Builders' Merchants News

Chris Pateman: reduce VAT on home improvements.

BMF angry about Budget 'soundbites'

Published:  29 March, 2010

LONDON: "It is difficult to escape the conclusion that the entire Budget was designed to generate electioneering soundbites, rather than to address the immediate needs of the economy," said Builders' Merchants Federation managing director, Chris Pateman.

"At the core, this simple Labour election mantra: 'the recovery will be fragile'  means it is essential that public sector support for economic reconstruction is not withdrawn until the private sector recovery is well under way.

"We can confidently expect Alistair Darling's fellow parliamentary candidates to chant this line of thinking all the way to the polling booths, because it is their biggest economic differentiator from the Tories. But, isn't the crucial question: what is government is doing to help the sought-after private sector recovery?"

Mr Pateman believes the stamp duty holiday is to be welcomed, although fundamental reform has, once again, been firmly avoided.

"Extending support for the mortgage interest scheme is to be welcomed. But, the quoted interest rate – 6.08% – says it all!

"The biggest barrier to private sector growth is the high cost of borrowing and the strings which are attached to loans.

"It is easy for the banks to pledge £105bn to homebuyers and businesses over the next 12 months. That is, after all, their job. At what rate, and on what terms? Will a small business credit adjudicator have powers to insist lending rates reflect base rates?"

A year without business rates will be welcome for a lot of struggling small businesses, Mr Pateman stated.

BMF, however felt that spreading the 3p fuel duty hike over several months is an insult to business. "It demonstrates that the Government has no concept of how goods actually move from factory gates to their place of use. "It is, essentially, a tax on recovery," he said.

"If the Chancellor was really serious about growing the private sector recovery, we gave him one simple, cost-effective measure he could have implemented which would have had an immediate effect. He could have reduced VAT on home extensions and improvements to 5%, and tied it to a programme of carbon-reducing consequential improvements.

"This would have stimulated the economy, freed up savings, improved the housing stock, encouraged the housing market and put some genuine consumer pressure on the banks to lend at sensible rates," Mr Pateman stated.

"The cost to the Treasury? Less than half the £1.1bn Mr Darling announced in his last Autumn Statement to electrify the Manchester/Liverpool main line."

Mr Pateman went on to make the following points: "It's not hard to see where this current government's priorities lie. They have lived so long in a Westminster bubble that they see things only in terms of mighty institutions and heavy-handed instruments of government.

"They have become disconnected from the realities of the market and scared of giving individuals any real power over their own lives.

"Maybe a spell out tramping the streets and talking to real people would do them good," he said.