It would be interesting to establish from the ATCOs just what they mean by a 'Hydraulic Failure'. Are you referring to a total loss or a partial loss? A full loss is probably bad news but the latter for me would probably not constitute a full emergency from my point of view when operating into the likes of LHR and LGW which are more than large enough with runway length (I fly a 146).
With a partial loss I may advise that we need a bit of extra spacing behind us for a potentially longer landing roll and it obviously depends on the circumstances but I would not necessarily declare a PAN since safety won't have been affected with just a simple loss of one system out of the two and a large airfield to look forward to when you land!
This could perhaps be a double edged sword where a flight crew member suddenly mentions 'Hydraulics' on the R/T and unknown to him/her, ATC have initiated a full emergency on the airfield. Perhaps best practice would be to initiate a full emergency only if a crew call for it since it could perhaps be a bit embarrassing for us if we mention to the Pax that we have a minor problem with a partial hydraulic loss and are then greeted by the blue lights when we land!!!
Roffa
ATC will not encourage you to divert anywhere but ATC can be requested to pass a message on behalf of the BAA (at Heathrow or Gatwick) to request that an a/c with technical difficulties that may result in a runway being blocked consider diverting somewhere else.
The BAA have already stuck their head above the parapet with this one since some wag from the BAA said that if you have a tech issue then the BAA would prefer that you didn't land/divert to LHR. BALPA quickly brought them back into the real world and that statement was retracted!