Green Deal needs 5% VAT rate says CPA chair

The government must support the Green Deal by levying a rate of 5% on work connected with it, according to Bill Bolsover, chairman of the Construction Products Association.

Bolsover was talking to an audience of more than 80 Parliamentarians and 150 construction industry leaders, civil servants and journalists at the House of Commons, last night (October 18) and identified the construction industry as a key driver of economic growth and suggested ways in which government should kick start the recovery.

He said that government must do more to support the proposed Green Deal programme. “Through this scheme it is hoped that some 14 million homes across the UK will be improved by the early 2020s. The stimulus to the economy and the benefits to our industry would be huge, however without some fiscal incentive this will not happen. Government must ensure that all Green Deal compliant measures pay the lower 5% rate of VAT as it is perverse to charge 5% tax on a product, i.e. energy, that we want people to use less of, but 20% on the measures which help them stop using it.”

Bolsover said: “Government must stick to its spending plans, but rebalance the economy between current and capital spending. Government’s own figures show current expenditure rising from £632bn this year to £694bn in 2014/15, whilst capital spending is being cut from £61bn to £42bn over the same period.

“Rebalancing this could make way for the £5 billion package of essential infrastructure investment which is being widely talked about.”

He also called upon government to do more to stimulate the new build housing market. “Although recent announcements about the release of public sector land for private sector housing are welcome, what is really holding back first-time buyers is not development but access to finance. Government must examine and encourage ways to help first-time buyers get on the housing ladder through, for example, some kind of mortgage indemnity guarantee scheme, or through a government-backed savings scheme for first-time buyers.”

However, the CPA chairman also emphasised it was industry that would deliver the economic recovery and that the role of construction would be crucial in achieving this.