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Chancellor Brown pushes brownfield incentives ahead

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Chancellor Gordon Brown has hinted that he may cut stamp duty on brownfield housing developments in his pre-Budget statement next month.

The policy was leaked this week and is aimed at enhancing inner cities by encouraging the re-use of derelict sites. It is in line with the Urban Task Force report, compiled by Lord Rogers, which demands tax breaks to encourage more brownfield housing developments. Stamp duty is levied at 1 per cent on all houses valued at between £60,000 and £250,000 and at 3 per cent up to £500,000.The lower rate of stamp duty would apply to the whole of the supply chain, benefiting landowners as well as house buyers, government officials told reporters.

The leak follows lengthy meetings between the chancellor and deputy prime minister John Prescott. Prescott is due to publish the Urban White Paper, outlining plans for the regeneration of cities, at about the same time as the publication of the pre-budget statement by the chancellor.

But the proposal has raised fears that the policy could replace cuts in VAT on brownfield development and refurbishment, also demanded by the task force. Campaigners met the chancellor to discuss fiscal measures last month and left feeling 'encouraged' and 'hopeful'.But the Treasury is reluctant to cut VAT because European rules may not allow it, sources close to the negotiations said.

In a separate government move aimed at encouraging development on brownfield sites, planners must refer all developments of more than 150 homes on greenfield sites to the secretary of state for the environment, transport and the regions, before it is awarded planning permission. The change is a modification of planning guidance PPG3 and means that permission will be denied if suitable brownfield sites are not being used. Previously the secretary of state had to call schemes in for a lengthy public inquiry if he had objections.

'This will give teeth to our new approach to housing development, ' said housing minister Nick Raynsford.'We want local authorities to plan to provide sufficient housing but give priority to the redevelopment of brownfield sites within urban areas.'

The Council for the Protection of Rural England welcomed the change to PPG3.'This will provide a new and important last line of defence against damaging urban sprawl, ' said assistant director Tony Burton.

Lord Rogers and Anne Powers, a London School of Economics academic, are to launch their new book, Cities for a Small Country, next week. The book is understood to be an elaboration of the task force's recommendations, aimed at the general public.

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