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DECC pushes Treasury for Budget retrofit tax incentives

Energy minister Greg Barker has indicated the government is considering reducing VAT rates for retrofit building work in this month’s Budget.

Speaking at the UKGBC Ecobuild event, Mr Barker was questioned by presenter of Grand Designs, Kevin McCloud and president of the Royal Institution of Chartered Surveyors, Robert Peto, both of whom advocated a reduction in VAT for retrofit work.

Mr Barker said: “You may see in the Budget steps around taxation measures to incentivise [retrofit]. It is certainly a priority for the Department of Energy and Climate Change but it is the Chancellor who has to make those decisions.”

Mr Barker was quizzed on a number of government policies, including the Green Deal and the decision to fast-track a review of Feed-In Tariffs.

Mr Peto said he would like to see 0 per cent VAT on retrofit work and that it would provide a massive impetus to the building economy.

“The government should be focused on VAT if they want to engage with the public,” he said.

“The knock-on effect of increasing work in the building industry would be £2.50 into the economy for every £1 spent on retrofit but all the conversations I have had with ministers are them saying we can’t afford it.”

Mr Barker said he believed the Green Deal would have a “big bang” effect on the retrofit market and he was confident it would be a huge success.

UKGBC chief executive Paul King said he was worried an incentive-only approach would pose fundamental problems in terms of funding as “government doesn’t have the money” and that people do not have faith the scheme will last due to decisions such as the Feed-In Tariffs review.

He added that the Energy Bill should be used to force people in the owner-occupier sector to retrofit.

Mr Barker said he wished to provide incentives and encourage people to retrofit rather than force them at this stage but that the Energy Bill would make provision for ensuring take-up of retrofitting if the work was not being done.

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