VAT cut can succeed where Green Deal is failing
Reducing VAT to 5 per cent on energy efficiency improvement work would help more households than Green Deal finance can, said the Federation of Master Builders (FMB) in response to the latest statistics from the Department of Energy and Climate Change (DECC).
38,259 Green Deal assessments have been carried out, but only four Green Deal plans have so far been signed. Research commissioned by the FMB shows cutting VAT to 5 percent on energy-efficient glazing and boiler replacements could result in an additional 57,668 households with both measures installed by 2020.
Brian Berry, the Chief Executive of the FMB, said: “These latest Green Deal statistics show the scheme is attracting some interest. However, there are disappointingly few households actually using Green Deal finance to pay for the work.”
Berry continued: “Green Deal finance was supposed to bring about a dramatic increase in the number of people improving the energy efficiency of their property by removing the upfront cost, but the complexity of the scheme and the high interest rate is severely limiting the number of households that see the Green Deal as relevant. Instead reducing VAT on energy-efficiency improvement work would create a real incentive and allow small, local firms to carry out the work, which they are currently struggling to win under the Green Deal.”
Berry concluded: “Government is doing its best to portray the Green Deal as a success, but it’s now time for honest debate on how to inspire greater uptake of energy-efficiency improvement work in order to cut carbon emissions and protect households against rising energy prices. We need to see a range of fiscal incentives to stimulate a long-term increase in demand for this type of work, including a targeted VAT cut and a reduction in Stamp Duty Land Tax for the most energy-efficient properties.”
Notes to editors
The Federation of Master Builders (FMB) is the UK’s largest trade association in the building industry, with national offices in England, Northern Ireland, Scotland and Wales, supported by additional regional offices. Established in 1941 to protect the interests of small and medium-sized building firms, the FMB is independent and non-profit-making, lobbying for members’ interests at both national and local levels.
The FMB is a source of knowledge, professional advice and support for its members, providing a range of modern and relevant business building services to save them time and money. The FMB also offers advice to consumers via its find a builder and check a builder websites. Please also visit www.fmb.org.uk
To read the FMB’s Strategy for the Low Carbon Building and Refurbishment Market in full, please visit bit.ly/14jll8u
 Experian (December 2011), ‘Update Report: The effects of a reduction in the rate of VAT on the labour element of housing repair, maintenance and improvement’. Available at, www.fmb.org.uk/news/campaigns/cut-the-vat/research