Spending on home improvement in Scotland would be boosted by a minimum of £80m over the next 12 months if the Chancellor announced a cut in VAT on home improvements to 5% when he announces the 2009 UK Budget on the 22nd April.

This is one of the key findings from a major new consumer survey, published this week by the Scottish Building Federation, in association with Scottish Opinion.

The survey findings show that an additional 73,000 Scottish householders would definitely invest in home improvements over the next 12 months if the UK Treasury chose to take advantage of a recent EU decision to allow the minimum 5% VAT rate to be applied to this category of spending.

Based on official statistics on average Scottish household expenditure on home alterations and improvements per year, this amounts to a boost in consumer spending of at least £80m.

The survey has also revealed that, with a cut in VAT, the number of Scottish householders seriously considering making improvements to their home in the next 12 months would increase by 230,000, potentially boosting spending by a further £256m.


Michael Levack, Chief Executive of the Scottish Building Federation, has written to Chancellor of the Exchequer Alistair Darling outlining the findings of the new survey and urging the Chancellor to cut VAT on home improvements to 5% when he presents the 2009 UK Budget on the 22nd April.

The survey findings were announced as the Federation steps up its campaign for a cut in VAT on home improvements with the launch of a car and van sticker bearing the slogan "Darling... Drop the VAT", to be distributed through builders’ merchants throughout Scotland.

The Federation's campaign highlights the multiple benefits a cut in VAT on home improvements would bring. Alongside the significant boost to the economy, it would also encourage measures to improve the energy efficiency of homes, reducing carbon emissions and saving consumers money on energy bills. It would significantly reduce the commercial advantage of VAT-evading rogue traders, helping to eliminate them from the building trade.

Contrary to Government fears that the change in policy would damage tax revenue, experience of applying a 5% VAT rate to home improvements on the Isle of Man also shows that the significant increase in spending has actually led to a net increase in tax take from home improvements.

Michael Levack said: "This new survey backs up what we’ve long been saying: Cutting VAT on home improvements is the sort of targeted tax measure that will genuinely deliver by stimulating consumer spending in an area of the economy badly in need of support.

"Accompanied by a targeted and cost-effective awareness-raising campaign, I believe the number of Scottish householders who take advantage of a VAT cut would end up being even higher."

(GK/JM)