By Claire West

The Electrical Contractors’ Association (ECA) has voiced its concern that the increase in VAT to 20 per cent (4 January 2011) will punish homeowners and businesses, and may well have the reverse effect on Government funds, as the UK stops spending.

The ECA Group CEO, Steve Bratt, says: “The economy is already fragile, and I believe the Government has missed a trick by increasing VAT to 20 per cent. A brave move would have been to cut VAT to five per cent for key sectors — such as repairs and maintenance — that could drive the economy

“To give an example, a cut to five per cent could have encouraged homeowners to undertake repair and maintenance work, and even upgrade their properties with some of the green technologies that are being incentivised as part of the Government’s sustainability agenda. This would have helped not only the consumer, but the thousands of businesses involved in this work — manufacturers as well as electrical contractors who act as advisors, assessors and installers of these technologies — while undermining a
growing black economy of cowboy operators willing to knock off the VAT for cash who undercut bonefide professionals.”

Bratt adds: “The knock-on effect for customers would be getting a ‘good job done’ for an accepable price, plus longer term benefits as they save money on their energy bills as their carbon useage falls. This would have
directly impacted the Government’s carbon reduction drive while bringing money into the Government’s coffers. A win:win situation for Government, the consumer and the construction industry.”

Concluding Bratt says: “However, the planned rise is likely to disincentivise spending in 2011. It will further squeeze cash-strapped consumers and businesses alike and could have a significant negative impact on the construction industry at a time when order books need to be boosted.”