Chancellor must make housing his top infrastructure priority

The Chancellor must prioritise investment Britain’s ageing housing stock by reducing VAT on renovation and repair work and investing public money in improving the homes of the fuel poor in order to secure the economic recovery and protect households from rising energy bills, said the Federation of Master Builders (FMB) in a submission ahead of George Osborne’s Autumn Statement on 4th December.

Brian Berry, Chief Executive of the FMB, said:

“The Chancellor must view the UK’s homes as an infrastructure investment priority if he wants to fulfill his responsibilities by boosting growth and protecting families from rampant increases in the cost of energy. Unlike big rail or aviation projects, domestic repair and improvement projects can start right away, so the positive impact on the economy would be felt immediately.

“The Chancellor must act quickly and decisively to cut VAT on all domestic building work to 5 per cent, which will encourage more householders to have energy-saving measures installed and give families new armour in the fight against ever-increasing energy bills. It just doesn’t make sense that the full rate of VAT is charged on work to make the average British home warmer and cheaper to run. Just under half of EU member states currently offer a discounted rate of VAT on this type of work, so why is the UK also not taking advantage of the opportunity to incentivise the market in this way?

“We also call on the Chancellor to look at ways of funding a mass programme of energy-efficiency improvement work, particularly helping the vulnerable and the fuel poor. The Government should not be talking about rolling back green taxes, it should rather be investing the £4 billion raised annually via carbon taxes such as the Carbon Floor Price to improve our housing stock and help those who are not able to help themselves through the VAT reduction. If the Government is serious about lifting millions of families out of fuel poverty by making Britain’s homes greener and cheaper to heat, and by so doing meet its own tough CO2 emissions reduction targets, it must tackle this issue head-on.

“In terms of the construction industry, although we’re starting to see some initial improvement, it is important that the Chancellor remembers what a low base this industry is recovering from. While it is encouraging that we have seen two consecutive quarters of largely positive results in the construction sector, the previous 22 consecutive quarters were pretty much all bad news for Britain’s beleaguered builders.

“Builders’ overheads have kept rising throughout this period, and now many firms are beginning to report rising energy costs, and shortages or delays in the supply of certain materials, while skilled labour is also increasingly in short supply. Despite striving to protect their customers from these costs, our members are telling us that they may simply have no choice to put up their prices next year.”