The Builders Merchants Federation believes that the Chancellor of the Exchequer missed a major opportunity in last week's Budget to boost the recovery for builders and builders merchants.
Despite major industry lobbying over many years, George Osborne's Budget failed to reduce the rate of VAT on housing repair and maintenance , instead raising it to 20% in line with the standard rate. Lowering VAT would have saved hundreds of thousands of jobs and allowed the trade to 'Get Britain Building', BMF believes.
Chris Pateman, BMF managing director, said: "The Chancellor failed to do the one thing which could have made a real difference to consumer confidence, to construction output, and to the long-term condition of our housing. He could have listened to BMF members - not to mention the Scottish Parliament and the Welsh Assembly - and selectively cut the rate of VAT to 5% on home improvements. It is a bitter disappointment and a major opportunity lost. The Tory-Lib Dem Coalition has let us down".
"Mr Osborne could have created a climate in which home improvement is more affordable to encourage homeowners to invest in their property. His failure is disastrous for construction which is already on its knees with hundreds of thousands job losses suffered over the last two years. Legitimate builders could have competed better with the 'cash-in-hand' cowboys who evade VAT and their responsibilities".
The BMF wants to see this new 20% rate held for at least 4 years. The HMRC should also allow any exceptional back-office costs of the changeover to be written down over that period.
However, the BMF has welcomed other aspects of the Emergency Budget Statement:
reductions in Corporation Tax by 1p in the pound in each of the next 4 years
concerns expressed about Capital Gains Tax have been listened to - and changes made are not as bad as had been feared.
taking the sting out of next year's planned 1% rise by raising the threshold at which bosses start paying it. But it would have been better to completely withdraw the whole of this 'tax on jobs'.