A VAT cut on home improvement works from 20% to 5% for a temporary five year period would generate a huge economic stimulus, new research from the Federation of Master Builders (FMB) and the Royal Institution of Chartered Surveyors (RICS).suggests.
… economic stimulus worth £51 billion and create 345,000 new jobs…
The Federation of Master Builders (FMB) writes:
A VAT cut on home improvement works from 20% to 5% for a temporary five year period would generate an economic stimulus worth £51 billion and create 345,000 new jobs, according to new research published today by the Federation of Master Builders (FMB) and the Royal Institution of Chartered Surveyors (RICS).
Analysis conducted on behalf of the FMB and RICS by CBI Economics has found that cutting VAT on Repair, Maintenance, and Improvement (RMI) activity for the period 2021 – 2025 would lead to:
- £51 billion total additional output in the construction sector and wider economy
- £25 billion additional Gross Value Added (GVA) across the economy
- 345,000 additional full-time equivalent jobs in construction and beyond.
This would cost the Government £2.8 billion in lower overall fiscal contributions.
In 2021 alone, the benefits are likely to include:
- £9.5 billion economic stimulus
- £4.6 billion in additional GVA
- 64,000 jobs.
Cutting VAT would not only help tackle the ‘cash in hand’ part of the market, but by making home upgrades more affordable, it will also make much needed energy efficiency home upgrades more accessible to all households.
The FMB and RICS are calling on the Chancellor to use the Spring Budget to make this change. In backing builders and the professional services working in repair and maintenance, the Government would be supporting a sector that is still grappling with the effects of skills and materials shortages made worse by the pandemic and Brexit….
