News Archive
UK’s Planning Gain tax fails
Released on 12/10/2007
It looks as though the Planning Gain Supplement (PGS) recommended to Gordon Brown in Kate Barker’s Housing Supply report at the end of last year is bound for the scrap heap.
Alistair Darling, the United Kingdom’s recently appointed Chancellor of the Exchequer, has announced that legislation implementing the proposed land tax will not be introduced in the next session of Parliament.
Instead the Government will introduce a Planning Reform Bill empowering local authorities in England to apply new planning charges on development proposals alongside negotiated contributions for site-specific matters.
The new planning charges will be used to finance infrastructure required by development plans for each area. But before they are introduced there is to be a fresh round of consultations on the introduction of planning charges as an alternative to PGS.
The opportunity of further discussion on financing the infrastructure work required from public authorities when development takes place has been welcomed by a coalition of developers and homebuilders including the House Builders Federation and the British Property Federation.
They are urging the Government to introduce a system of tariffs or charges such as have been applied in the Milton Keynes growth area which would be set locally to meet the infrastructure needs identified through regional spatial strategies and local plans.
Stewart Baseley, the Home Builders executive chairman, welcomed the Chancellor’s recognition that PGS is unworkable and expressed the keenness of the development coalition to find a tariff based approach to meet infrastructure costs.
A workable system, he emphasised, is necessary to deliver the Government’s target of at least 240,000 homes per annum eight years from now.
This target has been confirmed by the Communities Department following the disclosures of spending intentions in the UK’s 2007 Pre-Budget Report and Comprehensive Spending Review. It takes the department’s budget from £10.3 billion in the current financial year to £12.1 billion in 2010-11.
At the same time the Government confirmed the Prime Minister’s determination to deliver three million new homes by 2020. There will be £6.5 billion investment over the next three years in social housing, a 50 per cent increase compared with the present financial year.
A summary of responses to the recent consultation on paying PGS issued by H.M. Revenue and Customs confirms the need felt among stakeholders for additional funding of the infrastructure.
Capturing a portion of the land value uplift created by the planning process received broad acceptance as an appropriate source for additional funding. The question now is how best to do it without creating yet another obstacle to much needed housing and infrastructure development.
