Two-thirds of builders ask Chancellor to cut VAT, says FMB

Federation of Master Builders (FMB) has called on the Government to cut VAT on home repair and renovation works to boost economic growth nationwide.

The FMB says a VAT cut would support local builders’ contribution to the UK’s net zero carbon emissions target by 2050 and preserve Britain’s built heritage.

In its pre-Budget submission to HM Treasury, the FMB called for the labour-element of VAT to be cut from 20% to 5% on repair and renovation works on domestic dwellings.

Brian Berry, chief executive of the FMB, said: “The new Chancellor has a unique opportunity in his first Budget to signal a green, positive outlook for builders who are critical to delivering the homes and infrastructure this country needs.” 

“The fact that nearly two-thirds (59%) of builders say cutting VAT would boost their business sends  a clear message to the Government that if it is wants to deliver sustained economic growth in our building industry this is the single best policy change to achieve that.”

212 out of 357 small to medium-sized building companies sampled told the FMB that the new Government could best support the construction industry by using new freedoms granted by Brexit to cut VAT.

Cutting VAT will also encourage homeowners to invest in the sorts of renovation and retrofit work that the country will need if it is to meet bring all homes up to EPC Band C by 2035. Currently, just 29% of households meet this test.

Brian said: “We need a national retrofit strategy that sends homeowners and landlords a strong signal to invest in their properties, reduce costs, and cut carbon. Cutting VAT is the key to unlocking this and set us on track to achieve net zero by 2050 by saving almost 240,000 tonnes of CO2 from 92,000 homes.

“That means we need to urgently insulate 8 million lofts and solid walls, and 5 million cavity walls. Making homeowners more likely to take these steps by cutting VAT would give the Government a good news story ahead of hosting the UN Climate Change Conference (COP26) later this year.”

A cut in VAT would also help reverse the trend of left-behind areas and delivering the Government’s commitments to invest in place making.

The FMB says the Government should take up the recommendations of its own Building Better, Building Beautiful Commission and align the tax requirements for new and existing buildings.

In its pre-Budget submission, the FMB is also calling on the Government to:

• Support small to medium-sized house builders by reforming planning fees;
• Create incentives for low-carbon house builder pioneers; and
• Review and reform the UK Apprenticeship Levy to ensure construction has the skills it needs.