Planning Portal
Printable version E-mail this to a friend

Government drops PGS in favour of 'planning charge'

The Government has decided to replace its original proposals for a new land tax involving a Planning Gain Supplement (PGS) in favour of a planning charge.

This will build on the current s106 approach and the tariff formula pioneered in Milton Keynes, planning minister Yvette Cooper told Parliament.

Further details will be published shortly. Ministers have stressed that the necessary legislation will be included in the forthcoming Planning Reform Bill.

The decision to drop the PGS scheme, recommended initially by economist Kate Barker, was confirmed in the chancellor's Pre-Budget Report (PBR), published on 9 October.

This stated that the Government would empower local authorities "to apply new planning charges to new development, alongside negotiated contributions for site-specific matters. Charge income will be used entirely to fund the infrastructure identified through the development plan process".

It said: "Charges should include contributions towards the costs of infrastructure of regional or sub-regional importance. Legislation implementing PGS will therefore not be introduced in the next parliamentary session".

In a Commons statement the minister said the planning charge would "capture more planning gain to finance additional investment in local and strategic infrastructure while preserving incentives to develop". She said that new proposals would make the planning charge-setting process simpler and more certain.

She told MPs the measure would provide a fairer means of securing contributions from developers for infrastructure and argued that planning charges would "encourage regions and local authorities to plan positively for housing and economic growth".

Download the Pre-Budget Report Chapter 6 'Stronger communities and a better quality of life' (see 6.16) 

Read Yvette Cooper's written statement

Roger Milne

11 October 2007

Facing the Future...find out more