Housebuilders in high flood risk areas could face a massive increase in their planning gain bills to pay for much-needed flood defence systems.
The government is understood to be looking at using the tax to raise money to prevent flooding, which is estimated to cost the UK £1bn every year in insurance claims.
The proposals also reflect the growth in the number of homes being built on flood plains.
In 1996, only 4,000 planning applications were for homes on flood plains, while in 2000 there were 19,725.
Almost all the land in the Thames Gateway, on which the government is pinning hopes to tackle the housing shortage in the South East, is in a flood plain.
Ministers at the Department of Environment, Food and Rural Affairs (DEFRA) are currently considering proposals made by a steering group set up in response to the 2000 floods.
The group has suggested that a tax on developers could be used to raise some of the £564m needed for flood defence spending in 2005.
The government is expected to make a statement on the funding of flood defences in the House of Commons towards the end of the month.
The report submitted to ministers states that the main option considered by the steering group was “a ‘development connection charge’ which would be payable by all developers on the flood plain to recover general flood defence costs not attributable to an individual development”.
It adds that the charge could be levied as part of a section 106 planning gain contribution.
The proposal is supported by the Environment Agency, but has been strongly attacked by the House Builders Federation (HBF).
A spokesman for the HBF said: “The notion that new development should pay for nationally needed improvements is unfair and makes little sense.
“It is local planning authorities, not housebuilders, who decide where to build.
“Unfortunately most of the housing land is in the flood plain. The Thames Gateway is a classic example.
“But the burden placed on developers through section 106 payments is going up all the time. Any increase will simply make developments unviable.”
Under PPG 25, developers already have to pay for flood defences required specifically by their developments.
EGi News 13/01/03
