The report; ‘The Opportunities and Cost of Cutting VAT: The effects of selected reductions in the rate of VAT on the labour element of housing repair, maintenance and improvement,’ (PDF, 500 KB)which was launched on Tuesday 23rd February at the House of Commons, found that a cut in VAT could create more than 24,000 jobs in the construction sector, as well as an extra 31,000 other new jobs in the wider economy in 2010 alone.
The report also reveals that a cut in VAT to five percent would contribute more than £1.4 billion to the UK economy in 2010 alone, rising to £17 billion by 2019. Furthermore it predicts that an extra 81,500 jobs would also be created in the UK by the end of the decade.
The UK’s housing stock would also benefit from a cut in VAT, as the research showed that cutting VAT could result in an extra £450 million a year for the improvement of the UK’s social housing stock. This would be enough to renovate or bring back into use approximately 19,000 homes per year; by 2019 this could see up to 190,000 extra social homes back up to the Government’s Decent Homes Standards.
Cutting VAT to five percent would also mean a greener, more energy efficient housing stock. The Government’s current focus on zero carbon housing will not do enough to tackle the UK’s carbon emissions as it would take more than 130 years to completely replace the UK’s existing housing stock with new carbon-zero homes. The extra demand created by a cut in the VAT rate on housing repair, maintenance and improvement to five percent could generate around £1.23bn extra expenditure over the next decade on energy efficiency measures. This would equate to an extra 174,000 homes fully insulated and with energy efficient boilers between 2010 and 2019, leading to a saving of up to 337,000 tonnes of CO2.
Speaking at the launch of the research in the House of Commons, Lorely Burt MP for Solihull said:
“The Liberal Democrats have long supported the Cut the VAT coalition’s call for VAT to be cut on repair, maintenance and home improvements and this research proves what benefits a VAT cut could have for the UK. We need to act quickly to get people back into work and a cut in VAT would provide many jobs immediately and would continue to provide a sustained flow of jobs over the next decade.
For further information contact External Affairs on externalaffairs@fmb.org.uk or
020 7092 3887.
