Perry backs tax breaks for housing

FORMER Scottish Enterprise chief executive Jack Perry yesterday called for a VAT concession to kick-start recovery in the construction industry.

Speaking at a business growth summit at The Scotsman office in Edinburgh, Perry said the building sector had been hit "pretty badly" by recession.

He also reiterated his opposition to the planned rise in employers' National Insurance contributions and called for reform of the research and development tax credit to make it easier for small firms to claim relief.

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"We need some kind of concession regarding VAT in the construction industry," he said. "Construction has been hit pretty badly, especially in the housing sector. This would help people to engage in new construction activity, and that would be extremely relevant."

His call echoes demands from within the industry, with the London-listed building group Rok launching a campaign last month to slash VAT to 5 per cent for repairs and improvements to existing properties, down from 17.5 per cent. The company created an online petition on the Downing Street website and aims to collect 10,000 signatures before the poll closes on 3 June.

Michael Levack, chief executive of the Scottish Building Federation (SBF), said: "The SBF has long campaigned for a reduction in VAT on home building. We have a huge mountain to climb to make our homes greener to meet our legal commitments to tackle climate change. Given what limited grants are currently available, slashing VAT on home improvement works would encourage many more homeowners to invest their own money towards making their homes more energy-efficient.

"At the same time, it would help the construction sector to keep many more apprentices in work, developing the valuable 'green skills' our economy will need in the future."

In a wide-ranging keynote speech at the summit – which was run by the National Business Awards, in partnership with The Scotsman Conferences – Perry said that public-sector cuts in Scotland could be "therapeutic" and also highlighted the opportunities for mergers and acquisitions among small firms to create companies of scale.

"Contrary to what every politician will tell you, they have nowhere to go, they are going to have to cut public spending and they're going to have to raise taxes.

"The question is will they make the right cuts and will they raise the right tax.

"I think the right spending cuts could be enormously therapeutic. Getting the timing right for cuts is key, but it's pretty scandalous that, over the past ten years, the private sector productivity has grown by 10 per cent, while the public sector productivity has fallen by 3 per cent, despite a 60 per cent increase in public spending."

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Perry suggested social enterprises could deliver better public services and at a lower cost than the UK and Scottish governments and that the NHS should not be "sacrosanct".

Entries are now open for the National Business Awards, which are sponsored by Orange and which have The Scotsman as the media partner. Closing date for entries is 23 June and more details can be found at

&149 The next Scotsman Conference – which will ask, "Can the green economy deliver for Scotland?" – will be held at Queen Margaret University in Musselburgh on 24 May.

Speakers will include Jim Mather, the Scottish energy minister; Susan Rice, managing director of Lloyds Banking Group Scotland; and Richard Dixon, director of environment charity WWF Scotland. For more details, go to www.