VAT cut on labour 'would boost the economy'

Date: 25th February 2010

The UK's construction sector and the wider economy would be given a major boost if VAT rates on labour were reduced to five per cent.

This is the view of the Cut the VAT coalition, which claimed the move would create more than 24,000 jobs in the construction sector alone.

According to the organisation, reducing the VAT rate on labour for repair, maintenance and improvement work on residential properties would also benefit the UK economy as a whole.

A recently-published report from the coalition claimed that the measure would create 81,500 jobs around the country and contribute £17 billion to the economy over the next ten years.

Alex Hawkes, news editor at industry publication Construction News, said: "It would certainly give a boost to that sector … it would probably reduce the differential between people who are the honest builders and the rogue builders who don't pay the VAT. That would be a good thing."