House of Commons
Session 2006 - 07|
Publications on the internet
Other Bills before Parliament
Bill Home Page
|The Planning-Gain Supplement (Preparations) Bill|
These notes refer to the Planning-gain Supplement (Preparations) Bill as introduced in the House of Commons on 12th December 2006 [Bill 37]
THE PLANNING-GAIN SUPPLEMENT (PREPARATIONS) BILL
1. These explanatory notes relate to the Planning-gain Supplement (Preparations) Bill as introduced in the House of Commons on 12th December 2006. They have been prepared by HM Treasury in order to assist the reader of the Bill and to help inform debate on it. They do not form part of the Bill and have not been endorsed by Parliament.
2. The notes need to be read in conjunction with the Bill. They are not, and are not meant to be, a comprehensive description of the Bill. So where a clause or part of a clause does not seem to require any explanation or comment, none is given.
3. The Planning-gain Supplement (Preparations) Bill will enable the Commissioners for Her Majesty's Revenue and Customs, and the Secretary of State for the Department of Communities and Local Government (DCLG) to incur preliminary expenditure for the purposes of facilitating the introduction of and designing business processes for a Planning-gain Supplement (PGS).
4. An independent review of housing supply ("the Barker Review") in March 2004 proposed that the "Government should use tax measures to extract some of the windfall gain that accrues to landowners from the sale of their land for residential development..[and that the] Government should impose a Planning-gain Supplement Bill 37EN 54/2 on the granting of planning permission so that landowner development gains form a larger part of the benefits of development." 1
1 Barker Review of Housing Supply, p87, HMT, 17 March 2004, available at:
5. The Government responded to the Barker Report by announcing on 5 December 2005 that it accepted the proposal in principle and would consult on the workability of PGS. 2 The consultation sought views on aspects of PGS including how planning gain would be valued, how PGS would be paid, the scope of PGS, the new scope of planning obligations and the allocation of PGS revenues. The consultation closed on 27 February 2006 3. Further consultations on the practical workings of PGS were announced at the 2006 Pre-Budget Report. 4
2 Planning-gain Supplement: a consultation, HMT, HMRC and ODPM, 5 December 2005, available at: www.hm-treasury.gov.uk
3 A summary of responses was published on 6 December 2006 and is available at: www.hm-treasury.gov.uk
6. The Government intends that PGS would seek to capture a portion of the land value of the increase that occurs when full planning permission is granted for the development of that land (subject to minimum thresholds).
7. Developers would be required to declare their intention to commence development of any site that carried a potential PGS liability through a PGS Start Notice procedure. That person would be the chargeable person for the purposes of the PGS liability for the relevant development site and would be required to make a PGS return and pay the PGS within a specified time from the date of the PGS Start Notice. PGS would apply to both residential and non-residential development.
8. It is intended that PGS would be levied and collected centrally by the Commissioners for Her Majesty's Revenue and Customs; but to retain the local link between developer contributions and local planning permission. PGS revenues would be recycled to the local level.
9. The implementation of the PGS will require primary legislation when Parliamentary time allows.
10. However, the information technology and administrative systems that will be required to ensure the successful introduction of the PGS have a long development period. The successful implementation of the PGS will therefore require expenditure to be incurred on the technological and administrative infrastructure of the PGS well in advance of the implementing legislation.
11. For example -
12. This Bill will authorise the Commissioners for Her Majesty's Revenue and Customs, the Secretary of State and the Northern Ireland Department to incur expenditure for the purposes of facilitating the introduction of the PGS if legislation establishing the PGS is enacted by Parliament.
13. It is intended that PGS would operate across the United Kingdom. The Secretary of State and the Northern Ireland Department would not incur expenditure outside England and Northern Ireland respectively. However, HMRC may incur expenditure across the United Kingdom.
14. Annex A lists the standard abbreviations of enactments and technical terms used in these notes.
COMMENTARY ON CLAUSES
Clause 1 Preparatory Expenditure
15. Subsections (1) and (2) enables the Commissioners for Her Majesty's Revenue and Customs, the Secretary of State and the Northern Ireland Department to incur expenditure for the purposes of preparing for the introduction of the Planning-gain Supplement. This is a proposed tax on the increase in the value of land arising from the granting of planning permission in respect of that land.
16. Subsection 3 provides that the money will be paid out of monies provided by Parliament in the usual manner (and therefore subject to the annual supply procedure).
Clause 2 Extent
17. This clause provides the Act to have effect throughout the United Kingdom (as described in paragraph 14 above).
Clause 3 Short title
18. This clause provides for the Bill to be known as the "Planning-gain Supplement (Preparations) Act 2007" when it is enacted. It will come into force at Royal Assent.
FINANCIAL EFFECTS OF THE BILL
19. The financial effects of this Bill will be to authorise expenditure principally on designing and building an administrative system to administer the PGS, including the necessary business processes and in particular an IT system. Between now and the date of implementation a core team of project staff will be needed to design and develop the new operating model and recruit and train staff. This Bill will ensure that a full project plan and the financial effects of the Bill can be worked through and implemented.
20. Project planning is at an early stage. The enactment of this Bill will allow further development of the project by HMRC and their IT partners and for the technology to be properly costed. The current upper end estimate is that IT build, infrastructure and service costs will be approximately £40 million, however these are subject to change as the project is refined and policy finalised. Between enactment of the Bill and the implementation of PGS a core team of project staff will also be needed to develop the new operating model and recruit and train staff. These costs are currently estimated at £12 million for HMRC and the Valuation Office Agency up to and including 2008/09.
EFFECTS OF THE BILL ON PUBLIC SERVICE MANPOWER
21. Estimates of the public service manpower required to deliver the business processes of PGS are still being developed. The enactment of this Bill will authorise further work to develop and cost the business processes for PGS.
EUROPEAN CONVENTION ON HUMAN RIGHTS
22. HM Treasury has assessed the compatibility of the provisions in the Bill with the European Convention on Human Rights (ECHR).
23. Section 19 of the Human Rights Act 1998 5 requires the Minister in charge of a Bill in either House of Parliament to make a statement about the compatibility of the provisions of the Bill with the Convention rights (as defined by section 1 of that Act). The Chancellor of the Exchequer has made the following statement:
4 s.19 of the Human Rights Act 1998 available at:
24. This Bill concerns only the powers of the Secretary of State, the Commissioners for Her Majesty's Revenue and Customs and Northern Ireland Departments to incur expenditure preparing for the introduction of the new levy and this does not engage any convention rights.
SUMMARY OF THE REGULATORY IMPACT ASSESSMENT
25. The Bill authorises the spending for the creation of the infrastructure necessary to implement PGS. There is no regulatory impact expected, therefore, no Regulatory Impact Assessment is required specifically for this Bill, as there will not be any costs or benefits on business, charities, or the voluntary sector. However, a partial Regulatory Impact Assessment for PGS was published at the 2005 Pre-Budget Report. 6
5 Partial Regulatory Impact Assessment available at:
ANNEX A: LIST OF ABBREVIATIONS
DCLG Department for Communities and Local Government
HMRC Her Majesty's Revenue and Customs
ODPM Office of the Deputy Prime Minister
PGS Planning Gain Supplement
VOA Valuation Office Agency
|© Parliamentary copyright 2006||Prepared: 13 December 2006|