Letter: VAT cut call

I WHOLEHEARTEDLY endorse calls this week from the Federation of Small Businesses for VAT on construction work and tourism businesses to be cut to 5 per cent.

The industry has for a long time campaigned to cut VAT on construction work. It would deliver multiple benefits by supporting skills and apprenticeships, stimulating spending, improving energy efficiency and rooting out rogue traders.

For the construction sector in particular, the latest UK GDP figures are far from encouraging. In particular, they show output from the industry fell by 1.4 per cent compared with the second quarter of 2010 and only grew by 0.5 per cent compared with the first quarter of 2011.

Given the impact of the severe winter weather on industrial output in the first three months of this year, this hardly suggests an economy in rude health.

If we are to see stronger industry performance over the remainder of 2011, the UK government needs to act now not only to cut VAT but also to improve business bank lending and to give the Scottish Government borrowing powers to increase capital investment.

Michael Levack

Scottish Building Federation

Crichton's Close

Edinburgh