Prescott tax on home extensions

HOUSEHOLDERS and businesses are facing a new 'stealth tax' with Labour plans to hike planning fees by more than 24 times the rate of inflation.

Deputy Prime Minister John Prescott wants to raise an extra £70m a year by increasing the charge for a planning application by an average of 39%.

The Tories warned that everyone from homeowners wanting to build an extension to developers seeking permission for a new shopping complex would be hit.

More and more people are turning to home improvements to avoid the high cost - particularly in stamp duty - of moving somewhere larger. And 2m homeowners are estimated to have built extensions, conservatories and garages in the past 12 months.

Under the plans by the Office of the Deputy Prime Minister, the fee for an application for an extension will rise by 23%, from £110 to £135. The cost of making an application to build a new house will rise from £220 per quarter of an acre to £265.

For commercial developers the maximum charge for large developments, such as housing estates, will soar by 355% - from £11,000 to £50,000.

{1} The Government claims the increase will cover councils' rising administration costs, but the Tories claim its real purpose is to make up the fall in the central government grant. They say Labour allocated £300m to councils between 2004 and 2006 but only £255m has been set aside for 2006 to 2008.

Tory local government spokesman Caroline Spelman said: 'Labour have already put up stealth taxes 66 times, and are now introducing yet another tax on business and local residents. What John Prescott is giving councils with one hand, he is snatching back with another, leaving firms and local residents to foot the bill.'

Pierre Williams, of the House Builders' Federation, said: 'This is a massive increase. We appreciate that the planning system is underfunded, and we wouldn't mind paying a little bit more if it would help speed up the system.

'But we want value for money and any increases in fees have got to be matched by a similar increase in performance.'

A spokesman for Prescott's office said: 'It's simply not accurate to describe it as a tax in any shape or form. At the moment, the amount householders and developers are paying does not cover the cost of processing an application.'

Planning Minister Keith Hill said: 'Applicants expect a quality of service, and this can only be provided with adequate resources to local authorities.'