the local MP, the Rt Hon Peter Lilley, LADACAN asked him to raise what it described as "an important point which needs fast-tracking" with the Defendant. The letter described the point in these terms:

"Briefly, the new document appears to introduce a new option for Luton of simply extending the existing runway, but fails to follow that through with an indication of its consequences (throughput and environmental), nor include it in the questionnaire. We feel that if this exercise is to remain a true public consultation, this surely requires an extension of the consultation deadline in order to give those affected the opportunity to comment on that idea.

To elaborate, since the Consultation Documents were re-issued in February 2003 it has become increasingly clear to LADACAN that no one understands what precisely is meant by the addition to paragraph 10.6 of the words, "Increased use of the airport, might for example, be based on the existing runway alignment." We have had to guess that the DfT means that the existing runway could be extended as an alternative to building a replacement runway, but it seems quite wrong to require consultees to approach these already complex documents as if they were a cryptic crossword. The general public is left as much in the dark as they were by the original document, which effectively hid the proposals for a massive, five-fold expansion of Luton Airport.

It is a crucial point because [the] background reports to SERAS show that an extension to the existing runway could increase Luton Airport's capacity by almost as much as a replacement runway. The effects on the surrounding region would be thereby just as damaging.

We look forward to Mr Darling's response and will take careful note of any reasons he may care to put forward as to why the consultation may not be extended to rectify this shortcoming."

278. The Parliamentary Under-Secretary of State replied on behalf the Defendant on the 4^th August 2003:

"I would like to assure Dr Davis, that every effort was made to make the text clear in the second edition of The Future Development of Air Transport in the United Kingdom Consultation Document. Indeed, where it had become evident that clarification of the text in the first edition would be helpful, the text was expanded. This was explained in the Introduction to the second edition of the Consultation Document.

I am sorry if Dr Davis considered paragraph 10.6 of the second edition to be misleading. However, I do not agree that there was any need to extend the consultation period.

Question 10 in the second edition of the Questionnaire referred clearly to the two options at Luton – a new southern runway and a realigned runway.

The Consultation Document itself emphasised that it was an open consultation. Comments were not only invited on the options put forward. We invited views on the following broader questions:

Should new airport capacity be provided in the South East over the next 30 years and, if so, how much?

Where should any additional capacity be provided?

What controls, mitigation measures and compensation should be put in place to limit and manage the adverse impacts of any additional airport development on people and the natural and built environment?

The Consultation Document provided a commentary on the key issues.

The consultation closed on 30 June. We will consider LADACAN's main consultation response carefully, along with other responses, before decisions are taken. We plan to publish the White Paper later this year.

I hope this is helpful."

279. Pausing there, it will be noted that far from being "helpful" the reply, which was sent only after the extended consultation period had closed, studiously avoided answering the question that had been raised by LADACAN; what precisely was meant by the addition to paragraph 10.6 of the final sentence "Increased use of the airport might, for example, be based on the existing runway alignment". Was this sentence a reference to "a new option for Luton of simply extending the existing runway", and if so, were the public expected to comment upon it in response to the second Consultation Document?
280. Question 10 in the second Questionnaire referred to in the letter dated 4^th August 2003 asked consultees to: "indicate your level of support [from 'strongly support' to 'strongly oppose'] for development at each of the airports / sites below". At Luton consultees' views were sought in relation to the two options mentioned in the Consultation Document; the new southern runway option and the realigned runway option.
281. LADACAN referred to the fact that LLAOL had "published plans to expand on the existing runway" in a letter dated 20^th October 2003 to Mr McNulty MP. Ms Vertes of the Airport's Policy Division of the Department for Transport replied in a letter dated the 28^th October 2003:

"with regard to LLAOL's proposals for the future development of Luton airport a number of variant proposals at existing sites and proposals for new airport capacity at sites which were not included in the Government's Consultation Document have been submitted as responses to the consultation. These are being considered. If the Government was minded to favour any of these options it would be necessary to consult separately on them."

