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VAT hike 'will cost 7,500 construction jobs'

A senior industry figure has warned the government that the increase in the rate of VAT to 20 per cent next January will cost thousands of construction jobs required to deliver the Green Deal.

Federation of Master Builders director-general Richard Diment said the tax hike, announced by chancellor George Osborne in the Budget earlier this year, would remove £910 million from the repairs, maintenance and improvement market, resulting in the loss of 7,500 jobs.

“At a time when the Government wants to create jobs and get people to improve the energy efficiency of their homes, they have decided to bring in a policy which will have exactly the opposite effect,” he said.

“The timing of the VAT increase in January next year couldn’t be worse.

“Independent research on VAT shows that the £45.5 billion a year domestic RM&I market will fall by 2 per cent as a direct impact of the VAT increase, and that removing this £910m from the market will result in 7,500 jobs being lost from a sector that will need to grow massively in the run in to Green Deal if the ambition for it is to refurbish 26m homes over the next 20 years.”  

Energy Secretary Chris Huhne yesterday announced plans to deliver on the Liberal Democrat party manifesto pledge of a Green Deal. The scheme will see domestic insulation improvements surveyed, financed and overseen by government. It is predicted to create 100,000 jobs.

Changes will be paid for by lower energy bills following the installation process.

Mr Huhne said: “I want Britain to say goodbye forever to leaky lofts and chilly draughts. At a time of increasing gas prices, energy efficiency is a no-brainer.

“It’s also a massive economic and job opportunity which could help Britain’s economy turn the corner.

“With up to 100,000 green jobs up for grabs over the next five years, and even more in the long term, this is about growing our economy in a way that’s good for jobs, the environment and energy security.”