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Green Deal success depends on VAT cut, say campaigners

13 Sep 11 Government's Green Deal initiative will fail without a cut in VAT on energy efficient improvements, campaign groups claim.

Some 27 different organisations have clubbed together to try to persuade the government that unless VAT is reduced, consumers will be reluctant to take up the Green Deal offer of help with home energy efficiency improvements.

As MPs prepare to debate the final stages of the Energy Bill, which is the legislation that will introduce the Green Deal, supporters of the Cut the VAT campaign have signed a joint statement urging MPs from all parties to ask the government to reduce the rate of VAT to 5% for all Green Deal approved measures to stimulate demand.

Federation of Master Builders (FMB) director of external affairs Brian Berry said: “At a time when energy prices are soaring the need to make our homes more energy efficient has never been so urgent. It is critical that the Green Deal is a success but it needs to be attractive to consumers who may be reluctant to have a ‘charge’ attached to their property. Other incentives are needed to support the Green Deal which is why a cut in VAT for Green Deal energy efficient work makes sense.”

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Berry added: “ Our homes contribute 27% of the UK’s total carbon emissions and 85% of our existing homes will still be standing in 2050 so it is imperative that homeowners are encouraged to make their homes more energy efficient if the UK is to achieve its legal target to cut carbon emissions by 80% by 2050. Businesses also need to be reassured that there is demand for Green Deal work if they are to invest in new energy efficient work because in the in the current economic climate many firms can’t afford to start training their workforce until they know there is a growing demand  for energy efficient home improvements. With little more than a year to go before the Green Deal, the energy saving market has to expand fast and wide. A targeted VAT cut would be a great start to stimulate demand and raise awareness of the Green Deal.”

Federation of Small Businesses national chairman John Walker said:  “Confidence among small business owners fell dramatically in the second quarter of the year with businesses in the construction sector not overly confident about their prospects for the third quarter. The FSB is calling for a cut in VAT for Green Deal improvements to help to restore growth in the construction sector and to help the government achieve its carbon reduction targets. With just over a year until the Green Deal kicks in and as business and household budgets remain squeezed it is vital that the government begins to incentivise energy efficiency improvements to ensure that the Green Deal is a success.”

WWF-UK sustainable homes campaign manager Darren Shirley said: "The Green Deal will be the only game in town from the end of 2012 and its success is critical to insulating consumers from rising household energy bills and to meeting the UK's carbon budgets. With current energy efficiency programmes under-delivering and with the Green Deal not yet looking to be an attractive offer for households the government must introduce measures that will help drive the market to ensure the Green Deal is taken up. Cutting VAT on energy efficiency improvements as part of a package of incentives is one such measure that will be needed."

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