New report shows a cut in VAT could boost economy by £15bn

The Cut the VAT campaign has been calling for a reduction in the rate of VAT on the labour element of domestic repair, maintenance and improvement (RM&I) work. Since work began, the EU has changed VAT law to allow Member States to permanently reduce VAT in this area in order to support economic growth. On 3rd March the campaign launched new research "VAT reductions in the housing renovation and repair market' in Parliament. The report shows that a cut in VAT would stimulate the UK economy by £15bn and create a total of 95,480 extra jobs by the end of 2020. The campaign for a targeted reduction has successfully won support from across the political spectrum. The Labour Party, Plaid Cymru and the Scottish National Party all support the policy of reducing VAT on domestic RM&I work to 5%. The Liberal Democrats also argued for a lower rate of VAT on home repairs in their 2010 General Election manifesto. With the Government in desperate need of effective policies that will generate growth and jobs, the pressure to follow suit is overwhelming.

The research was launched at a Parliamentary reception on 3rd March, at which Parliamentarians of all parties backed the report and the policy of a lower rate.