VAT rise will ‘cost jobs’ says FMB

January’s increase in the rate of VAT to 20% will cost building industry jobs and risks damaging the government’s planned Green Deal, says the Federation of Master Builders.
Richard Diment, FMB director general said: “At a time when the Government wants to create jobs and get people to improve the energy efficiency of their homes, they have decided to bring in a policy which will have exactly the opposite effect.

” In fact the timing of the VAT increase in January next year couldn’t be worse. Independent research on VAT shows that the £45.5 billion a year domestic renovation maintenance and improvement market will fall by 2% as a direct impact of the VAT increase, and that removing this £910m from the market will result in 7,500 jobs being lost from a sector that will need to grow massively in the run in to Green Deal if the ambition for it is to refurbish 26 million homes over the next 20 years.”

Diment said that the key to the policy’s success will be what happens when the Green Deal becomes available – between January and Autumn 2011.

“Given that the work will need to be completed at the rate of 1.3 million homes every year, amounting to 25,000 homes every week, the Government must drive job creation in the sector so that the skills are available when the Green Deal starts. At the moment they look set to do the opposite of what is required to give this challenging but essential policy any chance of success.”

About Fiona Russell-Horne

Group Managing Editor across the BMJ portfolio.

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