Chancellor Rishi Sunak yesterday delivered the Spring Budget 2022, announcing the removal of VAT on energy efficiency measures for homeowners, as well as a new tax plan to ease the rising cost of living. Commentary from the construction industry shows a mixed bag.
Brian Berry, chief executive of the Federation of Master Builders said: “This VAT cut will help householders insulate their home at a time when energy bills are escalating. It will also provide a much-needed boost to local builders operating in the retrofit market. The Government now needs to build on the VAT cut and implement a long term National Retrofit Strategy to provide business certainty.
“The commitment from the Chancellor to improve the UK’s skills system is encouraging, notably the push for greater numbers of employers to train up staff. This is particularly true for construction, a sector that has suffered long-term skills shortages. Smaller firms in the construction sector already conduct the bulk of the training, with 71% of all construction apprentices being trained by them. Measures should focus on providing long-term solutions that incentivise more businesses to play their part in training the next generation of tradespeople. The FMB therefore welcome the Chancellor’s commitment to enhance this system.”
Principal of architects Perkins&Will, Sunand Prasad, commented: “With nearly 20% of the UK’s emissions used to power Britain’s antiquated housing stock, there is no doubt we are reaching boiling point when it comes creating energy-efficient homes.
“This battle to retrofit our homes is not only vital to combat the climate emergency. It will also help families across the country save on skyrocketing energy bills.
“We strongly welcome the cut to VAT on energy-saving materials such as solar panels announced today and we urge the government to continue prioritising energy efficiency to level up the entire country towards a greener future.”
Phil Hurley, chair of the Heat Pump Association, said:
“The Spring Statement comes with great news for the heat pump industry and households today. The HPA has been working hard behind the scenes calling for financial incentives to tackle the barriers to heat pump uptake, and the decision to cut VAT from 5% to zero on energy-saving measures is an important step forward. Whilst this decision alone will not be enough to enable all households to access technologies such as heat pumps, we are confident that it will play a role in helping to accelerate the switch to low carbon heat. But we must remember that more steps still need to be taken to support the rollout of heat pumps, including the removal of illogical environmental levies on electricity.”
Bradley Tully, senior public affairs officer at RICS (Royal Institute of Chartered Surveyors), commented:
“Our findings from the market suggest that the biggest barrier to improve the energy efficiency of homes is cost – 85% of respondents in fact.
“However, the road to achieving Net Zero always required the retrofitting of thousands of existing homes across this country to make them greener, and discounts for homeowners looking to support these ambitions have been a long time coming, so we’re delighted the Chancellor has finally listened to our call and taken action to cut VAT for families to retrofit their homes and drive down carbon emissions.
“Looking at the wider economic picture – including rising inflation – this poses a significant pressure for businesses, and while the business rate cut being maintained will help our highstreets, it does fall short from the widescale reform that they need to flourish.”
Marc Vlessing, CEO, Pocket Living, warned that major issues remain for home buyers:
“The 14% increase in house prices in England shows again just how dysfunctional the UK’s housing market is and why real change is needed now. This rapid increase, when combined with the cost of living crisis, is resulting in a significant loss of housing opportunities for those desperate to get onto the housing ladder. While some positive announcements have been made today by the Chancellor, we need the government to act now to unlock affordable housing delivery, especially for first time buyers who cannot otherwise afford to buy. This can only be achieved through reform of the planning system that will enable innovative developers to deliver, without requiring any additional state spending.”
Trevor Morriss, principal at architects SPPARC said: “While I am pleased to see the Government’s new programme of cheap loans for retrofitting projects, I am concerned that this seems to be a reincarnation of the failed Green Homes Grant. If the government invested the same amount they are spending on the Palace of Westminster refurbishment into low-carbon heating solutions and insulation, almost 19 million homes could be upgraded by 2030.”
He added: “Retrofitting, however, will only go so far in greening homes and protecting households from the downsides of the UK’s dependency on fossil-fuel heating. Government and industry must harness the impact that higher building standards will have so that we can ensure the delivery of high-quality and sustainable homes that are fit for a net-zero future and seek genuine renewable solutions.”