The Federation of Master Builders has predicted that more than 11,000 jobs will be lost from the construction sector in the next 10 years.
The group estimates that next year’s VAT rise to 20 per cent will result in a 2 per cent decrease in demand for domestic repair, maintenance and improvement work.
Not only will this lead to the loss of 11,400 construction jobs by 2019, the FMB warned, it will also see the market being flooded with rogue traders offering “VAT-free services”.
The FMB believes a further 34,000 jobs will be lost from the UK economy as a whole by 2019.
The FMB’s director of external affairs, Brian Berry, said the loss of jobs in the construction sector would seriously impair the recovery of the industry, due to a lack of skilled workers.
Mr Berry said: “Construction has been badly affected during this recession so the VAT rise could not come at a worse time.”
He continued: “The government claims it wants to create a greener Britain but its decision to increase VAT will have the exact opposite effect.
“The job losses the VAT rise will create will mean that there will be even fewer skilled workers to do the energy efficient work required by the government’s Green Deal. Homeowners will also be badly affected as many might be tempted to use a rogue trader claiming they can make VAT disappear.
“However, rather than saving 20 per cent, many homeowners will lose their money either through shoddy work or the trader running off with a deposit and doing no work at all.”
Mr Berry concluded: “The simple solution is to reduce the rate of VAT on home repairs as this offers the best hope of encouraging take up of the government’s Green Deal as well as helping to create jobs in the construction sector.”