Chancellor says 70% of revenue derived from planning gain supplement will go to local authorities

Gordon Brown pressed ahead with the government’s plan to introduce the planning gain supplement in today’s budget, by saying that most of the revenue derived would go to the original local planning authority.

Brown said that 70% would be ploughed back into the local authority, with the remaining likely to be handed to the mayor or the equivalent.

Faraz Baber, director of planning and regeneration at the British Property Federation, reiterated its opposition to the PGS: “The government has thrown the last dice to rally support for the PGS.

“Having received no support whatsoever during the recent round of consultation, this undoubtedly has to be seen as a sweetener to public bodies likely to receive the cash, aimed at getting them on board. However, they stand to receive 30% less of the cash at local level than they currently receive.”

Mark Heighton, head of real estate at law firm CMS Cameron McKenna, said that the Budget had added to the confusion on PGS: "The lack of concrete news on the proposed land tax just further adds to the confusion for developers. However, the industry is having to still negotiate deals now with the potential threat of a new tax in 2009 and this new tax could have a significant impact on future large scale or phased developments which developers are planning now but will not actually be fully built out until after 2009"

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