The industry has welcomed news that the government will ditch the planning gain supplement (PGS).

Responding to chancellor Alistair Darling’s announcement in his pre-Budget report on Tuesday that the levy would be scrapped, Sunand Prasad, the RIBA president, said: “The RIBA opposed the PGS as it posed a threat to development. I hope the new plans strike a better balance.”

Stewart Baseley, executive chairman of the Home Builders Federation, said he was delighted and that the federation would work closely with the government to find a replacement for the levy.

Instead of the PGS, the government has suggested a locally set tariff-based system.