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Industry welcomes scrapping of PGS

A coalition of developers and homebuilders today welcomed the Chancellor’s announcement of further consultation on a tariff-based alternative to the proposed Planning Gain Supplement (PGS) to fund regional and local infrastructure.

Below is the minister's statement on planning, along with the joint consultation response and letter to the chancellor which sparked this change.

An alliance of the Home Builders Federation, British Property Federation, Major Developers Group and London First had responded to the Prime Minister’s call for industry to devise a workable alternative to the Planning Gain Supplement to be considered ahead in time for the Pre-Budget Report.

The alliance had urged the Government to introduce a system of tariffs which would be set locally to reflect regional and local infrastructure needs identified through Regional Spatial Strategies and local plan making.

Liz Peace, Chief Executive of the British Property Federation, said:

“We know from the more than twenty existing local tariff schemes that they can be made to work in a way that secures local support and retains industry confidence while delivering much-needed infrastructure investment to underpin development.

“We hope that the property industry and government can move quickly to agree the detailed implementation of a local tariff-based system.”

Stewart Baseley, Executive Chairman of the Home Builders Federation said:

We welcome the Chancellor’s recognition that the proposed Planning Gain Supplement was unworkable and we look forward to working with Government to develop further a tariff-based approach to help meet infrastructure costs through developer contributions. To deliver the much needed 240,000 new homes per year it is vital we agree a workable system to raise additional funds for necessary infrastructure.’

Sir Stuart Lipton, on behalf of the Major Developers Group said:

‘ PGS threatened to hinder development. In consulting on a tariff-based alternative the Government have accepted the need to develop a system that carries the confidence of major developers and delivers much-needed infrastructure investment.’

Additional briefing - Key facts on tariff-based alternative to Planning Gain Supplement

1. The Government’s Housing Green Paper included an invitation to interested parties to consider a number of alternative approaches to a Planning Gain Supplement.

2. Home builders and developers have consistently opposed the PGS on the grounds that it would slow down development, break the link between developers, local authorities and infrastructure delivery, lead to prolonged dispute over valuations and fail to deliver the additional sums required for infrastructure investment.

3. Our industry alternative is a tariff based system. The proposed tariff would be set at the local level according to planned infrastructure needs and levied on all but the most minor development. Payment would be made directly by the developer to the local authority and there would be provision for essential site mitigation needs to be met under a section 106 arrangement and netted off against the tariff.

4. The coalition’s tariff detailed proposal is:

• A local authority tariff, including a regional component
• Variable charges for greenfield and brownfield, possibly a zero charge for “regeneration” schemes
• Based on fully-costed regional and local infrastructure needs taking account of existing funding sources, but tempered by local viabilities
• Applying to all development by type and size
• Tariffs established through full Regional Spatial Strategy (RSS) and Local Development Document (LDD) processes
• Developers able to argue for a reduced tariff payment if a scheme is not viable because of tariff and other impositions (S106, Affordable Housing, etc), requiring proof of financial non-viability
• Planning obligations (S106) agreements continuing for necessary site-based requirements
• Offsets against a tariff payment for any infrastructure covered by tariff but provided direct by a developer through S106, including land for infrastructure
• Affordable Housing maintained as a separate S106 process, as now

• In the transition period:

• New tariffs not to be imposed on sites with existing planning permission
• Tariffs can be imposed through Supplementary Planning Document (SPD) – but no tariff without at least an SPD
• With rapid central government revisions to Circular 05/05 and PPS11 and 12, including defining limits of tariff and S106
• Central government encouragement to local authorities to prepare infrastructure/tariff Development Plan Documents (DPDs) as soon as possible

Notes for Editors

1. The Home Builders Federation (HBF) is the principal trade federation for private sector home builders and voice of the home building industry in England and Wales. The HBF’s 300 member firms account for some 80% of all new homes built in England and Wales in any one year, and include companies of all sizes, ranging from multi-national, household names through regionally based businesses to small local companies: www.hbf.co.uk

2. The British Property Federation (BPF) is the voice of property in the UK, representing companies owning, managing and investing in property. This includes a broad range of businesses comprising commercial property owners, the financial institutions and pension funds, corporate landlords, local private landlords, as well as all those professions that support the industry. The BPF estimates that its members manage property assets worth approximately £200 billion.

3. The Major Developers Group is chaired by Sir Stuart Lipton. Chelsfield Partner, 53 Grosvenor Street, London W1K 3HU (tel: 020 7290 2388 begin_of_the_skype_highlighting              020 7290 2388      end_of_the_skype_highlighting) slipton@chelsfield.com

4. London First is a business membership organisation with the mission to make London the best city in the world in which to do business. Its 300 members represent 25% of London’s GDP. Contact Judith Salomon Director of Planning and Development 020 7665 1584/07931 736270

For media information, please contact Andrew Teacher, BPF media manager ateacher@bpf.org.uk / 020 7802 0113 / 07968 12 4545

Downloadable documents

Statement on planning reform from ministers

Industry reponse to PGS

Industry letter to Government