A cut in VAT from 20 to 5 per cent in home improvements over the next five years would create 345,000 new jobs and pump £51bn into the economy, according to new research.
CBI Economics analysis discovered the cut would offer an extra £25bn in goods and services to the UK economy at a cost of £2.8bn to the government in lower fiscal contributions.
The survey, conducted for the Federation of Master Builders and the Royal Institution of Chartered Surveyors, found in 2021 the measure would create 64,000 jobs and offer a £9.5bn economic stimulus.
Federation of Master Builders, FMB, chief executive Brian Berry urged the chancellor, Rishi Sunak, to introduce the cut on Wednesday’s budget to show he was serious about ‘levelling up’ across the UK.
“A temporary tax cut will give a much-needed boost to small building firms, and unlock additional cash for households to spend on repairs and energy efficiency measures,” he said.
Both SME builders and surveyors say the VAT reduction would make it easier for people to make energy efficiency changes to their homes and support the beleaguered green homes grant scheme.
Royal Institution of Chartered Surveyors, RICS, UK MD Matthew Howell said: “If the government is serious in its desire to build back better and help level up the country then we have to be bold and do things differently.”