Building work that contributes to ecological improvement of homes should be exempt from VAT, the body representing smaller building firms will say when it launches a Building a Greener Britain campaign this month.

As part of the initiative, the Federation of Master Builders will review government policy on sustainable construction. It has commissioned Gavin Killup, senior researcher at the Environmental Change Institute at Oxford University, to look at how the government needs to change policy in order to bring existing buildings up to scratch.

Richard Hyslop, public affairs manager for the federation, said a key thrust of the research was whether the government needed to reduce VAT to 5% for building work on existing buildings. VAT is now at 17.5% for all renovation and refurbishment work, but is exempt on new-build schemes.

The federation has also come out in support of a plan by the National Trust to buy up greenfield development sites in order to stall government housebuilding plans. It said the government should concentrate on refurbishment and smaller infill sites in existing urban areas.