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22 per cent of small builders cut jobs after VAT rise

Federation of Master Builders calls for VAT cut on repairs

More than open in five small building firms have cut jobs as a result of last year’s VAT rise to 20 per cent, research has found.

The latest survey of small builders by the Federation of Master Builders (FMB) said 22 per cent had cut jobs and more than half of those firms saw workloads fall as a result of the VAT increase.

The FMB called for a cut in VAT to 5 per cent on repairs and maintenance work, which it said would cost £161m but have a total stimulus effect of £1.7 billion and create 34,400 jobs by the end of 2012. It added that research from business analysts Experian found 4,000 jobs were lost in the housing repairs and maintenance market last year as a result of the rise in VAT. It said 10,254 jobs may have been lost last year rising to 17360 by 2020 once the impact of the VAT rise on the industry’s supply chain is taken into account. The FMB added that over 200,000 construction jobs have been lost since 2008.

Brian Berry, director of external affairs at the FMB, said: “The FMB warned the government at the time that raising the rate of VAT to 20% would suppress demand for building work and cost jobs. Unfortunately our prediction has been borne out by our latest research which shows that the VAT increase is hurting the very small businesses that the government is looking to for economic growth.”

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