282. The White Paper was published in December 2003. So far as material it said this in relation to Luton:

"11.84 Luton currently handles about seven million passengers per annum, and is growing steadily towards its current planning limit of 10mppa. Forecasts suggest that there would be sufficient demand to justify expansion of Luton to the full potential of a single runway – say about 30mppa and 240,000 ATM's – in the period up to 2030, even with two new runways at other South East airports.

11.87 The Consultation Document included two options for a replacement runway at Luton. One of these involved moving the runway to a NNE – SSW alignment and extending it. The other option that was put forward was for a replacement full-length runway to the south and on the same alignment, with the latter used as a taxiway…"

Having discussed the realigned runway option, paragraph 11.87 concluded "On balance there does not appear to be a compelling argument for this option and we do not support it."

283. The White Paper continued:

"11.88 There is a stronger case for the southern replacement runway option. The airport operator does not favour that option and proposes instead to lengthen the existing runway and taxiway. The second edition of the South East Consultation Document acknowledged the possibility of such an alternative. (emphasis added)

11.89 The Government supports the growth of Luton up to the maximum use of a single full-length runway based broadly on the current alignment, on condition that the overall environmental impacts of such development will be carefully controlled and adequate mitigation provided. We believe that growth should be subject to stringent limits on the area affected by aircraft noise, with the objective of incentivising airlines to introduce the quietest suitable aircraft as quickly as is reasonably practicable. The limits should look ten years ahead, and will need to be reviewed at intervals between now and 2030 to take account of emerging developments in aircraft noise performance. We note that the airport operator's proposed single-runway solution may be a more cost-effective approach than the consultation option, and that less land outside the current boundary might be required.

11.90 The two maps below reproduce that shown in the Consultation Document for the option of a replacement runway to the south of the existing runway as well as the airport operator's alternative proposal."

284. In paragraph 11.92, the White Paper noted that LLAOL had also included in its consultation response a proposal for a second close parallel runway at Luton that would provide a total capacity of about 62mppa. Having discussed this proposal, paragraph 11.92 concluded: "On balance we do not support a second runway at Luton".
285. The two maps referred to in paragraph 11.90 show the runway moved south and extended (the first option in the Consultation Document), and LLAOL's proposal for an extended runway. The note above both maps states "it must be stressed that these maps are only indicative pending detailed design work and the submission of a planning application by the operator. They should not therefore taken to be formal safeguarding maps."
286. Both Essex / Herts and the London Boroughs submit that the Defendant has acted unfairly in giving policy support to LLAOL's proposal - for the lengthening of the existing runway at Luton - which had not been the subject of public consultation. The Defendant submits that the Claimants' complaint is based upon a misreading of paragraphs 11.87 – 11.89 of the White Paper. In his Summary Grounds the Defendant said:

"The White Paper does not pretend that the Consultation Paper proposed as an option the extension of the existing runway along its current alignment. Moreover, the White Paper expresses no policy support for the airport operator's proposal that the existing runway be extended. In fact, paragraph 11.89 of the White Paper expresses the Government's support for –

'the growth of Luton up to the maximum use of a single full-length runway based broadly on the current alignment, on condition that the overall environmental impacts of such development will be carefully controlled and adequate mitigation provided'

The White Paper does no more than to 'note' the airport operator's proposed single runway solution and its possible advantages in terms of cost and land-take. Thus, insofar as the White Paper expresses any policy support for runway development at Luton, it is essentially for an approach which reflects the second of the 2 options consulted upon (i.e. a full length runway on the existing alignment). Its stance in relation to the airport operator's proposal for achieving that by extending the existing runway itself is essentially neutral. The Claimants' complaint that the White Paper has adopted a policy of support which was not consulted upon is thus based on an incorrect understanding of the facts."

287. Paragraph 60 of the Defendant's Detailed Grounds cross-referred to these passages in the Summary Grounds and said:

"the White Paper supports the growth of Luton up to the maximum use of a single full-length runway based broadly on its current alignment. The White Paper shows two possible means of achieving that without expressing a preference between them. It will therefore be for the airport operator to bring forward a proposal for the expansion on an application for planning permission and to justify its preference in relation to impacts... There will be public consultation on such a proposal in accordance with the applicable development control procedures."

