The UK government signalled a possible change in direction on its proposals to introduce a tax on property developers when Prime Minister Gordon Brown said a Bill doing so would only be introduced in provisional form.

The Planning Gain Supplement (PGS) is a proposed levy on land that gains in value once planning approval is given. In his announcement of the governments draft legislative programme, months ahead of the Queens Speech, Brown said the PGS would not proceed ‘if prior to the pre-Budget report a better way is identified of ensuring local communities receive significantly more of the benefit planning gain to invest in necessary infrastructure including transport’.

Royal Institution of Chartered Surveyors spokesman Damian Cleghorn said he is pleased the government has recognised PGS is not the most appropriate mechanism for increasing the supply of housing, based as it is, on a fundamental misunderstanding of how land comes forward for development.

However, Cleghorn added that further clarification is needed as to whether or not the statement represents Gordon Brown throwing down his gauntlet to industry to come up with a more practical solution.

The House Builders’ Federation, which represents Taylor-Wimpey and Barretts as well as 300 other homebuilders, welcomed the apparent U-turn. The organisation’s director of economic affairs, John Stewart, said: “Were pleased the prime minister is not charging ahead with something we dont think would have the benefits expected of it. There are better alternatives to a property gain tax and we were concerned this wasn’t a workable proposal.”