Nick Knowles: Four things the Budget could do for homeowners and the housing market

The building industry is struggling. Rising costs mean that homeowners dreaming of a kitchen or loft extension are having to put plans on hold. That has a knock-on effect for companies who are seeing work dry up and having to make difficult decisions about the future. So it’s no surprise that young people leaving school and searching for a trade are finding that no one is taking on apprenticeships. A few simple changes, however, could breathe life into our building sector, helping to create more work and more jobs, and a much-needed boost for the economy. Shorts With the Budget just weeks away, here are four ideas that could help: Reduce VAT on building materials The builders I speak to are less busy than they’ve ever been – people who used to be booked up 18 months in advance are now struggling for work. A huge part of the reason for that is because costs have gone up so much that homeowners can’t afford to have extensions or other building work carried out. With so much going on in the world, prices have increased and we have had to change how we source certain materials. Timber, for example, which used to come from Russia and Ukraine is now being imported from Canada. For some materials, costs have gone up 70 per cent, and builders have to pass that on to their customers. The result is that the cost of getting any work done has soared. When you get a quote of £100,000 for an extension, you’re going to think twice. There is a simple fix that could help bring down costs for homeowners and boost business for builders. Large-scale construction companies building hundreds of homes pay 0 per cent VAT on their materials, but smaller businesses carrying out private jobs pay the usual 20 per cent. Extending the VAT relief to these businesses – or even reducing it to 5 per cent – could make a huge difference. It would save homeowners thousands of pounds, making renovation works more affordable, and energising the ailing building industry. Incentivise apprenticeships Construction has historically been a fantastic place for young apprentices to be taken on and trained to learn a trade. But the increase in minimum wage and changes to national insurance at the last Budget have made the costs of taking on an apprentice untenable for many firms. When businesses are struggling, apprentices are usually the first to go. In a country with more than a million young people not in education, employment or training, that is a huge problem. Introducing tax incentives for companies that take on apprentices is an obvious solution. It might cost the government a small amount upfront, but in return they get a person taken out of benefits and put into training, who becomes a net contributor to the economy. The ability to train up new apprenticeships not only means that employers can grow their own business, but it also ensures that we have a new generation of tradespeople to keep their industry going in the future. It makes no sense to have a situation where companies can’t afford to have an apprentice. Make energy efficiency work As we continue the shift to net zero, and grapple with rising fuel costs, energy efficiency is an important consideration for homeowners. Too often, though, the rules that are created look good on paper or a spreadsheet, but don’t work in the real world. Take insulation, for example. The amount of insulation that needs to be installed in a loft extension to make it compliant means the top of the house becomes unbearably hot, while the downstairs feels cold. The result is people using those loft rooms will simply live with slightly open windows. That means homeowners continue to crank the central heating up. The upshot? You’ve ended up completely negating the point of the insulation you had to install. It’s the difference between a solution in theory and real world experience. If we really want to reduce our energy usage and reliance on fossil fuels – as well as help bring down household energy bills – installing a Mechanical Ventilation and Heat Recovery Unit (MVHR) would do a lot more good. This is a fairly inexpensive device that takes heat from the top of the house and recirculates it to the bottom, cleaning the air, capturing the heat and regulating the home’s temperature. When new laws and regulations are being made, the government should speak to the builders who are actually implementing the measures to make sure the rules work on the ground. Improve access to green energy Years ago, the government introduced schemes to encourage homeowners to install solar panels. The “Green Deal” allowed households to take out loans to pay for energy-saving improvements, including solar panels. Separately, the Feed-in Tariff paid households for renewable electricity they generated and exported to the grid. That meant solar panel owners could benefit in two ways: by using the electricity they generated themselves to reduce their energy bills, and, under the Feed-in Tariff, by receiving payments for electricity they exported to the grid. Not only did the scheme encourage the use of more green energy, it made solar panels accessible for lower-income households who otherwise would not be able to afford the upfront cost. However, as with so many schemes that work well and get a decent amount of take-up, these have been scrapped. Launching a new scheme to help homeowners install solar panels and ground source heat pumps would not only drive more households towards green energy, it would help to lower energy bills for those who most need the help. In an ideal world, every new house that is built would have both these things as standard.