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MPs' VAT call

POLITICIANS have called on the Treasury to scrap VAT on repair, maintenance and improvement to prevent the Government's Pathfinder initiative to combat low housing demand from becoming a wholesale demolition programme.

MPs on the House of Commons' housing, planning and local government select committee have warned that major demolition could repeat the mistakes of previous clearance programmes and destroy the heritage of areas.

The report states: 'The differential level of VAT on new-build housing and refurbishment schemes makes demolition more commercially attractive.

'The ODPM should put pressure on the Treasury to harmonise VAT on newbuild and refurbishment housing schemes.'

In 2002 the Government set up the Pathfinder programme in nine areas, with £1.2 billion of funding to close the gap by a third between areas hit by low housing demand and the rest.