Britain’s financially squeezed households would benefit if Chancellor George Osborne cut VAT on housing renovation and repair work, according to a letter written to the Chancellor by campaigners.

Brian Berry, chief executive of the Federation of Master Builders (FMB), explained: “The Chancellor should empower homeowners to reduce the amount of energy they use. Cutting VAT on domestic building work from 20% to 5% will encourage more people to commission refurbishment work and at the same time improve the energy efficiency of their homes.

“Government must give families some control over their seemingly ever-increasing energy bills. Switching suppliers or taking out a long-term fixed tariff can protect against sudden price increases, but the cost of heating our homes is set to rise exponentially for years to come. The only way to stem – or even reverse – these rises is to have new glazing, better insulation or more efficient heating systems installed.”

Paula Higgins, chief executive of the Home Owners Alliance, said: “It is ridiculous that hard-pressed home owners living in cold, draughty, leaky and cramped houses are being taxed by the government for trying to make their homes fit to live in. Many homeowners can only afford to do essential repairs and maintenance by going to the black market, making honest homeowners dishonest.

“If the government is serious about reducing the cost of living, cutting the tax on home repairs is a simple and immediate way to do it. When the Isle of Man did it, the government found it was such an economic boost that it paid for itself.”

Loyd Grossman, chairman of The Heritage Alliance, another of the signatories to the letter, added: “Compared to other EU countries, we have a much higher proportion of older properties, and many are in desperate need of renovation and repair. A reduction in VAT would certainly help kick-start a big increase in this type of work, and would lead to an enormous improvement to our existing buildings. I believe maintenance, repair and renovation is a crucial issue, and urge the government to act.”