29th March 2012 – FOR IMMEDIATE RELEASE
Aberdeen Central MSP Kevin Stewart has urged the Chancellor of the Exchequer to cut the VAT on housing repair, maintenance and improvement work to support employment in Scotland, tackle rogue traders and to protect our built heritage.
Research by Experian, commissioned in December 2011 by the Federation of Master Builders (FMB), found that a reduction in VAT to 5% on all home improvement work would create 2,103 new construction jobs in Scotland in 2012 alone, with figures in subsequent years suggesting that a total of 3,625 jobs could be created in the period to 2020 through incentivising home owners to repair and improve their homes. A lower rate of VAT would also help to improve the energy efficiency of our housing stock, reduce the advantage of rogue traders and help remove the perverse incentive to demolish older properties rather than bring them back into use.
Despite all of this, the Government instead decided to surprise the construction and heritage sectors with a decision to remove the zero rate of VAT for approved alterations to listed buildings in the recent Budget announcements. This means that from 1 October 2012 the standard rate of VAT will apply to the alteration of a listed building, which is a 20% more than the current rate. The impact will be significant in Scotland where there are around 47,600 listed buildings, totalling 1% of the nation’s total building stock.
Kevin Stewart MSP said:
"It is a matter of regret that the Chancellor of the Exchequer chose not to reduce VAT on housing repairs and maintenance in his Budget, which would have helped to boost the economy, address the number of empty properties and bring vacant homes back into use.
"According to Trading Standards, £170 million is stolen by so-called cowboy builders from unsuspecting homeowners across the UK each year, and rogue traders thrive by evading VAT and offering the customer a cheap deal, however, these traders often disappear with deposits, perform shoddy work and cannot be found when there are complaints. The Chancellor must take cognisance of this, and reduce VAT on housing repairs and maintenance."
Grahame Barn, Director of FMB Scotland, added:
"This UK Government’s move to remove the zero rate VAT on alterations to listed buildings really is out of step with the industry’s wishes and the needs of the UK’s heritage buildings. The increase to 20% will prevent many from carrying out important improvement work to their properties, and will in turn put many more building firms at risk.
"If the Government is serious about supporting growth in the economy and cutting carbon it should focus on measures to encourage property owners to improve the UK’s existing buildings, and not do the opposite. The harmonisation of VAT at 5% for all housing repair, maintenance and improvement work would create jobs and reduce the competitive advantage of those operating in the informal economy. I hope all MSPs will support Kevin Stewart’s motion in the Scottish Parliament and help increase the pressure on the Chancellor to promote growth in this way."