As part of the IHBC’s long-standing partnership in the ‘Cut the VAT Campaign’, the institute added its name to the Campaign’s letter to the Chancellor, The Rt Hon George Osborne MP, calling on him to implement ‘a reduction in VAT to 5% on housing renovation and repair’ in his Autumn statement on 5 December.
Mike Brown, IHBC Chair, said: ‘It is critical that the IHBC continues to play this kind of leading role in the heritage sector, partnering with the full spectrum of interests concerned with the problem of VAT. That’s the best hope we currently have of making headway against the outdated financial straitjacket that the current VAT regime represents – the construction industry’s very own Gordian Knot.’
‘The Treasury has misled successive governments on this issue for too long, hampering sustainable development and growth across the UK, as all in our sector know already. Piling on VAT makes it all the harder to deliver well-designed development and find viable solutions for Heritage At Risk cases.’
‘While we can only hope that this might be another nail in the coffin of an inequitable tax that favours a short-term, new-build housing industry, we also need to remember that the need also reflects our collective failure to impress on government, at the highest levels, the economic and environmental benefits of conservation principles. Addressing that failure must become the headline for our own, wider aspirations.’
The ‘Cut the VAT Campaign’ letter to the Chancellor reports as follows:
As members of the Cut the VAT Campaign Coalition, we urge you to reduce VAT on all housing renovation and repair work from 20% to 5% as part of your suite of announcements at the forthcoming Autumn Statement on 5th December.
By levying VAT at 20% on all housing renovation and repair work, the Government is exacerbating a number of serious economic, environmental and social problems. Introducing a reduced rate of 5% VAT is a simple and extremely effective way of achieving a number of the Government’s goals.
At a time when economic growth is still tentative, a cut in VAT would provide a huge economic stimulus. Independent research by Experian showed that a targeted reduction in VAT to 5% would provide a total economic stimulus of over £20 billion by 2020 (1). The same research by Experian stated that this reduction would create more than 32,000 extra full-time equivalent construction jobs by the end of 2015.
Equally as pressing is the need to bring down the cost of living for individuals and families. A single cut in VAT on housing renovation and repair work would help millions of households to upgrade their homes to make them more energy efficient. Without such help to reduce energy use, the number of households living in fuel poverty will continue to grow as more and more people struggle to protect themselves against this latest increase in energy prices. This would not only reduce the cost of living but also help the Government meet its carbon reduction targets by reducing the emissions from our existing housing stock.
This is why an alliance of more than 60 charities, trade associations and business groups behind the Cut the VAT Campaign are calling for a reduction in VAT to 5% on housing renovation and repair.
As well as the IHBC, the letter is supported by: British Blind and Shutter Association; Federation of Master Builders; Joint Tax Committee of Construction; Built Environment Forum Scotland; Country Land & Business Association; British Woodworking Federation; Shawbrook Bank; National Energy Action; Royal Institute of Chartered Surveyors; SELECT; ; Knauf Insulation Northern Europe; National Federation of Builders; House Beautiful Magazine; Town and Country Planning Association; British Property Association; The Heritage Alliance; Lister Trade Frames; British Precast Concrete Federation; Modern Masonry Alliance; Royal Incorporation of Architects in Scotland; Glass and Glazing Federation; Historic Towns Forum; UK Green Building Council; HomeOwners Alliance; Electrical Safety Council; National Federation of Roofing Contractors; European Builders Confederation; Historic Houses Association; Building & Engineering Services Association; ; Institute of Historic Building Conservation; Countryside Alliance; Electrical Contractors’ Association; National Specialist Contractors’ Council; Bathroom Manufacturers Association.
The Campaign’s press release states:
Britain’s financially squeezed households would benefit from lower cost energy saving measures if the Chancellor were to cut VAT on housing renovation and repair work, according to a broad coalition of campaigners in a letter to George Osborne ahead of his Autumn Statement.
Brian Berry, Chief Executive of the Federation of Master Builders (FMB), said: ‘The Chancellor should empower home owners to reduce the amount of energy they use. Cutting VAT on domestic building work from 20 to 5 percent will encourage more people to commission refurbishment work and at the same time improve the energy efficiency of their homes.
‘Government must give families some control over their seemingly ever-increasing energy bills. Switching suppliers or taking out a long-term fixed tariff can protect against sudden price increases, but the cost of heating our homes is set to rise exponentially for years to come. The only way to stem, or even reverse, these rises is to have new glazing, better insulation or more efficient heating systems installed.‘
Paula Higgins, Chief Executive of the Home Owners Alliance, said: ‘It is ridiculous that hard-pressed home owners living in cold, draughty, leaky and cramped houses are being taxed by the Government for trying to make their homes fit to live in. Many home owners can only afford to do essential repairs and maintenance by going to the black market, making honest home owners dishonest.
‘If the Government is serious about reducing the cost of living, cutting the tax on home repairs is a simple and immediate way to do it. When the Isle of Man did it, the Government found it was such an economic boost that it paid for itself.’
Loyd Grossman, Chairman of The Heritage Alliance, another of the signatories to the letter, added: ‘Compared to other EU countries, we have a much higher proportion of older properties, and many are in desperate need of renovation and repair. A reduction in VAT would certainly help kick-start a big increase in this type of work, and would lead to an enormous improvement to our existing buildings. I believe maintenance, repair and renovation is a crucial issue, and urge the Government to act.’
The Experian (December 2011) report, The effects of a reduction in the rate of VAT on the labour element of housing repair, maintenance and improvement, is available via the Cut the VAT campaign website at: LINK
For the Cut the Vat Campaign see: LINK
For the FMB press release see: LINK
