In March, Mr Prescott committed the government to building 60% of new housing on brownfield sites by 2008, but without treasury support his goal looks doomed. DETR ministers made their pledge believing their proposals would be backed by the chancellor in his last Budget. There was widespread speculation that Mr Brown would agree to impose VAT on all new house-building. This would have created a level playing field for urban developers. At present, no VAT is levied on new building on greenfield sites, although the full 17.5% rate is applied to the
refurbishment of old properties. The VAT plan, proposed by Lord Rogers's urban task force, was designed to reduce building in the countryside and encourage it in cities. However, Mr Brown discarded the idea after lobbying from construction companies and set up a consultation on another recommendation by Rogers: the introduction of stamp duty relief for buyers of derelict properties for restoration on brownfield sites.
Mr Prescott welcomed the new proposal and entered a series of meetings with the chancellor that have been going on since March. Insiders claim that Mr Brown knows he must give some ground but is unwilling to give enough to make the stamp duty idea viable. A senior treasury source confirmed there was a 'high level' of disagreement on how far
Last week, Mr Prescott increased the regeneration budget for poor areas by 20%, to£1.2bn, but Keith House, chairman of the Local Government Association's planning executive, said: 'Without straightforward fiscal incentives developers are not going to be attracted'.