Out of Whitehall

Brown: a lot at stake

As Regenerate went to press the exact date remained a well-kept secret, but the chancellor’s Pre-Budget Statement can’t come soon enough. This time round there is a lot more at stake than a few pence on the price of petrol or a pint.

Not only will the pre-Budget report provide indications of how prime minister in-waiting Gordon Brown is teeing up his territory, it is also likely to turn out to be a key date for the housebuilding industry.

The pre-Budget report is expected to mark the arrival of the government’s long-awaited deliberations on the planning gain supplement proposed by Bank of England economist Kate Barker. At the same time, the ODPM is expected to complete its analysis of the responses to the consultation on its equally long-awaited revision to Planning Policy Guidance Note 3, which covers sustainable communities.

The planning gain supplement – effectively a tax on the increase in value in land when it receives planning approval for development – has been a hot potato ever since Barker recommended it in her review of housing supply last year. Condemned by the British Property Federation and the RICS, it is hard to find anyone apart from Barker who thinks the PGS will be effective.

The general view is that, as with previous attempts to introduce such an unpopular tax, it would simply prompt landowners to hold onto their land until the tax is abandoned – which would hardly help increase housing supply.

The prospect of raising up to £2bn a year in tax revenue is reason enough for the Treasury to persist regardless. The government is, however, expected to consult not simply on Kate Barker’s highly unpopular PGS but on several other options for siphoning off some of the profit made by landowners when land becomes developable.

Initial proposals for the revision of PPG3 caused a flurry of protest from housebuilders when it was suggested that the government was considering giving local authorities powers to dictate the size, type and affordability of all homes developed on a site. That prospect looks to have been ditched, and replaced by the idea of advising local authorities to earmark land in their areas to meet low-cost housing need. This far less draconian solution would undoubtedly be popular with the housebuilding industry.

The ODPM seems keener than ever before to work with housebuilders, as the meeting that took place between top housebuilders, communities minister David Miliband and housing minister Yvette Cooper just over a month ago testified. The reason for this healthy dialogue is clear: the government’s pledge to deliver extra new homes is being threatened by the housebuilding industry’s fears that it will have to reduce output in a slowing housing market.

As a result, the government may just be willing to introduce more housebuilding-friendly policies – particularly in relation to the housebuilders’ favourite bugbear, the planning system – in return for more housebuilding. PPG3 could be just the start.