The government must cut VAT on home improvement works to reverse the worrying drop in private repair and maintenance activity, and to put more cash in householders’ pockets to make their homes fit for the future, says the Federation of Master Builders (FMB) in response to the Office for National Statistics (ONS) construction output data published today [12 March].
The Figures showed that construction output grew by 0.9% in the month-on-month all work series in January 2021; this return to monthly growth follows the 2.9% decline in December 2020.
The level of output in January 2021 was 2.6% below the February 2020 level; the level of new work was 6.4% below this level, while repair and maintenance work was 4.5% above this level despite a monthly fall.
Meanwhile, new work increased by 1.7% in January 2021, driven by private commercial and infrastructure, which grew by 4.5% and 3.1% respectively.
Repair and maintenance decreased by 0.4% in January 2021 because of a 4.7% fall in private housing repair and maintenance, despite 5% growth in public housing and 1.3% in non-housing repair and maintenance.
Whereas construction output grew by 1.7% in the three months to January 2021 compared with the previous three-month period, because of growth in both new work (2.2%) and repair and maintenance (0.8%).
Commenting on the figures, Brian Berry, chief executive of the FMB, said: “If the government is serious about levelling-up, creating jobs and decarbonising our homes, then it should cut VAT on home improvement works and back local builders who employ tens of thousands of people and in each community across the country.
“Independent research conducted for the FMB found that if the government cut VAT on home improvements to 5% for a temporary five-year period, this would generate an economic boost worth £51 billion and unlock almost 345,000 jobs, both in construction and the wider economy. This would swiftly reverse January’s worrying fall in private repair and maintenance of 4.7%, and as in 2021 alone, the benefits are likely to include a £9.5 billion stimulus and more than 64,000 jobs.”
He concluded: “Households are more likely to install green measures if they are doing larger home improvement projects, so cutting VAT alongside the Green Homes Grant scheme would help boost our transition towards net zero carbon emissions by 2050.
“However, we can’t make the progress that is needed without a long-term plan. That’s why the FMB is calling on the government to deliver a twenty-year National Retrofit Strategy that provides businesses and consumers with the confidence they need.”
