GEORGE Osborne has been urged to slash the rate of VAT charged on the refurbishment of care homes, dentists and doctors’ surgeries to create hundred of jobs and drive up standards in the healthcare sector.
The demand to cut the tax from 20 per cent to just 5 per cent comes ahead of next month’s Budget statement from the Chancellor.
Care home industry veteran and entrepreneur Robert Kilgour, who founded and built up the Four Seasons Health Care business in the 1990s, said a temporary reduction in VAT would allow developers to “push the button” on scores of mothballed building projects across the country.
His plea to the Treasury echoes calls from the Scottish Building Federation and Federation of Small Businesses to cut the tax, which also affects home building improvements such as extensions and conservatories.
Kilgour, who is calling on the support of MPs and business bodies including the CBI, told Scotland on Sunday: “Across the industry, I know of many refurbishment programmes which simply can’t get off the starting blocks due to the costs involved.
“If I want to build a new care home it’s not an issue, but if I want to put up an extension to an existing home or refurbish it then you are looking at 20 per cent VAT.
“In the current climate, getting funding for a project that might cost half a million pounds is hard enough, but you are looking at a further £100,000 in tax, which is money down the drain.
“By cutting the VAT rate to 5 per cent for companies and partnerships in the healthcare sector, the Chancellor could at a stroke give the green light for dozens of projects, protect jobs and potentially create hundreds of others in the construction industry.”
He added: “This is not just the care home sector we’re talking about – children’s nurseries, dental practices, doctors’ surgeries and other healthcare properties could all benefit from this change in policy.”
Scots-born Kilgour stepped down from Four Seasons in 1999, having built it up into a UK-wide group with more than 100 care homes.
His current venture, Renaissance, recently agreed a deal to take over four former Southern Cross properties. Kilgour aims to grow the business to between 15 and 20 homes, all in Scotland, by 2015.
Southern Cross, which had been Britain’s biggest care home operator, ran into crippling financial problems after it was unable to pay its rent bills to its landlords.
The sector suffered a fresh blow in November when Aberdeen-based Argus Care Group, which ran 12 homes, was forced to call in the administrators.
Kilgour said: “Standards in the care home industry are improving. However, cutting the rate of VAT on capital refurbishment projects now will lead to a step change in the quality of care these facilities can offer.
“The measure would actually raise more net tax revenue in the long run.”
Prior to last November’s autumn statement, both SNP and Labour MSPs urged the Chancellor to cut VAT on work on extensions, conservatories and household repairs to 5 per cent.