The Green Party has pledged to cut VAT on housing repairs and renovations.
Currently the VAT rate on repairs and renovations is 20% but, with the UK housing stock in desperate need of improvements such as insulation, a coalition led by the Federation of Master Builders (FMB) has been calling for a reduction to five per cent, the lowest level allowed by European rules.
The latest independent economic research, from Experian, shows that a reduction in VAT on housing renovation and repair from 20% to five per cent could create 42,000 extra full-time equivalent construction jobs from 2015 to 2020 and more still, an additional 53,000 jobs in the wider economy over the same five-year period.
Additionally a cut in the VAT rate would incentivise the ‘greening’ of homes through insulation and other measures. The total cost of the VAT cut would be £6.6 billion over the five years from 2015 but would result in an economic stimulus of £15 billion in the wider economy.
Tom Chance, Green Party housing spokesperson, said: “This VAT cut would be a real boost for green jobs and warm homes. It comes at a time when we desperately need to be investing in a nationwide home insulation scheme, to cut bills and end the scandal of fuel poverty. This election presents Britain with a chance to vote for change. This VAT cut, just one of an array of bold policies from the Green Party, demonstrates our commitment to building a Britain of warm, comfortable homes.”
The Greens’ pledge to cut VAT comes after the FMB launched a campaign to ‘Cut the VAT’.
Brian Berry, chief executive of the FMB, said: “A VAT reduction on housing renovation and repair work will empower home owners to contribute to growth, jobs and greener homes. There is no other proposal that will help the UK achieve so many of its economic, environmental and social aims with so little cost to the public purse. Independent research shows that the wider benefits of a VAT reduction on housing renovation and repair would stimulate more than £15 billion of wider economic activity, which completely overshadows any direct losses to Treasury coffers due to a drop in the percentage charged for VAT. The Green Party is the latest political party to commit to a VAT reduction on housing renovation and repair and we are delighted they see the enormous value of this policy.”