Opportunity missed to 'build Britain'

The National Federation of Builders has voiced its disappointment over the chancellor's missed opportunity to cut VAT on domestic repair, maintenance and improvement work in the 2009 Budget.

Julia Evans, chief executive of the National Federation of Builders, commented: "This Budget was branded 'Building Britain's Future' but unfortunately there was barely a mention for the people that will actually build that future – the UK construction industry. Help for our industry was very thin on the ground and the small assistance handed out to house building will not be enough to kick-start the sector. It would be churlish not to acknowledge the nod towards continued capital investment but overall this was not the Budget we needed.

"Where is the help for SMEs - the engine of both the construction industry and the wider economy?

"We are particularly disappointed that yet again the government has missed the opportunity to reduce VAT to five per cent on domestic repair, maintenance and improvement work.

"This was the ideal time to make the change – a reduction in VAT would have stimulated work in the sector, creating jobs, bringing a larger proportion of this work into the formal tax-paying economy with accompanying benefits for the treasury through increased revenue from payment of income tax, corporation tax and national insurance contributions. There would even have been benefits for the customer, no longer attracted to cheap deals and shoddy work from rogue builders. It was win-win-win all round. The government was faced with an open goal and has put the ball in the stands. Very disappointing."

"The 'top-up' for the trade credit insurance scheme will be a comfort for businesses and their supply chains."

On housing, she added: "We welcome the decision to guarantee mortgage-backed securities as outlined in our Budget submission to the chancellor. Unfortunately, there seems to be no detail on this. There is still a strong demand for new homes. Supporting that demand with new mortgages is critical to our industry's survival and its ability to increase output. Guaranteeing mortgage-backed securities is only half the battle – the mechanism might be in place but we still need to see the banks actually lending the money.

"The £500m cash-injection into the housing sector is well-meaning but there is no indication of how this will actually work. A better way to stimulate house building would be to reduce the cost imposed by local authorities through Section 106 and affordable housing, so that the schemes become viable again. This would take very little time to implement and would have an immediate effect."