Aircraft stand on the tarmac at Terminal 3 of Heathrow airport in London

A new runway at Heathrow, with a ban on night flights, is the best way to boost Britain’s economy and secure the UK’s future in global aviation, according to the independent Airports Commission.

That is the long-awaited judgment from the panel led by Sir Howard Davies, the economist, set up by David Cameron in 2012 to settle decades of political controversy over airport expansion in southeast England.

Sir Howard insisted that expansion at Heathrow — at £17.6bn the most expensive and politically contentious of the three options shortlisted last year — would deliver the greatest benefits to the UK. A third runway could generate up to £147bn for the economy over 60 years and 70,000 new jobs by 2050, he said.

The panel left little room for the government to opt for the politically less contentious expansion of Gatwick. Sir Howard said Gatwick’s proposal was “plausible” but that failure to expand Heathrow put the UK’s aviation sector at risk of losing out to continental Europe.

However, Heathrow’s expansion should go ahead only with a “significant package of measures” to mitigate its impact on local communities and the environment. Roads around the airport already breach EU limits on pollution.

According to the panel, the package should include a ban on all flights between 11.30pm and 6am, a legally binding cap on noise levels, a levy to fund a more generous compensation package for those living under the flight path, and an independent noise regulator. The government would also have to pledge that there would be no fourth runway.

There are currently 16 flights each night, concentrated between 4am and 6am.

Sir Howard said the average London air fare could fall by £20 if Heathrow was expanded. Passengers were paying the price for capacity constraints which were impeding competition, he said. However, at Heathrow the gain could be reduced by the expected £10 rise in airport charges.

John Holland-Kaye, Heathrow’s chief executive, sought to distance the recommendation from a battle between his airport and Gatwick. “This debate has never been about a runway, it’s been about the future we want for Britain,” he said.

The decision will set the scene for a fierce battle within the ruling Conservative party. It has pledged to consider the commission’s findings and give a detailed response by the end of the year, but not necessarily to implement them.

Sir Howard urged the government to decide quickly on new capacity. “Further delay will be increasingly costly and will be seen nationally and internationally as a sign that the UK is unwilling or unable to take the steps needed to maintain its position as a well-connected, open trading economy,” he said.

Heathrow: a third runway

The Institute of Economic Affairs agreed, saying: “While the UK hasn’t built a new full-length runway in the southeast since the second world war, in just a few years China has built more than 30 airports.”

Downing Street said the document was “not definitive” and not legally binding. It will be keen to avoid a judicial review of its final decision and will have to allow for public consultation on the commission’s findings and on its own final decision.

Patrick McLoughlin, the transport secretary, said he would make a statement to parliament later on Wednesday. “As a nation we must be ambitious and forward-looking,” he said. “This is a once in a generation opportunity to answer a vital question.”

Some senior Tories, such as Boris Johnson, mayor of London, and Philip Hammond, the foreign secretary, whose constituencies sit under the airport’s busy flight path, are bitterly opposed to Heathrow’s expansion.

Mr Holland-Kaye said Mr Cameron would not be reneging on his decision to block Heathrow expansion by supporting it now. “This proposal is completely different,” he told the BBC. “It’s us who have U-turned so the prime minister doesn’t have to.”

Stewart Wingate, Gatwick’s chief executive, refused to concede defeat. “Gatwick is still very much in the race,” he said. “We are confident that when the government makes that decision they will choose Gatwick as the only deliverable option. This report highlights the very significant environmental challenges at Heathrow such as air quality and noise impact.”

But the commission said adding a runway at Gatwick was unlikely to deliver the same benefits as at Heathrow.

“For Gatwick expansion to deliver connectivity benefits closer in scale to those from Heathrow, substantial changes would need to be seen, such as an airline alliance moving to the airport, low-cost carriers making significant incursions into the long-haul sector or the structured use of low-cost networks as ‘feeder’ services for long-haul carriers,” it said.

“None of these is impossible, but they would be a risky basis for any long-term infrastructure decision and even if they were to occur, it would not necessarily lead to the establishment of a broader long-haul route network, which will be central to the UK’s long-term economic prosperity.”

The commission last year shortlisted three options — a third runway at Heathrow, extension of an existing runway and a second at Gatwick.

Anti-Heathrow campaigners vowed to continue the fight a project that will mean an extra 260,000 flights a year over an area west of London, where several hundred thousand people are already affected by varying levels of aircraft noise.

Environmental campaigners said the UK’s pledge to cut carbon emissions made Heathrow’s expansion impossible legally and politically. “Davies’s preferred option of a third runway at Heathrow is an environmental and political minefield,” said John Sauven, UK executive director of Greenpeace. “It would jeopardise the UK’s climate targets, worsen air pollution in London and open up a political can of worms for David Cameron.”

However, the business community welcomed the commission’s support for expansion of Heathrow, which is not only the UK’s busiest passenger airport but handles two-thirds of all air freight.

John Cridland, director-general of the CBI employers’ organisation, said the government “must commit to the decision and get diggers in the ground at Heathrow swiftly by 2020”.

Whichever option the government chooses, airport expansion will have to be put to a parliamentary vote and this could be delicate given the Tories’ narrow majority.

Zac Goldsmith, Tory MP for Richmond, which sits on the Heathrow flight path, told LBC radio: “Politics will decide this and I don’t think it is politically deliverable any more than it is legally deliverable. I’m surprised that the report isn’t more professional than it is given the cost and the length of time it has taken.”

Mr Johnson, who is also MP for Uxbridge in west London, told the BBC: “The impact on London, the environmental cost, the human rights challenge, will be so great I don’t think it will be deliverable.”

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