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Cut VAT on home improvements to reverse drop in building activity, says FMB

March 2021

The Government should cut VAT on home improvement works to reverse the drop in private repair and maintenance activity, says the Federation of Master Builders (FMB) in response to the latest ONS construction output data.

Brian Berry, Chief Executive of the FMB, said: “If the Government is serious about levelling-up, creating jobs and decarbonising our homes, then it needs to cut VAT on home improvement works and back local builders who employ tens of thousands of people and in each community across the country.  Independent research conducted for the FMB has found that if the Government cut VAT on home improvements to 5% for a temporary 5-year period, this would generate an economic boost worth £51 billion and unlock almost 345,000 jobs, both in construction and the wider economy. This would swiftly reverse January's worrying fall in private repair and maintenance of 4.7%, and as in 2021 alone the benefits are likely to include a £9.5 billion stimulus and more than 64,000 jobs.”

“Households are more likely to install green measures if they are doing larger home improvement projects, so cutting VAT alongside the Green Homes Grant scheme would help boost our transition towards net zero carbon emissions by 2050.  However, we can’t make the progress that is needed without a long-term plan,” concluded Berry.  “That’s why the FMB is calling on the Government to deliver a twenty-year National Retrofit Strategy that provides businesses and consumers with the confidence they need.”

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