Sefton Central Labour MP Bill Esterson is campaigning to get the government to slash VAT on renovation and refurbishment of properties which he argues will boost the economy, rejuvenate the housing market and go a long way to saving the greenbelt.
The MP wants to see a cut from 20% to 5% for the industry.
Speaking in Parliament, Bill said the cut would not only boost the economy, but also go a long way to saving the greenbelt as builders would get better returns for investing in existing properties rather than building new ones.
Bill said: "I called this debate because of the pressure to build on green spaces and the greenbelt in Sefton and elsewhere. Sefton Council is consulting on its Core Strategy and uses the figures in the Regional Spatial Strategy says it needs 480 new homes each year. To achieve this target, the council has suggested three options, two of which imply significant incursion into the green belt. The new National Planning Policy draft Framework does not continue the brownfield first policy, councils are not allowed to include windfall development sites like the Maghull prison site in my constituency which would deliver several hundred homes and councils cannot use empty homes as part of their target. So the 6,000 empty homes across Sefton are not included in Sefton’s figures. The lack of a brownfield first policy and the inability of councils to include empty homes or windfall sites means that councils need to have an alternative strategy for building the homes that especially our young people need, the affordable housing which is in such short supply at present.
"That is why I believe that a sustainable policy is needed and that a cut in VAT on renovation and refurbishment of empty properties would make a significant contribution to delivering the targets for housing at the same time as protecting the green belt and important urban green space as well.
The VAT regime perversely incentivises new-build on greenfield land, which currently attracts zero VAT. A VAT cut to 5% on the renovation and re-use of existing buildings would allow greater emphasis to be placed on urban regeneration."
Bill also argued that the VAT cut would help stem the surge in unemployment in the country, reversing the trend and providing much needed training opportunities for younger people.
Bill said: "As many as 249,000 workforce jobs have been lost in the construction sector alone since 2007 according to the Office for National Statistics. This is terrible news for the government’s finances as well as for those affected. We know from independent research that a cut in VAT on home repair and improvement work could create thousands of new jobs in the construction sector and the wider economy. Again, independent research based on a standard VAT rate of 17.5% suggests 24,200 extra jobs construction could be created in the first year alone if VAT on home improvements was cut to 5%. This growth in the construction industry would also lead to 31,000 new jobs created in the wider economy according to the research.
"Such significant job losses also risk creating a major skills shortage in the industry. Unless the industry can recruit and train sufficient people now there will be a serious skills shortage in future years. The number of construction apprenticeship starts fell by 4,010 between 2008/09 and 2009/10. Almost 1 million people under 25 are currently unemployed, but when the construction industry returns to more sustainable levels of growth there will not be a sufficient number of people already equipped with the right skills to meet demand. It will be difficult for employers to make more apprenticeship places available unless there is an increase in construction activity.
The Sefton Central Labour MP also pointed out that cutting VAT for the renovation of existing homes will create more affordable home, particularly for first time buyers, here in Sefton.
Bill said: "We are building fewer than half the number of new homes needed to match the rate of household growth in the UK. Therefore, it is shocking that there are up to 750,000 empty homes. Many require considerable repair work before they can be lived in and the high rate of VAT makes this a very costly activity for private owners, landlords or local authorities who could otherwise renovate more existing properties to help ease the pressure on housing supply. By making home repair and improvement work more affordable, it would encourage the use of existing structures rather than continuing the urban sprawl and building on greenbelt land."
Bill has also directly called on Chancellor of the Exchequer George Osborne.
Speaking after the debate, Bill said: "There are clearly a lot of reasons why the government should drop the VAT level on renovated properties.
"It will boost the economy, create much needed jobs, save the greenbelt and help the building industry in Sefton at a time when they most need it.
"This Tory-Lib Dem government needs to realise that its current economic policy isn't working. That's why we are seeing the highest unemployment levels in over 18 years.
"This is a simple step which will have a huge impact in helping to get the economy back on track."
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