If the Government is serious about green issues, it needs to bring out a series of measures including a reduced rate of VAT on home energy efficiency improvements in next month’s Budget, according to the Federation of Master Builders.
FMB director of external affairs, Brian Berry said: “In the current economic climate householders will need more than just loans as currently proposed by the Government in its Green Deal finance package to make existing homes more energy efficient. What is needed is a range of targeted incentives to encourage householders to take the steps that are necessary to install energy efficient improvements.
“A reduced rate of VAT to 5% for all energy efficiency improvement projects would provide that boost as well as create much needed jobs in the building industry. The current VAT exemptions for energy saving materials are too complex and are not serving the purpose for which they were intended. These need to be simplified and better promoted to householders and builders alike.”
Berry added: “Independent research commissioned by the FMB shows that the rise in VAT to 20% in January will cause a decline in the housing repair, maintenance and improvement market, resulting in 7,500 construction job losses this year, rising to over 11,000 by 2019. The construction industry’s prospects for 2011 look bleak. Small and medium sized building companies are continuing to report falling workloads and a third expect to have to cut staff this year. The stimulus effect of a targeted VAT cut would far outweigh the cost to the Treasury and would help to deliver the Government’s low carbon policy objectives.
“The Government has promised thousands upon thousands of new construction jobs as a result of the Green Deal, but unless home owners are given the best possible deal on their improvements this flagship policy risks falling at the first hurdle.”