Cut VAT on home building and remove rogue traders

A 5% rate will create jobs and help housing, says Grahame Barn
The construction industry has fared worse than the economy as a whole during the last few years. Picture: GettyThe construction industry has fared worse than the economy as a whole during the last few years. Picture: Getty
The construction industry has fared worse than the economy as a whole during the last few years. Picture: Getty

Each year nearly 90,000 householders have around £170 million stolen from them by rogue traders.

While we might picture an elderly grandmother being tricked out of her life savings, in fact it happens to people of all ages, from all walks of life.

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These traders are experts in lulling us into a false sense of security.

They often promise low prices in return for cash payments – effectively dodging the 20 per cent VAT paid by legitimate business people.

When they fail to deliver quality services, homeowners are left with no right of redress.There’s little doubt in the building industry that the high VAT rate contributes to this problem. 20 per cent VAT on home improvement work just doesn’t make sense for our economy, our environment, or our security.

It has encouraged rogue traders, while stifling growth in the legitimate construction industry.

The Scottish economy is facing a weak recovery from the recent recession – and the construction industry has fared worse than the economy as a whole during the last few years.

It was particularly badly affected by the recession, and recent forecasts suggest that it will show no significant signs of a recovery until 2014.

In Scotland, tens of thousands of direct and indirect construction jobs were lost during the height of the recession.

This is terrible news for the government’s finances as well as for those individuals affected.

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Moreover, unless the industry can recruit and train sufficient people now, there will be a serious skills shortage in future years.

Thousands of new jobs

We know from independent research that a cut in VAT on home repair and improvement work could create thousands of new jobs in the construction sector and thus in the wider economy.

Successful trials in a number of EU countries also strongly suggest that carrying out this cut would help reap economic benefits for Scotland.

With more than 50,000 enterprises connected to the construction industry in Scotland, and around 190,000 people working in the sector, we cannot afford to keep VAT at 20 per cent.

A cut to 5 per cent on all home improvement work would allow many businesses to take on new employees and apprentices, contributing to local economies and also creating sustainable jobs for the future.

A VAT cut would also help Scotland address the current housing shortage.

Too many families are living in inadequate housing, or struggling to find rental accommodation or are able to afford the deposit and mortgage payments to buy their own home.

Around 59,000 households in Scotland are overcrowded, with a majority of them including children.

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At the same time, it is shocking that there are 23,000 privately owned homes currently lying empty, according to the Scottish House Condition Survey.

Many require considerable repair work before they can be lived in.

The high rate of VAT often makes this a prohibitive cost for landlords or local authorities, preventing them from renovating existing properties to help ease the pressure on housing supply.

By making home repair and improvement work more affordable, we could encourage the use of existing buildings, rather than continuing the urban sprawl and building on greenbelt land.

Work to be done to meet emissions targets

A VAT cut would also be of benefit to the environment, and would be able to help tackle fuel poverty.

Existing homes contribute around 27 per cent of the UK’s total CO2 emissions.

There is a vast amount of work to be done if we are to meet the legally binding targets for reducing emissions.

Reducing the cost of home repair and maintenance work would help millions of households to upgrade their homes to make them more energy efficient.

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Without help to reduce energy use, the number of people living in fuel poverty will continue to grow, as they struggle to protect themselves against rising fuel prices.

Retrofitting homes to be more energy efficient is important to give people confidence they will be able to affordably keep warm throughout the year.

Rogue traders are unregulated, untaxed, and illegal.

They harm our local economy, prey on families, and take advantage of our most vulnerable citizens.

Cutting the VAT to 5 per cent on all home repairs will take away their most powerful tool while supporting local businesses, helping meet our climate targets, providing much-needed homes, and increasing employment.

• Grahame Barn is director of FMB Scotland