 | Get Britain Building welcomes VAT report
 back
| 26 Feb 2010
The Get Britain Building (GBB) campaign has thrown its weight behind a new report – produced by the Cut the VAT Coalition – on the effect of cutting VAT for housing repair, maintenance and improvement (RMI) as an important first step in convincing the Treasury to take action to improve demand and employment in the building industry.
The report – The Opportunities and Costs of Cutting VAT: The effects of selected reductions in the rate of VAT on the labour element of housing repair, maintenance and improvement – identifies opportunities for the Government.
*To create 55,000 new jobs in the first year of a VAT cut;
*Free up £450m per annum for renovations on social housing;
*Bring 19,000 social houses back into use p.a;
*See sustainability improvements to 174,000 private domestic properties; and
*Reduce housing carbon emissions by up to 337,000 tonnes.
The Opportunities report, published at the House of Commons on February 23rd, estimates that the cost of this to Government could be as little as £102m per annum – equivalent to a quarter of the Car Scrappage Scheme; only twice the recent Boiler Scrappage Programme and representing only a mere 0.01% of the resource so far committed to the bailing out the banks.
It is arguable that, for instance, the £400m Car Scrappage Scheme did not create one single new UK job; the majority of monies out-flowing to companies – such as Hyundai, that benefited to the tune of around £25m – with no British manufacturing base at all.
GBB has been campaigning for a cut in VAT to 5% on domestic works that include an element of ‘consequential improvements’ which deliver sustainability benefits. Such an initiative would not only generate activity in the domestic RMI environment, it would serve to improve the property asset base of the UK and assist the Government in meeting its challenging 2020 and 2050 carbon reduction commitments.
Mike Leonard, GBB spokesperson and director of the Modern Masonry Alliance, said: “This report is a great piece of work as it represents the first costed proposal to Treasury that incontrovertibly demonstrates the enormous economic, social and environmental benefits that would accrue from support for the building industry. Yet: it is only a start. The report only addresses the benefits of VAT reduction on the labour elements of works. It is our belief that should the programme be widened to encompass all elements of RMI – provided sustainable ‘consequential improvements’ are included – the cost to Government would be lower still; possibly cost-neutral and even revenue generating”.
The report 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. The report also predicts that an extra 81,500 jobs would also be created in the UK by the end of the decade.
Speaking at the launch of the research in the House of Commons, Lorely Burt MP for Solihull said: "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”.
Leonard also says, “The point of this campaign is now broadly understood, and is penetrating mainstream, cross-party political thought. However, for years, the faceless wonders at the Treasury have been deaf to the message, claiming they did not have numbers to support it. Well now they do, and there can be no excuse for them to carry on prevaricating. In addition, as this report only deals with labour; the treasury now has its own incentive to research how this inexpensive measure would become cheaper still if it were extended to all elements of RMI that included improvements in a building’s environmental performance”.
“For too long, Government has determinedly ignored the opportunity provided by the building industry to help rebuild the economy, while improving investment in infrastructure and UK housing stock. One hopes this report goes some way to demonstrating that they can’t afford to ignore that anymore”, Leonard concludes. |
| |