288. The detailed grounds reflect paragraphs 107 - 110 of Mr Fawcett's third Witness Statement:

"107. The White Paper explained that Ministers had decided that, based on the evidence, there was a stronger case for the southern replacement runway option rather than the realigned runway. They therefore supported the growth of Luton up to the maximum use of a single full-length runway based broadly on the current alignment.

108. Ministers were aware of LLAOL's responses to the consultation. LLAOL were critical of the southern and realigned runway options and proposed a variant option which comprised of an extension to the existing single runway to 3000m and the creation of parallel taxiways.

109. Ministers recognised that the airport operator's proposed single runway solution might be a more cost effective approach than the consultation option and offered other potential advantages. For example, that less land outside the current boundary might be required.

110. The White Paper however, did not express a preference between the southern replacement runway consultation option and the airport operator's own option for maximum use. Maps of both options were published in Chapter 10 of the White Paper. It is for the airport operator to decide how to take forward plans for airport expansion and accordingly submit a planning application providing full details of their proposal."

289. In its written submissions LLAOL contended that the Claimants had had "ample opportunity to consider and make representations on the possibility of a runway extension at Luton." The possibility was referred to in the SERAS Stage 2 Appraisal Findings Report and the Final Optioneering Report both published in February 2002, and in LLAOL's responses to the two Consultation Documents. In LLAOL's view the final sentence of the revised paragraph 10.6 in the second Consultation Document "clearly implied an extension of the existing runway". That this was LLAOL's understanding of the revised wording is evident from paragraph 1.7 of its June 2003 response (see paras 275 and 276 above). LLAOL also relied upon the last paragraph of the introduction to the second edition of the Consultation Document which made it clear that this was "an open consultation", that it was "open to anyone to submit alternative ideas", and that several "new proposals" had already been put forward.
290. LLAOL also submitted that the various options had been put forward on a representative basis (para 209 above). I have accepted Essex / Herts submissions to that effect in respect of Option 5 at Stansted. However, the position at Luton was different in that no options for additional runways were considered (para 10.5 of the second Consultation Document), and its capacity of 31mppa was a constant in all of the "packages" considered in Chapter 14, although the traffic by 2030 varied depending upon the package. Two ways of maximising the use of a single runway were put forward: both of them involved the construction of a new runway; in the case of the southern runway option the existing runway would be retained to form a parallel taxiway.
291. I would accept the proposition that these options could reasonably have been regarded as representative of the proposition that a new runway should be constructed either to the south of the existing runway, or on a NNE-SSW alignment. I do not accept the proposition that these two options could reasonably have been treated as representing an extension to the existing runway.
292. In his submissions, Mr Drabble confirmed that it was not part of the Defendant's case that there had been consultation in respect of LLAOL's proposal, and the Defendant did not contend that members of the public could have been expected to make representations in respect of that proposal as a consequence of the inclusion of the final sentence in paragraph 10.6 of the second Consultation Document. Because LLAOL's proposal had not been consulted upon, paragraph 11.89 was deliberately drafted on the basis that it would be inappropriate to express any policy preference for the operator's solution. Paragraph 11.89 merely gave policy support to a general approach. LLAOL could bring forward one or other of the options falling within that broad policy approach. There would then have to be an EIA which would consider alternative solutions, and the planning process would select which solution was to be preferred. The Defendant would be content with a declaration that properly construed the White Paper did not give policy support for LLAOL's proposal to extend the existing runway in preference to the consultation option of providing a new replacement runway to the south of the existing runway on the same alignment.
293. The two groups of Claimants contend that this does not go far enough. Two options were consulted upon. One, the realigned runway, was expressly not supported. That left the second option that was consulted upon, the southern replacement runway, for which the White Paper says "there is a stronger case"; and LLAOL's proposal which was not consulted upon. Since the White Paper did not express any preference between the two remaining options, it followed that if the White Paper was to be construed as supporting the southern replacement runway option, it also gave an equal measure of support to LLAOL's proposal. When the White Paper did not support a proposal it said so in terms: see not only paragraph 11.87 in respect of the realigned runway option, but also paragraph 11.92 which stated that the Government did not support a second runway at Luton.
