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PR 25 - Coalition calls for speedy resolution to land tax uncertainty

25 June 2007

A group of leading organisations representing British business, property and planning today called on Gordon Brown to clarify the Government's position on the proposed Planning Gain Supplement (PGS). The PGS proposes to tax the rise in land values created when planning permission is granted. Failure to provide certainty is threatening investment in the infrastructure needed to create truly sustainable communities. The coalition is calling on Government to provide certainty as a matter of urgency.

The Royal Town Planning Institute (RTPI), the British Property Federation (BPF) and the British Retail Consortium (BRC) all agree that the PGS tax proposals made in late 2006 are unworkable. Government is currently thinking about the way forward, but the lack of a clear direction is causing uncertainty and raising the prospect of significant social, economic and environmental harm.

Money is needed to build infrastructure to support sustainable communities and housing growth. At present, most funds come from the 'planning gain' system, which the PGS tax would largely replace. Infrastructure takes a long time to plan and, without certainty about the planning and funding process, it is likely that much-needed infrastructure will not be properly planned and may be delayed or not built at all.

Rynd Smith, Head of Policy and Practice at the RTPI said: \"Uncertainty in infrastructure planning now could lead to real harm in three or four years time. New housing is in danger of missing out on the full range of services that it needs, creating the sink estates of the future. Failure to include public transport will result in environmental damage as commuters continue to go by car. New construction without adequate infrastructure is unsustainable, but this could be the future if we don't set a clear direction soon.\"

Faraz Baber, Director of Regeneration and Development at the BPF said, \"From the very beginning, the BPF has urged the Government to consider alternative solutions to the proposed PGS tax, in particular, some form of standardised tariff system or an improved version of the current Section 106 system. Both these forms of planning gain would ensure support from all parties involved in the development process; crucially they would also provide the certainty that developers require in order to undertake large scale regeneration schemes.\"

Kevin Hawkins, Director-General at the BRC said: \"The PGS will discourage development in the areas where it is most needed. An increasing level of retail development is now taking place on brownfield sites and in areas in desperate need of regeneration. Imposing a blanket tax on these sites will only make marginal areas less attractive.

\"The current system is far from perfect, but at least it guarantees direct and timely benefit to the community in which a development is taking place. There is no such guarantee under the PGS, where much revenue will be allocated bureaucratically, at arms length from local communities and projects.

"If the Chancellor is really interested in promoting development where it is most needed and ensuring local communities receive the benefits he will reject the PGS in its current form.\"

The RTPI, BPF and BRC recognise that we have a duty to make constructive proposals to government about how to develop better infrastructure planning and funding processes. RTPI and BPF have provided alternatives that focus on a development tariff of the sort currently used in Milton Keynes. However, the development of alternative practice is also being held up by the lack of clear direction on the government's proposals.

ENDS


For further information please contact:

Rynd Smith, RTPI Head of Policy and Practice, 0207 929 9478,

Notes to Editors
1. The Royal Town Planning Institute (RTPI)
The RTPI is a dynamic organisation leading the way in the creation of places that work now and in the future. We understand that just as people develop places, so places develop people. We are committed to the enhancement of our natural and human environment, using spatial planning to manage competing pressures on our built environments and the very real effects on our space. Through our 20,000 members, we constantly seek to create areas and places in which people want to live and work.

For further general information, visit the RTPI website at: www.rtpi.org.uk
41 Botolph Lane, London, EC3R 8DL, charity no. 262865

2. The British Property Federation (BPF)

The BPF sustains and promotes the interests of all those who own and invest in property in the UK. We aim to create the conditions in which the industry can grow and thrive, for the benefit of our members and of the economy as a whole. We represent a wide range of companies, including property owners and developers, institutions, fund managers, investment banks and organisations that support the industry. We work very closely with Government and other regulators, providing the knowledge and expertise they need to produce workable legislation and regulations. Find out more at www.bpf.org.uk

3 The British Retail Consortium

BRC is the lead trade association representing the whole range of retailers, from the large multiples and department stores through to independents, selling a wide selection of products through centre of town, out of town, rural and virtual stores. Find out more at www.brc.org.uk