Industry lobbyists are to write to chancellor Gordon Brown in a fresh attempt to persuade him to cut VAT on refurbishment and repair and maintenance work from 17.5% to 5%.

A letter will be sent to Brown in the next seven days after representatives of materials producers, contractors, specialists and consultants, led by Laing chairman Sir Martin Laing, discussed the move with senior Treasury officials last week.

The reduction has been made possible by a new European Commission directive. The Reduced Level of VAT for Labour-intensive Industries Directive gives countries the chance to experiment with a cut to 5% for three years. Industry leaders believe this could help stamp out the black economy in construction.

The reduction would see the 17.5% difference in prices charged by reputable builders and rogue traders drop. This, the industry will argue, would play a major part in outlawing cowboy builders.

Brussels has dictated that all countries wishing to take part in the experiment, which is designed to improve employment prospects in labour-intensive industries, must submit details of their plans by 1 September.

Britain would have to provide details of which industries it wishes to use as guinea pigs for the lower rate of VAT.

Industry leaders fear the Treasury may not wish to lose the revenue from the higher rate. However, industry studies have shown that the Exchequer loses at least as much in cowboy builders’ unpaid tax.