CPA: Construction industry unites to call for a VAT cut in the Budget

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Monday, 20, Apr 2009 12:00

The construction industry has united in its call to the Chancellor of the Exchequer to cut VAT to five percent for property refurbishment in his Budget next Wednesday. A coalition of interests including the Construction Products Association (CPA), the Federation of Master Builders (FMB), the Royal Institute of British Architects (RIBA) and the Royal Institution of Chartered Surveyors (RICS) has united for the first time to write to the Chancellor arguing that a cut in VAT would help kick start the British economy. Job losses are predicted to hit 300,000 in the construction industry* but experiments elsewhere in Europe indicate a VAT cut could create thousands of much needed jobs.

Michael Ankers Chief Executive of the CPA said:

“The Chancellor has a unique opportunity in his Budget to take advantage of the EU decision of 10th March 2009, which allows Member States to reduce VAT on services, and cut the current rate of VAT from 15 to five percent for all private housing repair and maintenance work. This will provide a far more effective fiscal stimulus than many of the other measures the government has introduced or is considering, by helping to sustain employment in many thousands of SMEs and using construction products, of which a high proportion are manufactured in the UK.”

Louis Armstrong Chief Executive of the RICS said:

“Making it cheaper to repair and maintain homes will help bring empty properties back into use and encourage people to take advantage of energy saving measures such as insulation. Reusing empty homes improves communities, minimises waste sent to landfill and reduces carbon emissions from the transport of construction materials. Cutting VAT would help bring empty homes back into use and increase supply while housebuilding is at a record low level.”

Richard Diment, Director General of the FMB said:

“Recycling our heritage by putting buildings back into beneficial use is an essential part of improving our quality of life. Research carried out by University of Oxford calculates that the potential market for the refurbishment of existing homes to improve their energy efficiency is worth between £3.5 and £6.5 billion, which would be a significant boost to the construction sector providing thousands of new jobs at a time when they are needed more than ever.”

Sunand Prasad, President of the RIBA said:

“The European Construction Industry Federation (FIEC) has shown that the experiment of reduced VAT rates for activities relating to the restoration and maintenance of dwellings in Belgium, Spain, Italy and Portugal created almost 170,000 permanent additional jobs. In France the scheme resulted in a €500 million net increase in tax yields, disproving the argument that the scheme would burden public finances.”

ENDS

Note to editors

*The RICS has predicted the 300,000 job losses in the construction industry: http://www.rics.org/Newsroom/Pressreleases/rics_pre_budget_report_pr_241108.html

KPMG has recently recommended that VAT be reduced to five percent: http://www.kpmg.eu/budget/13996.htm

‘Cut the VAT’ Coalition

The Cut the VAT Coalition believes that reducing VAT from its current rate of 15 per cent to five per cent for all maintenance and home improvement work would help the Government achieve its target of cutting carbon emissions by 80 per cent by 2050. It would also benefit millions of UK homeowners by getting rid of cowboy builders, helping those who cannot afford vital repairs to their homes, bringing our empty properties back into use and protecting the countryside.

The Cut the VAT Coalition is made up of 19 varied organisations, all of whom wish to see VAT cut from 17.5 per cent to five per cent for all building repair and maintenance work. These include: The Association of Plumbing and Heating Contractors (APHC), The Bathroom Manufacturers Association, The Countryside Alliance, The Country Land and Business Association (CLA), Clay Roof Tile Council, The Civic Trust, The Empty Homes Agency, The Federation of Master Builders (FMB), House Beautiful, The Listed and Period Owners Group (LPOG), The National Home Improvement Council (NHIC),The National Landlords Association (NLA), The National Trust, The Royal Institute of British Architects (RIBA), The Royal Institution of Chartered Surveyors (RICS), The Theatres Trust, The Thatched Owners Group (TOG), Town and Country Planning Association (TCPA) and the Tax Payers Alliance (TPA).

For more information on Cut the VAT please visit: http://www.cutthevat.co.uk/