Tax hike will hit demand for home improvement work

January’s VAT rise will hit spending on home improvements hard, costing up to 11,400 jobs in the construction sector, according to the Federation of Master Builders.

Research conducted by Experian in February found 11,400 jobs would be lost over the next decade if VAT increased to 20%. The knock-on effect on UK employment as a whole could reach 34,000 job losses by 2019, the report found.

The job losses reflect an expected dip in demand for repair, maintenance and improvement work of around 2%.

Brian Berry, director of external affairs at the FMB, said: “Construction has been badly affected during this recession so the VAT rise could not come at a worse time.

Berry added the VAT hike would hit demand for energy efficiency measures under the government’s proposed Green Deal scheme.

“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.

“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.”