Brian Berry, chief executive of the Federation of Master Builders.

Government must slash refurb VAT to boost economy

Published:  10 March, 2014

A VAT reduction on housing renovation and repair could boost the UK economy by more than £15bn from 2015 to 2020 according to a new independent research report by Experian.

This reduction could also create more than 95,000 jobs and save 240,000 tonnes of CO2 from thousands of homes.

The report is backed by more than 60 charities, trade associations, business groups and financial institutions that are united in calling on all three main political parties to commit to this VAT reduction in their 2015 General Election manifestos.

Brian Berry, chief executive of the Federation of Master Builders (FMB), said: “A VAT reduction on housing renovation and repair work will empower homeowners to contribute to growth, jobs and greener homes without placing a burden on the Treasury. There is no other proposal that will help the UK achieve so many of its economic, environmental and social aims with so little cost to the public purse. This research shows that the wider benefits of a VAT reduction on housing renovation and repair would stimulate more than £15bn of wider economic activity, which completely overshadows any direct losses to Treasury coffers due to a drop in the percentage charged for VAT.

Mr Berry added: "It is a myth that EU law prevents the UK government from reducing VAT on housing renovation and repair. This research report clearly shows that almost half of EU member states are currently enjoying the economic, environmental and social benefits that this VAT reduction can bring. Why should the UK not follow suit?”

Nigel Rees, chief executive of the Glass and Glazing Federation, said: “We are impressed with this research report and urge the government to now take the necessary action. As the report shows, reducing VAT from 20% to 5% on housing renovation and repair has significant long terms gains, not only for economic growth and job creation, but also for carbon reduction, as many contemporary home improvements will include the installation of energy efficient products.”

Ray Horwood, chief executive of the National Federation of Roofing Contractors, concluded: “There are a range of complementary reasons for this sensible reduction in VAT on housing renovation and repair that play to government objectives and overall consumer expectations. The strong leadership message this sends to all political parties would, in addition, be a boost and clear message of support to the responsible and qualified SME firms that will undertake this work.”

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