Taxation: VAT on Retrofitting Buildings

Lord Empey Excerpts

Thursday 25th July 2013 Lords Chamber

Asked By

[Lord Empey]

To ask Her Majesty’s Government whether they have plans to reduce VAT on the retrofitting of existing buildings to encourage energy saving and job creation.

[Lord Newby]

My Lords, a reduced VAT rate of 5% already applies to the installation of various energy-saving materials, including insulation materials, in residential properties. There are many instances where people incur expenditure in a way that helps to reduce energy use, but given the current fiscal pressures, it is not possible to relieve such expenditure from tax.

[Lord Empey]

My Lords, as suppressing the demand for energy and encouraging job creation are two of the Government’s key objectives, is there not a strong case for reducing VAT more generally on the retrofitting of buildings as a simple and quick way of ensuring that both these objectives are achieved at minimal cost to the Treasury? Will the Minister not take a leaf out of the Americans’ book and look at this again, as it has been a successful policy across the Atlantic?

[Lord Newby]

My Lords, the Government recognise that energy efficiency has a major role to play in meeting carbon reduction objectives while reducing energy costs for consumers, and the process of doing that can and does generate jobs. That is why we have introduced the Green Deal, which, as noble Lords will be aware, encourages home energy-efficiency improvements, paid for by savings on energy bills. The energy company obligation will work alongside the Green Deal, focusing on hard-to-treat homes and low-income households.