In contrast the performance of section 106 agreements show an effective planning gain mechanism, raising £1.9 billion in 2003-04, and although by no means perfect, would be easier to finesse when you consider the potential flaws of the proposed PGS.

Despite several rounds of consultation, questions remain about a number of areas relating to PGS. These include the core assumption about the nature of development land being in single ownership and acquired with freehold vacant possession, which invariably it isn’t, the uncertainty about the distribution of revenue secured by PGS which is likely to penalise smaller local authorities, the inability of these local authorities to procure the necessary infrastructure in a timely fashion and the system’s capacity to cope with administering the tax when you bear in mind the treasury has recently requested £52m just to develop the concept of PGS.

If the government is determined not to pursue an improved section 106 process there are some other alternatives.  The well documented roof tax trialled in Milton Keynes was supposed to be favoured by the Chancellor and has appeared to work well in this trial location.  The government could also look to other alternatives including far simpler amendments to Stamp Duty Land Tax or Capital Gains Tax for development sales.

Indeed there is a strong argument to suggest that raising revenue through amendment to existing taxes will be easier to introduce and administer and more acceptable to potential taxpayers than a wholly new tax regime, particularly one reminiscent of the failed development taxes of the past.

Although these alternative scenarios are unlikely there are many commentators now agreeing that PGS could also prove unlikely.  By moving the delivery date back to 2009 the Chancellor sent a clear signal that the government knows that this tax is too complicated and controversial to push through at all costs. Reminiscent of their approach to HIP’s, this delay could well signal recognition that there is a need to water down PGS without embarrassing Kate Barker who is one of the Chancellors favourite advisors.