The VAT man cometh

So farewell to the little good you bear me.
Farewell! a long farewell, to all my greatness!

Well, I suppose it could have been worse.

Maybe that was the point. Tell people it’s going to be absolutely dreadful then when you only make it half as dreadful, they may not hate you as much as they might have done.

Or maybe, we are all grown up enough to recognize that the deficit needed to be taken down somehow and that it was always going to be painful. I mean we’ve all suspected something like this would be coming (see my earlier blog);

The VAT thing will be nasty but maybe it will mean businesses get really busy in November and December as people rush to get big ticket items through before the deadline. And maybe it will mean that people just put off buying those big ticket items indefinitely. And at the very least it will, apparently, bring in £13bn which would otherwise have been gained through tax cuts.

Of course one of the things that this Budget shows is, once again, that the legitimate calls to pay attention to the construction industry have fallen on deaf ears. Again.

Thank goodness the boy George has decided that there has been enough capital spending cuts for now (although projects are going to be assessed for their worthiness later in the year). But it’s still disappointing to see that little has been done to boost a low carbon economy at ground level.

I mean the Tories have been fans of the localism agenda and against top-down management , so it’s a shame they haven’t done something which could make a real grass-roots difference.

Even if they weren’t going to touch VAT on RMI labour element, surely it would make sense to throw a little in the way of energy-performance enhancing work. By which I mean that I pay 5% VAT on my gas and electricity bills, but if I want to pay someone to install something which will help me to reduce that consumption then I will pay 20% VAT on it.

So once again, something that the construction industry has lobbied long and hard for is being ignored. But maybe we can take comfort from the thought that there will be people out there who have decided to renovate or build an extension or whatever. If you have decided to spend fifty grand on an extension, are you really going to be bothered about the extra £1250 in VAT?

About Fiona Russell-Horne

Group Managing Editor across the BMJ portfolio.

Check Also


Careless whispers

To lose one parent is unfortunate. To lose two seems like carelessness Why it is …