Builders look to VAT cuts with support from Europe

Small builders are hoping plans to slash VAT on repair and maintenance work will be debated in Parliament after finding support in Europe.

The European Construction Industry Federation has told the EC to cut VAT rates when it revises a directive on the issue that expires in December 2010. It has warned 250,000 jobs could be lost if VAT is not cut by member countries.

Federation of Master Builders (FMB) director of external affairs Brian Berry said a change to the EC directive would allow the UK government to cut the VAT from 17.5% to 5%.

The government can currently only reduce the VAT on repairs to buildings with a social dimension. Berry said: "The government's hands are tied, but it has the scope to widen it, for instance using the social value to apply it to people living in fuel poverty. We would like to see the government be more imaginative on what it can do because a cut would have environmental, economic and social benefits - not to mention eliminating rogue builders."

Berry said only one more MP was needed to support an early-day motion to debate the proposed cut in Parliament. And with a recent survey showing 72% of MPs support the cut, the FMB has predicted this will happen in autumn after parliament's summer break.

The FMB has amassed 5,231 online signatures and 4,193 postcards calling for VAT relief on repairs and maintenance. These will be dumped at 11 Downing Street on 26 June.

Berry said: "It is disappointing the government is dragging its feet and showing little initiative or leadership on the issue but we are delighted by the cross-party support we are getting."