Is a VAT cut through the keyhole – new report on VAT cuts to boost economy

A VAT reduction on housing renovation and repair could boost the UK economy by more than £15 billion from 2015 to 2020 according to a new independent research report by Experian. This reduction could also create more than 95,000 jobs and save 240,000 tonnes of CO2 from thousands of homes.

A packed reception in the House of Commons attended by Iain McIlwee (BWF CEO) and David Pattenden (BWF President) saw the launch of this compelling new recearch.  In addition to the BWF, the report is backed by more than 60 charities, business groups, financial institutions and trade associations, including the BWF, that are united in calling on all three main political parties to commit to this VAT reduction in their 2015 General Election manifestoes.

Brian Berry, Chief Executive of the Federation of Master Builders (FMB), said: “A VAT reduction on housing renovation and repair work will empower home owners to contribute to growth, jobs and greener homes without placing a burden on the Treasury. There is no other proposal that will help the UK achieve so many of its economic, environmental and social aims with so little cost to the public purse. 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, which completely overshadows any direct losses to Treasury coffers due to a drop in the percentage charged for VAT.

Berry added: "It is a myth that EU law prevents the UK government from reducing VAT on housing renovation and repair. This research report clearly shows that almost half of EU member states are currently enjoying the economic, environmental and social benefits that this VAT reduction can bring. Why should the UK not follow suit?”

Iain McIlwee, Chief Executive of the BWF, said: “The results of this research construct a compelling case for the Treasury to appraise.  Clearly in the current climate, the Treasury will lead the debate, however, the impassioned speech from Lloyd Grossman (Chairman of the Heritage Alliance) reminded us of the broader reasons that this cut makes sense.  It would be a great step forward in ending the cash culture that undermines the efficiency and professionalism in the domestic refurb market, it would unlock work and ensure vital investment in ouf Heritage (which in turn is vital to support a tourism sector that is now the 5th largest sector in the economy) continues.”

Ray Horwood, Chief Executive of the National Federation of Roofing Contractors, said: “There are a range of complementary reasons for this sensible reduction in VAT on housing renovation and repair that play to government objectives and overall consumer expectations. The strong leadership message this sends to all political parties would, in addition, be a boost and clear message of support to the responsible and qualified SME firms that will undertake this work.”

Mike Brown, Chair of the Institute of Historic Building Conservation, said: “The care and maintenance of our heritage buildings is often crafts-based and, as such, labour intensive, so a reduction in VAT will help support those skills and thousands of jobs across the sector. The case for the reduction in VAT is particularly important in making the difference between a historic building being saved or being unviable. 

Brown added: “On top of that, more affordable day to day care and maintenance would help save countless older buildings from the destructive and costly cycle of decay and restoration, allowing diminishing resource to be directed towards delivering better informed energy conservation measures, compatible with the fabric of the building.”

Follow the link to download a copy of Experian's research report "An estimate of the effects of a reduction in the rate of VAT on housing renovation and repair work: 2015 to 2020".