Consultation launched on development tax
Monday, 5 December 2005 12:00 AM
Local authorities could take part of the profits made by housing developments to invest in roads, schools and hospitals, Gordon Brown has said.
The chancellor made the announcement in his pre-Budget report as part of a series of measures designed to help more people on to the property ladder.
There are now one million more homeowners than there were in 1997, Mr Brown said, and they were helped by low interest rates on mortgages and low inflation.
However, he insisted long term reforms in planning, land use, and industry were required to build "more affordable homes of high quality in strong communities".
"Our aim is a new consensus across our country on the extension of homeownership and affordable housing - public and private sectors working and investing together to strengthen our economy, protect the environment and meet the housing needs not just of some but of all," Mr Brown declared.
On the recommendations of Kate Barker's housing review last year, a consultation has been launched into the introduction of a planning gain supplement, which would allow local authorities to tax developers on their profits and use these to pay for roads and schools.
Mr Brown said this would achieve the aim of building communities as well as homes, but it has already prompted concern from housebuilders, who claim they are being effectively penalised for building more houses.
Kevin Hawkins, director general of the British Retail Consortium (BRC), said administering the system would be costly and threatened the viability of development in the UK.
"Many retail development schemes, particularly those in areas of re-generation, will now be at risk and may threaten the valuable contributions made by retailers to the local community," he warned.
Shadow local government minister Eric Pickles dismissed the proposals as "nothing more than a New Labour land tax", and questioned how much of the money was likely to go back to local people.
Mr Brown also announced pilot projects to encourage local authorities to give up brownfield sites for construction and to build more housing for rent.
Planning restrictions would be simplified, and where proposed new housing is high quality, councils would be obliged to speed up the planning process, he explained.
New guidelines, drawn up in consultation with business leaders, the Town and Country Planning Association and homeless charity Shelter would also ensure that the right kind of homes were being built, for example, ones that young people could afford.
To help people get their first foot on the property ladder, Mr Brown also announced an extension of the shared equity scheme, with a view to achieving Labour's manifesto pledge of creating one million new homeowners.
Today, he revealed that three of the biggest building societies and banks have joined the government as partners in shared equity, while building companies, including the four largest, are also now able to offer shared equity schemes.
Social housing will also be increased through building new and restoring derelict properties, he said, which will lead to 10,000 new homes a year from 2007-08 - a 50 per cent increase on current levels.
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