SMEs and electrical firms claim VAT cuts will creat 1,000s of jobs

Builders and electrical contractors have reignited calls for the Government to slash VAT on housing maintenance and refurbishment to 5%.

Trade bodies calling for the extra tax cuts say the move would create thousands of jobs in the UK.

The call follows an adjournment debate in the House of Commons by MP Gordon Banks on Monday who urged the Government to be bolder on VAT.

He said reducing VAT to 5% on home extensions, repairs and maintenance would motivate home owners to invest, and provide real jobs in the industry.

Martin Wade, head of commercial contracts at the Electrical Contractors Association said: “This move will reduce the amount of work cheaper unregistered 'rogue traders' receive and increase work for bona fide contractors as they will be able to pass on the VAT cuts to the customer making them more competitive on price.

“This will also increase the overall tax take for Treasury.”

He added that a cut would filter through to an increased demand for employees and work opportunities for apprentices, stimulating the training agenda.

National Federation of Builders chief executive Julia Evans said: “The NFB have been campaigning for a cut to level the playing field between the cowboys and bona fide builders and so reduce the cash-in-hand temptation.

“This is an ideal opportunity for the government to reform the punitive VAT system which allows illegal businesses to flourish at the expense of reputable tax payers,“ she added.

The UK government is now legally allowed to cut the rate of VAT on housing repairs and maintenance following a vote in the European Parliament.

MEPs voted by a majority of more than 600 to add housing repairs and maintenance to the sectors where a reduced rate of VAT can be applied last month.

The latest support adds extra weight to the arguments of the Cut the VAT coalition, which includes the Federation of Master Builders and the Royal Institute of Chartered Surveyors.

It argues that Britain could receive a huge boost in employment. In France, such a cut resulted in the creation of 43,000 new jobs in the construction industry; and in Italy the measure saw the creation of between 65,000 and 75,000 new jobs in the construction industry.