VAT must be cut for construction sector to recover, says FMB

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The chancellor should prioritise cutting the rate of VAT on home improvement works and invest in the construction industry to maintain the sector’s recovery, urges the Federation of Master Builders (FMB)

In response to the ONS construction output data published yesterday (13 January), the Federation of Master Builders (FMB) has called in the chancellor to use the upcoming budget to radically reduce the rate of VAT on repair and maintenance work.

The ONS data

The ONS data revealed that construction output increased by 1.1% in the three months to November 2019, compared with the previous three-month period, driven mostly by 1.6% growth in new work, with a smaller contribution from 0.2% growth in repair and maintenance.

In repair and maintenance, the rise in the three months to November 2019 was largely because of the 1.2% increase in non-housing repair and maintenance, with public housing repair and maintenance growing 2.5%; in comparison, private housing repair and maintenance fell by 1.9%.

Prioritise cutting VAT on home improvement works

Brian Berry, chief executive of the FMB, said: “While 2019 was a year marked by political and economic uncertainty, there does seem to be some small signs of hope for the construction industry, with the largest monthly growth in the industry seen in November since the start of the year.

“It is too soon to tell whether this will be a longer-term trend, as some sectors such as private housebuilding and repair and maintenance continue to see sluggish growth.”

He added: “The upcoming budget provides the perfect opportunity for the government to help ensure this positive trend at the end of 2019 continues into the new decade. In order to help boost the industry, the chancellor should prioritise cutting VAT on home improvement works, so that tax isn’t a barrier to homeowners upgrading the energy efficiency of their properties.”

The FMB also added that the government should use this opportunity to invest in construction skills and “invest in planning departments to ensure the planning system doesn’t act as a blockage” to the government’s housing targets.

The article was originally seen at: https://www.pbctoday.co.uk/news/planning-construction-news/construction-rate-of-vat/70025/

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