Lib Dems under pressure on nuclear and housing VAT plans

The construction industry has raised concerns over Liberal Democrat policies after the leaders’ TV debate raised the possibility of the party helping to form the next government.

The party would abandon Labour’s plans to build nuclear power stations and prisons. It would also raise VAT on new-build housing and take on aspects of the Tories’ localism agenda.

Roger Humber, strategic policy adviser for the House Builder's Association, said the proposals on VAT could effectively close down the private house-building industry overnight. "It is the single most catastrophic policy to be proposed by any of the main political parties since the second world war," he said. Humber said VAT of just 5% would be enough to entirely wipe out developers profit margins in the current market, with no possibility that price increases could be passed on to the consumer. He said most schemes would be stalled rather than be built at a loss.

John Slaughter, director of policy at the Home Builders Federation, said: “It is perplexing that there is not a single positive policy for encouraging private sector new-build housing.”

Ian Baker, group managing director for housebuilding at Galliford Try Homes, joined the criticism. "Introducing VAT at any level would fatally damage the housebuilding industry at any time and its ability to deliver much needed new homes in the UK. This is an example of a lack of understanding of the importance of the housebuilding industry in the UK and of the significant tax and legislative burden that the industry already carries."

Stephen Ratcliffe, director of the UK Contractors Group, said: “We’re disappointed with the curb on nuclear in particular, and very unhappy to see the planning regime appearing to go backwards.” Meanwhile, writing in Building this week, Labour leader Gordon Brown pledged to “see through” the £55bn Building Schools for the Future programme, if elected.

On housing, he said this year marked the “largest council housebuilding programme for two decades”. He added: “We will allow councils to keep all rent receipts from their tenants. As they use that to reduce their debt, they will be given flexibility to refocus on building homes.”