11,400 jobs will be lost in the construction sector over the next decade as a result of the VAT rise to 20 percent in the New Year and a further 34,000 will be lost from the UK economy as a whole by 2019.

In addition, homeowners will also be more vulnerable to rogue traders who will flood the market, warns the Federation of Master Builders (FMB).

Brian Berry, Director of External Affairs at the FMB said: "Construction has been badly affected during this recession so the VAT rise could not come at a worse time. The VAT increase will result in a two percent decrease in demand for domestic repair, maintenance and improvement (RMI) work which will mean 11,400 job losses in construction alone by 2019. This will seriously affect the recovery of the construction industry, when it comes, as there won’t be enough skilled workers available."


Mr Berry continued: "The Government claims it wants to create a greener Britain but its decision to increase VAT will have the exact opposite effect. The job losses the VAT rise will create will mean that there will be even fewer skilled workers to do the energy efficient work required by the Government’s Green Deal. Homeowners will also be badly affected as many might be tempted to use a rogue trader claiming they "can make VAT disappear". However, rather than saving 20 percent many homeowners will lose their money either through shoddy work or the trader running off with a deposit and doing no work at all."

Berry concluded: “The simple solution is to reduce the rate of VAT on home repairs as this offers the best hope of encouraging take up of the Government’s Green Deal as well as helping to create jobs in the construction sector.”

(GK)