A proposed reduction in VAT on housing renovation and repair could create more than 42,000 jobs in construction, many of them within small to medium enterprises (SMEs).
The proposal is the latest attempt by the Cut the VAT campaign which has the support of trade bodies like the Glass and Glazing Federation (GGF) and the Federation of Master Builders (FMB).
The campaign is demanding that the government reduces VAT from 20% to 5% on the ‘labour element’ of all such work from 2015 to 2020. It is being given support by a new independent research report from Experian, which believes that the VAT reduction could boost the UK economy by over £15 billion.
There is a range of significant economic, social and environmental benefits of the proposed reduction until the end of 2020 including:
• 42,050 extra full time equivalent construction jobs.
• A potential saving of up 237,128 tonnes of CO2 as 91,660 homes are retrofitted with energy saving improvements.
• Reducing the competitive advantage of the ‘informal economy’, in which companies accept cash payments for work to avoid tax including VAT.
The Cut the VAT campaign is supported by more than 60 charities, financial institutions, business groups and trade associations, including NSCC, all of whom are calling on the three main political parties to commit to a VAT reduction in their 2015 General Election manifestoes.
“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,” explained Brian Berry, Chief Executive, FMB. “This research shows that the wider benefits of a VAT reduction on housing renovation and repair would stimulate more than £15 billion of wider economic activity.”