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A new coalition of leading organisations in the building and heritage sectors is today pressing the Government to reduce the rate of VAT to 5% on repair, maintenance and improvement (RMI) work on housing and historic buildings.
Speaking at the launch, FMB director of external affairs Andrew Large said:
"This coalition calls on the Chancellor Gordon Brown to use the current review of European VAT policy to ensure a reduced rate option for building repair work in the UK. The upcoming ECOFIN (European Council of Finance Ministers) meeting is a crucial opportunity and one that the Chancellor should not let slip by.
"Present VAT policy on building repair work in the UK causes many problems. By conferring a significant competitive advantage to unregistered building firms, present VAT policy fuels the informal economy and is one of the main reasons why UK homeowners continue to suffer needlessly in the hands of rogue builders each year."
According to the FMB, the domestic RMI sector's share of complaints is grossly disproportionate to its size in relation to the overall economy. It generates nearly 13% of total consumer complaints but less than 1.5% of total UK economic output.
Andrew Large continued:
"There are too many examples of consumers being ripped off by rogue builders. It is time that the Government stepped in to protect the consumer and also to prevent tens of thousands of honest, decent builders from losing valuable business. The FMB's research shows that reducing the rate of VAT on building repair work is the best policy option."
Present VAT policy also provides a perverse incentive to neglect the maintenance of existing housing and puts a brake on urban regeneration. The latest English House Condition Survey estimated that one-third of all English homes are considered non-decent, that is, failing to meet minimum statutory standards. Concluded Andrew Large:
"The Government's own figures show that a massive £43 billion needs to be spent on a backlog of repairs to improve some of the worst housing stock in urban centres. These homes are occupied by the poorest and most vulnerable in our society. Reducing VAT to five per cent on RMI work would cut billions from this repair bill and provide much needed homes to those who need them most."
The attached coalition position paper sets out the wide-ranging case for a reduced rate of VAT on RMI work.
First posted: 27 November 2003. Last modified: 27 November 2003.
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