The issue with Heathrow is that it in fact serves many purposes: it's an airport which serves the many businesses in London, the M4 corridor and the South West, it remains an important airport for people living in the rest of the UK, finally it is a transit airport for people who fly to LHR purely to catch a further intercontinental flight or regional flight.
Think about this last category of passengers - flying them to London involves using a scarce resource (airport capacity) and a huge environmental impact (noise) whilst there really is no value added stemming from the fact they are catching a connecting flight in London. All they ever see is the terminal building anyway.
What the government could consider is building a purely transit airport, optimized for handling passengers switching between long haul and connecting flights. The location of such an airport should be purely governed by cost of land/reclamation, environmental impact, access to airways. I guess the business case for such an airport is too weak and the airport must serve terminal in addition to connecting passengers.
Thames Estuary makes sense if Heathrow continues to operate, is somewhat down scaled and focuses on terminal rather than connecting passengers.
Golf-Sierra