Much pain for little gain: regeneration experts slate PGS

The academic behind a government study of the planning gain system has cast doubt over whether the tax will work.

John Henneberry, professor of property development studies at Sheffield University, this week submitted to the ODPM a report outlining the amounts raised through planning gain agreements.

The study will give the framers of the supplement, currently out for consultation, an indication of the level at which they need to set the new tax in order to generate more money than the existing system.

Henneberry, who led the research, refused to discuss the detail of the report sent to the ODPM.

However, he expressed scepticism about the effect the levy would have on raising funds for infrastructure. Speaking in a personal capacity, he said: "The gains are likely to be fairly small."

He also questioned whether the extra revenue raised would justify the upheaval caused by the shake-up.

Stephen Robinson, a planning partner at GVA Grimley, said concerns about the supplement were leading several developers to reconsider whether to bring forward greenfield sites not yet allocated for development.

He said developers that had options on land were keen to unstitch their agreements with owners because they ran the risk of becoming liable for tax on sites they had already paid for.

He said: "It's inevitably going to make the development process more expensive and some deals are not going to happen."

Robinson added that it would also undermine regeneration. He said: "If you spend money on regenerating and decontamination before you get planning permission, that is going to count against the grant of planning permission because that offsets the development value. Regeneration is all about building out uncertainty."

However, he added that developers who had worked-up schemes would bring them forward to escape the charge, which is due to be introduced in 2008.