The chancellor George Osborne has ordered an increase in the rate of VAT to 20% from January.
The move was immediately denounced by the UK’s largest builders group, the Federation of Master Builders, which said it would lead to consumers resorting to cowboy builders in a move to avoid paying VAT.
It said the move would lead to the loss of 7,500 jobs in the SME construction sector this year.
“This VAT rise will have a disastrous effect on many businesses and people across the UK,” said FMB director-general Richard Diment.
“The new 20% VAT rate will hit the building industry particularly hard as the industry is still struggling to recover from a recession in which it has been the single biggest cause of redundancies and business failures.”
Mr Osborne also unveiled large public sector spending cuts – with all departments, excluding health and international development, being cut by 25% over four years, with more details to follow in October.
Other elements of the emergency budget include housing benefit cuts, a two-year council tax freeze and an increase in capital gains tax.
For more on this story and reaction from the timber sector see this week’s TTJ.
