VAT increase will cost more than 11,000 jobs, says FMB

Increasing the VAT rate from 17.5% to 20% could lead to over 11,000 job losses in the construction sector over the next decade, according to the Federation of Master Builders.

The FMB also expects a rise in the number of “rogue traders” as the VAT increase hits the sector.

The federation’s director of external affairs, Brian Berry, said: “Construction has been badly affected during this recession so the VAT rise could not come at a worse time.

“The increase will result in a 2% decrease in demand for domestic repair, maintenance and improvement (RMI) work, which will
mean 11,400 job losses in construction alone by 2019.”

Suzannah Nichol, chief executive of the National Specialist Contractors Council, is also wary of the potential for rogue firms to take advantage of the higher VAT.

She said: “The increase could lead to pressure from customers and make it harder for legitimate businesses to win work. VAT
at 20% is much easier for customers to work out and quantify just how much tax they are paying.

“While a 2.5% increase might not affect a smaller purchase, it could make someone think twice before undertaking a larger project.”