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Spring Statement: RIBA Applauds Energy Efficiency Tax Breaks | News

Chancellor Rishi Sunak’s announcement to scrap VAT on the installation of ‘energy-saving materials’ on homes has been welcomed by the RIBA, but the institute has also warned the government it needs to do more further and faster to achieve its decarbonization goals.

Sunak’s spring statement confirmed that from next month measures such as roof insulation, wind turbines and heat pumps can be installed VAT-free, which the Chancellor said would allow property owners save £1,000 on the cost of installing solar panels as well as reduce ongoing expenses. energy costs.

Although the move was widely described as a “waived” VAT on energy-efficient materials, Sunak made it clear that the move was “time-limited” for the next five years. VAT is currently charged at 5% on energy efficient materials.

RIBA Chairman Simon Allford said the move was a helpful acknowledgment from Sunak’s team that they controlled important levers to help decarbonise the country’s building stock and reduce fuel bills. domesticated.


But he added ministers needed to think bigger and take a more coordinated approach to making the country’s housing stock greener faster.

“It is positive to see HM Treasury recognizing that it has the power to make energy efficiency a reality for households,” said Allford.

“The moves to remove VAT on home energy improvements such as insulation, solar panels and heat pumps are encouraging – and part of our call to use tax mechanisms to make greener options more feasible. .

“The government must now build on this. Both decarbonisation and the reduction of energy poverty rely on a comprehensive national renovation strategy with long-term funding and incentives. Today’s actions mark progress, but efforts must be scaled up quickly.

Perkins & Will director Sunand Prasad – former chairman of RIBA and current chairman of the UK Green Building Council – said cutting VAT would help cut carbon emissions and lower energy bills. However, he agreed the move had to be part of a wider campaign.

Sunand Prasad RIBA HP

“With almost 20% of UK emissions used to power Britain’s outdated housing stock, there is no doubt that we are reaching a boiling point when it comes to creating energy efficient homes. into energy,” Prasad said.

“This battle to modernize our homes is not only vital for tackling the climate emergency. It will also help families across the country save on skyrocketing energy bills.

“We warmly welcome the reduction in VAT on energy efficient materials such as solar panels announced today and urge the government to continue to prioritize energy efficiency to level the whole country towards a greener future.”

Elsewhere in his statement, Sunak announced the acceleration of plans to support the decarbonisation of non-residential buildings through the introduction of “green discounts for business tariffs” covering investment expenditure on machinery for energy production. renewable on site. Exemptions that were due to come into effect in 2023 will now come into effect next month.

The package, which will run until March 2035, also includes 100% relief for eligible low-carbon heating networks with their own tariffs.

Additionally, Sunak announced a 12-month reduction in fuel taxes aimed at offsetting soaring gasoline and diesel prices. It will see a 5p per liter reduction in duty which the Treasury says will save motorists £100, van drivers £200 and hauliers £1,500 over the next year.

The housing crisis “swept under the carpet”

Despite its array of green energy and modernization aid measures, Sunak’s spring declaration and its supporting “Blue Book” document contained no reference to housing construction.

North London property developer David Woolman said the lack of details on the delivery of homes – or any extension of the government’s home buying aid scheme, which is due to end in March next year – sounded like confirmation that ministers had ‘almost abandoned plans to tackle Britain’s housing crisis’.

“While the government is right to prioritize the crisis in the cost of living, soaring energy costs and the economic fallout from the war in Ukraine, such dark times should not be used as an excuse to sweep the country’s shattered property market under the rug by scrapping planning reform,” he said.

“Property prices are now at an all-time high, which means many first-time buyers will find it harder than ever to get their foot on the ladder. And as inflation climbs along with the costs of energy and groceries, the cost of renting is also rising, putting further pressure on Britain’s already strained ‘generational rent’.

Woolman, director of the Woolbro Group, said that at the very least Sunak should have announced a replacement for Help to Buy or expanded its operations.

“With major homebuilders already looking to reduce the number of new builds they deliver each year in the run-up to the end of the scheme, the government simply cannot afford inaction,” he said. he declares.