294. In my judgement there is force in this complaint. The manner in which LLAOL's proposal was dealt with by the Defendant in the second Consultation Document was most unfortunate. It is understandable that apart from the inclusion of various options at Gatwick in response to the Maurice Kay J's judgement in the Medway case, the Defendant should have wished to limit the revisions to the second Consultation Document to the correction of "small typographical errors", and to expanding the earlier text to provide "clarification". If that was the Defendant's intention it is difficult to see the purpose of the final sentence in the revised paragraph 10.6. Far from providing clarification, if it was intended to refer to LLAOL's proposal (as now seems to be the case), it was at best an opaque reference to the proposal. In its letter of the 10^th June 2003 LADACAN understandably sought clarification as to the meaning of the additional sentence. But after a delay of nearly 2 months, no clarification was forthcoming in the Parliamentary Under-Secretary of State's letter dated the 4^th August 2003. If the second edition of the Consultation Document did "acknowledge" the possibility of the alternative that had been proposed by LLAOL (as stated in the final sentence of paragraph 11.88 of the White Paper) it is difficult to see why the acknowledgement was made in such vague terms, and why clarification was not provided until publication of the White Paper. Neither Mr Fawcett's evidence, nor Mr Drabble's submissions provided any satisfactory explanation for these matters.
295. If the Defendant had made the position clear, either in the Second Consultation Document itself, or in response to the letter dated the 10^th June 2003, and given LADACAN and others a proper opportunity to make representations in response to LLAOL's proposals, there could have been no complaint if the Defendant had then decided to express a policy preference for those proposals (subject always to detailed assessment in an EIA and to consideration in the planning process). An opportunity to provide much needed clarification was not taken by the Defendant.
296. Absent any explanation, I am left with the impression that officials within the DfT wanted the best of both worlds. The Defendant's obligation to act fairly extended to all parties, in particular (in this context) LLAOL as well as LADACAN. LLAOL had responded to the first edition of the Consultation Document. It was entitled to have its proposal properly considered by the Defendant. Those responsible for drafting the second Consultation Document wished to include some form of acknowledgment of LLAOL's proposal, to leave the door open for the Defendant to give it some discreet encouragement, if not outright support in the White Paper. At the same time they did not want to include the proposal as a new option for consultation because that might have led to requests for a further extension of the consultation period, which had originally been due to end on the 30^th November 2002, and had been extended following publication of the second Consultation Document to 30^th June 2003.
297. A vague sentence was therefore added to paragraph 10.6, and its meaning was not clarified until the White Paper was published. I do not accept LLAOL's contention that the Claimants had "ample opportunity" to make representations about its proposals for an extension to the existing runway. The Defendant rightly accepts that the final sentence of paragraph 10.6 was not sufficient to put the Claimants on notice that they should make representations about LLAOL's proposal in response to the second Consultation Document. In the absence of any clarification in response to LADACAN's letter dated 10^th June 2003 the Claimants could not reasonably have been expected to make such representations.
298. Again, it is helpful to look at the responses to the consultation exercise. When dealing with "Attitudes towards Development at Luton" the Responses Report described the options consulted upon, as follows:

"1.188 The proposition put forward for Luton in the South East consultation document was that maximum use should be made of a single runway, either to the south of the existing runway (which would become part of a full length parallel taxiway), or realigned on a north east – south west axis, broadly comparable to the Stansted runway alignment."

Paragraph 1.190 stated:

"A large number of respondents commented on the possibility of making maximum use of the existing runway rather than on the options consulted on."

This does not make it clear whether the possibility of making "maximum use of the existing runway" is a reference to LLAOL's proposal for an extension of the existing runway.

