Ministers have been advised to give the go-ahead to a fifth terminal at Heathrow Airport. Public inquiry Inspector, Roy Vandermeer QC, gave ministers the go-ahead, albeit with some tough conditions. On past form, ministers are likely to follow the Inspector's advice.

Terminal Five will add 20 million passengers a year to Heathrow Airport, and is due to open in 2007.

It's not just aviation jobs. It's all the new economy jobs.

Mike Hodgkinson, BAA Chief Executive

This leak will embarrass Lord Macdonald, the Minister for Transport, who is determined to delay saying anything about the Terminal Five decision till after the general election. Airport development is politically explosive, and could provoke a backlash in marginal London constituencies. He will announce his decision, and publish the Inspector's report, probably in June.

BAA, which owns Heathrow, Gatwick and Stansted, is convinced that Terminal Five is vital not only to alleviate Heathrow's overcrowding, but for the economy of the south-east as a whole. Mike Hodgkinson, BAA's chief executive, tells the Money Programme: "It's not just aviation jobs. It's all the new economy jobs, that are only going to come to London and England, if in fact we have good airport infrastructure."

But the environmental lobby is deeply troubled by the implications of the leak. John Stewart, Chairman of the Heathrow Association for the Control of Aircraft Noise, tells the Money Programme: "The Terminal Five decision is hugely significant. It's the first major decision this government will take on aviation. It will have a huge influence on the rest of the government's aviation policy."

BAA says Terminal Five will add only 8% more flights to Heathrow, which is almost at full capacity now. The government is predicting a continuing rise in airline passengers of around 4% per year - which will double the present number over fifteen years. On those figures, BAA admits that the south-east will need a new runway in less than ten years, which will be another political and environmental hot potato. Most planners think that fast-growing Stansted is the logical place to build it, but no-one in authority dare say so. And airport development won't stop there.

For airports in the south-east, where congestion is worst, the government has set up a study group that won't report till the autumn. There will be a White Paper on aviation policy for the next thirty years in 2002. But the decision on Terminal Five will be made first.

Challenged about the order in which airport policy decisions are being made, Lord Macdonald tells the Money Programme: "When a decision is made later this year on Terminal Five, that's one of the pieces of information that will inform those consultations [for the White Paper]."

Aaviation doesn't pay its way in terms of taxes, nor does it cover the costs of the noise and pollution

John Stewart, Heathrow Association

The environmental movement says that demand for airport capacity should be managed - that people should be deterred from flying by higher fares resulting from environmental taxes on airlines. Three quarters of all flights are for leisure.

Says John Stewart: "The bottom line is aviation doesn't pay its way in terms of taxes, nor does it cover the costs of the noise and pollution that it imposes on society." Responds BAA's Mike Hodgkinson: "The very high petrol tax on cars doesn't seem to have deterred people from travelling."

Nor is the Airbus A380, the superjumbo that will be able to carry over 800, likely to make more than a temporary impact on the relentless rise in passenger numbers. Airport development represents a dilemma for government, and will require some tough decisions. The likely go-ahead for Terminal Five is just the first.