VAT increase is a setback

Published:  23 June, 2010

EDINBURGH: Commenting on the UK Emergency Budget, Scottish Building Federation chief executive Michael Levack said: "The planned cuts in public spending come as no surprise and are something the construction sector has been bracing itself for.

"But in that context, there was too little action in this budget to stimulate the promised enterprise-led recovery. I can find nothing that would help ease the availability of affordable credit to building firms or to expanding businesses and homebuyers that should be driving future construction demand. However politically popular it may be, I fear the proposed new bank levy may actually encourage banks to restrict their lending further.

"For the construction sector in particular, increasing VAT to 20% is a retrograde step which plays into the hands of cash-in-hand cowboys by increasing their competitive advantage over legitimate building firms.

"A targeted cut in VAT on repair and maintenance would have provided a major stimulus to the construction sector, would have supported building apprentices, helping them to develop valuable green skills and made our built environment significantly more energy efficient.

"The new higher rate of VAT will be a further setback to sustainable recovery in the construction industry."

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