299. Tables 20 and 21 summarised respondents' views on the two options presented in the second Consultation Document. Paragraph 1.199 added:

"86 respondents commented on the alternative possibility of increased runway capacity from the existing runway, which in essence would require the addition of improved taxiway provision and rapid exit taxiways and other airfield improvements. 64 respondents expressed support for this approach, with 27 of these respondents not commenting on either side of the consulted options."

This summary does not suggest that these respondents were commenting on LLAOL's proposal to extend the existing runway. One would have thought that such a proposal would be described as a "runway extension" and not as an "other airport development". The responses to the second Questionnaire were separately analysed by NOP. As mentioned above (para 179) the questions in that Questionnaire were confined to the two options mentioned in the second Consultation Document.

300. In these circumstances, the Defendant could not fairly give any policy support in the White Paper to LLAOL's proposal. If he was not intending to reject it, upon the basis that he was not persuaded by LLAOL's representations, the fair course of action would have been to mention the fact that LLAOL had made the proposal, and considered it preferable to the southern replacement runway option, but to state that it would have to be the subject of full public consultation. In fairness to those who had not been consulted he had to maintain an attitude of strict neutrality towards LLAOL's proposal.
301. Mr Drabble submits that, properly understood, this is just what the White Paper did. It deliberately expressed no preference between the southern replacement runway option and LLAOL's proposal, and instead supported a strategy: "the growth of Luton up to the maximum use of a singe full length runway based broadly on the current alignment", which enabled either option to be brought forward by LLAOL.
302. In assessing the force of this submission it is instructive to compare the manner in which LLAOL's proposal was treated in paragraphs 11.88 – 11.90, with the manner in which the BAA's proposal for a sixth terminal to the north of the A4 was dealt with in paragraph 11.65 of the White Paper. Having summarised BAA's arguments, paragraph 11.65 said:

"In principle we recognise the force of these arguments and suggest that the operator should carry out further work on proposals for terminal capacity and an appraisal of the impacts, on the basis of which a further consultation would be required."

303. Had such an approach been adopted to LLAOL's proposal there could have been no complaint from the Claimants. I realise that BAA's proposal took more land than was allowed for in the consultation option, and that LLAOL's proposal takes less land than the construction of a new southern runway, but the illustrative maps on page 130 of the White Paper indicate that there would be a relatively small extension of the airport boundary to the east if LLAOL's proposal was adopted. In contrast to the White Paper's acknowledgement that further consultation was required in respect of BAA's proposal because it had not been consulted upon, the final sentence of paragraph 11.88 simply muddied the waters. If one turns to the second Consultation Document to see what alternative it did acknowledge, one sees that it was the possibility that "increased use of the airport might…be based on the existing runway alignment" (para 10.6). Thus, the statement in the first sentence of paragraph 11.89 - "the Government supports the growth of Luton up to the maximum use of a single full-length runway based broadly on the current alignment – looks suspiciously like an expression of support for the possibility which was acknowledged in the final sentence of paragraph 10.6 of the second Consultation Document.
304. The addition of the word "broadly" does admit the possibility of the southern replacement runway option, but if that option was being supported and no policy support was being given to LLAOL's proposal because it had not been consulted upon, such a convoluted description of the southern replacement runway option would have been unnecessary. The Defendant's "neutrality" as between it and LLAOL's proposal, is further strained by the final sentence of paragraph 11.89, which notes the possible advantages of LLAOL's proposal. The overall impression created by paragraphs 11.88 and 11.89 is that policy support is being given to LLAOL's proposal, albeit that the southern replacement runway is also supported.
305. In any event it is not enough to say that the White Paper is "neutral", or does not express any preference as between the southern replacement runway option and LLAOL's proposal, if it gives policy support to the former. The policies must be read as a whole and in a common sense way. When an option is not supported the White Paper says so in terms: see the final sentences in paras. 11.87 and 11.92. Two options for a replacement runway at Luton having been presented in the Consultation Document and one of those options having been rejected, a statement that there is "a stronger case" for the remaining option is bound to be interpreted as support for that option. If no preference is then expressed between it and some other proposal it follows that the other proposal is also supported. Even if the White Paper is "neutral" as between the southern runway option and LLAOL's proposal, it is not "neutral" towards those two proposals.
306. It must be emphasised that this lack of clarity is not the fault of LLAOL. It acted entirely properly in responding to the consultation exercise by putting forward its proposal. The deliberate fudge was the result of the Department's wish to be able to give encouragement, but not so blatantly as to trigger another round of consultation, the consultation exercise having already been extended.
307. The White Paper could fairly support the growth of Luton up to the maximum use of a single full-length runway, but LLAOL's proposal could not fairly be placed on an equal footing with one of the options presented in the Consultation Document until it had been the subject of public consultation.
308. For the reasons set out above in relation to the 'Stansted' ground of challenge it is not an adequate answer for the Defendant to point to the fact that there will have to be public consultation if LLAOL makes a planning application supported by an ES. That would equally apply to a proposal by BAA for a 6^th Terminal North of the A4. Given the weight that will be accorded to any apparent expression of policy support in the White Paper, it is essential that a proposal should not have been given a "head start" in policy terms if it was not properly consulted upon.
309. For these reasons the 'Luton' ground of challenge succeeds.

