MONDAY 28th
NOVEMBER 2011 – FOR IMMEDIATE RELEASE
Reducing VAT to 5% for all
domestic Repair, Maintenance and Improvement (RM&I) works would create more
than 100,000 extra jobs in the UK by 2020, according to a latest report from
the Federation of Master Builders (FMB), the largest trade association in the
UK construction industry.
According to the research,
produced by economic analysts at Experian, ‘TheOpportunities and Costs of Cutting VAT: The effects of selected reductions inthe rate of VAT on the labour element of housing repair, maintenance andimprovement’, reveals thatmore than 26,600 jobs would be created in
the construction industry alone, with a further 34,400 new jobs in the
wider economy, over the next year as a result of the VAT cut.
Brian Berry, FMB Director
of External affairs, said:
“At a time when
unemployment, especially among young people, is rising cutting VAT on RMI works
would help create more than 60,000 jobs over the next 12 months. Last year the
construction industry took on over 26,500 apprentices, but a VAT cut for home
improvements would increase demand in the sector and help create even more
apprenticeship opportunities for young people. The cut would also benefit
millions of UK homeowners by reducing bills for those who cannot afford vital
repairs to their homes; help bring empty properties back into use thereby
assisting with the alleviation of the housing supply crisis; remove the perverse
incentive to demolish existing buildings to avoid the VAT bill; encourage the
use of existing structures rather than continuing the urban sprawl and building
on greenbelt land; and help protect consumers by cutting the competitive
advantage of the informal economy over legitimate traders.”
Berry continued:
“A VAT cut would also have
considerable social and financial benefits for the public sector by reducing
the VAT bills of housing associations and local authorities, enabling more of
the current expenditure to be used for improving the UK’s 4.9 million units of
social housing stock. Based on the 2010 expenditure for improving the UK’s
social housing stock which was £7.9billion, a further £374 million each year
could be added to the budget.”
Berry added:
“While the research
demonstrates that the immediate effect of a reduction in the rate of VAT would
be a net revenue loss to the Government in 2012 of between £161million and £864
million, it also shows that such a move would provide a total economic stimulus
in the region of £1.7 billion in 2012 alone, rising to more than £20 billion by
2020.”
Berry concluded:
“One of the biggest
benefits of cutting VAT from 20% to 5% from the Government’s point of view is
the boost it could give to its flagship programme the Green Deal as a VAT cut
would act as an incentive to homeowners considering energy efficiency home
improvements to their home. This has been the Government of cuts and we urge
the Chancellor to make this selected cut as will help create much needed jobs,
give homeowners the opportunity to have a more energy efficient home and
critically will provide the stimulus that is needed to boost economic growth.”
