Builders' Merchants Federation calls for 5% VAT rate

Published:  20 September, 2011

Industry associations including the BMF and APHC have joined together to call for a 5% VAT rate on home improvements as the government's Energy Bill is finalised.

To coincide with the last days of the Energy Bill, the BMF helped prepare a joint statement calling on ministers to use VAT to incentivise uptake of their Green Deal.

Twenty-six organisations backed the statement urging the government to levy VAT at 5% for all approved Green Deal measures (instead of the standard 20% rate). It was sent to MPs as they debated the final stages of the Bill that introduces the Green Deal.

In addition to the BMF, the statement was signed by (among others) the Association of Plumbing & Heating Contractors, Bathroom Manufacturers' Association, Glass & Glazing Federation, and National Federation of Roofing Contractors. They argue that a financially-compelling package is needed for voters to act to improve the energy and thermal performance of homes and workplaces.

On 14 September, BMF staff went into the House of Commons to talk to MPs, and field queries on how the Green Deal can and will affect the interests of BMF members.

Speaking outside Parliament, Brett Amphlett, BMF policy manager, said: "We believe it is perverse to apply a 5% rate on energy consumption, but the full 20% standard rate for energy conservation. The 5% rate ought to apply to both. In the coming weeks, we shall argue that ministers should:

* Simplify existing VAT rules and rates – they are complex, confusing and do not favour green improvements;

* Extend the 5% rate to cover the installation of all micro-generation and energy-saving measures eligible under the Green Deal to encourage people to commission such work;

* Promote the purpose and benefits of the Green Deal to consumers to create demand.

"All of the signatories to the statement believe the government must do more to stimulate uptake for its Green Deal to succeed. Without incentives like 5% VAT, the policy may prove unattractive to voters. Consequently, demand will remain low and builders' merchants and their SME trade customers will find it harder to keep going through difficult trading conditions," Mr Amphlett said.

Click here to read the joint statement.

* For more in-depth merchant news, visit Builders' Merchants News.

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