Overall Conclusions

310. The applications succeed on the 'Stansted' and the 'Luton' grounds and fail on the 'Heathrow' and the 'Commercial Viability' grounds. Having said that, it must be clearly understood that the Court is not concerned with the merits of the policies contained in the White Paper. For those, the Defendant is answerable to Parliament. The question for the Court is whether the decision making process which led to the adoption of the policies in Chapter 11 of the White Paper was lawful.
311. Subject to the two qualifications below, the answer to that question is 'Yes'. The overall process, with the progressively more detailed appraisal stages of SERAS, followed by an extensive public consultation exercise, was an impressive attempt to grapple with a difficult and complex issue, and to provide a clear policy framework. Subject to the two qualifications it was not unfair for the Defendant to adopt the policies in Chapter 11 without further consultation. He gave very careful consideration to all the relevant material, and it cannot be said that his decision to adopt the policies was irrational.
312. The two qualifications are as follows:

(1) While policy support for the development of a second runway at Stansted as the first new runway in the South East was a fair outcome of the consultation exercise, the statement that it "would be the wide spaced runway option presented in the Consultation Document" was not. Having regard to the basis on which the consultation exercise was conducted and the role of the Government policy in the planning and EIA process the final sentence of paragraph 11.40 of the White Paper was, to mix the transport metaphors, "A bridge too far".

(2) The White Paper could fairly support the growth of Luton up to the maximum use of a single full-length runway, but it unfairly managed to convey the impression that LLAOL's proposal to extend the existing runway at Luton had been consulted upon, and that it (in addition to the southern runway option) was supported in policy terms, when fairness required a clear acknowledgement that since it had not been consulted upon, any decision as to whether or not it should have policy support would have to be the subject of full consultation.

Relief

313. In the context of an air transport policy for the UK, or for the South East of England, these are minor qualifications, but from the Claimants' point of view they are of considerable local significance. Although the policies in Chapter 11 are interlinked and, to an extent, interdependent, it would be wholly disproportionate, and of no benefit to anyone, to quash Chapter 11, leaving the South East of England without any airports policy. Nor would it be appropriate to simply quash the offending passages, e.g. the final sentence in paragraph 11.40. It would be unfair to LLAOL to delete all reference to its proposal. It is not the Court's function to wield a blue pencil, or to re-write paragraph 11.89, or the final sentence of paragraph 11.40. If relief is to be granted it should be declaratory in nature. I see no advantage in attempting to frame specific declarations. This judgement will be available to those responsible for framing the policies in the RSS, and to the participants in any future planning inquiry. In these circumstances a declaration in the terms of this judgement should suffice. In any event, I suspect that the Stansted and Luton challenges have largely served their purpose in establishing the basis upon which Option 5 was chosen, and in establishing that LLAOL's option was not consulted upon.