The Government needs to cut VAT by 5% for repair and maintenance works on residential properties, the Federation of Master Builders (FMB) has said. The builders group believes that doing so would create more than 24,000 construction jobs across the UK.

The Federation’s statement follows results from the recent ‘Cut the Vat Research report’ conducted by Experian. The report found that cutting the rate of VAT to 5% could create an additional £1.4 billion for the UK economy alone, which could eventually rise to £17 billion by 2019.

The results also suggested that a cut in VAT would benefit the UK’s housing stock by creating an extra £450 million a year for improvements and renovations. Richard Diment, Director General of the FMB, explained why he believes reducing residential VAT would be more effective than the Government’s focus on zero-carbon housing:

“House building in the UK is at its lowest level since 1946 so building zero carbon homes will have a limited impact on the UK’s carbon emissions, especially considering the existing UK housing stock is responsible for 27% of total UK carbon emissions.

“A more effective way to reduce carbon emissions would be to ‘green’ the existing housing stock. Cutting VAT would mean that many more homeowners could afford to have their homes retrofitted which would also create savings for them on energy bills, leading to a reduction in fuel poverty.”

Last month, results from the Chartered Institute of Purchasing and Supply (CIPS) showed that the construction industry had failed to record growth during December 2009, prompting Chief Executive David Noble to state that the industry “seems unable to escape the shackles of the recession”.