Spring Statement 2022 – support for the plan to reduce VAT on sustainable heating solutions

Last updated: 23rd March 2022

This afternoon's Spring Statement saw several measures put in place to address the rising cost of living and ongoing energy crisis currently affecting households across the UK. Measures included a reduction in the VAT rate on home sustainable energy solutions to 0 per cent. CIOB (the Chartered Institute of Building) welcomes these measures as Government has listened to sectoral calls but have said that more can be done to tackle the current cost-of-living crisis and called for Government to implement a long-term national retrofit strategy to improve the energy efficiency of homes in the UK, helping drive energy bills down and improve the health and wellbeing of occupants.
Eddie Tuttle, Director of Policy, Public Affairs and Research at CIOB, said: 
“CIOB understands that, given the current geopolitical issues, as well as the need to pursue a quick fix to the rapidly increasing cost of household bills, there was not a great deal included in the Chancellor’s Spring Statement that related directly to the construction industry. Government has clearly listened to sectoral calls for VAT cuts and we welcome Government’s commitment to reduce the VAT rate on home sustainable energy solutions to 0 per cent. However, we feel that there is a missed opportunity to both address the need to improve the quality of housing across the board and help alleviate the reliance on carbon intensive energy systems. 
The cost-of-living crisis is hitting Britain harder than ever, and while it is paramount that this is addressed by Government, there is a risk that progress will stall on significant societal issues, like our net zero commitments. With fuel prices soaring, the Chancellor must strike a balance between addressing consumer concerns whilst exploring other avenues to reduce carbon emissions and the UK’s dependence on fossil fuels. We recommend that the Government works with the construction industry to ensure that the reduced VAT for home sustainable energy solutions helps address whole home carbon emissions, as opposed to isolated measures. This is something we highlighted in the Government’s Heat and Buildings Strategy, recommending Government to utilise the expertise of the built environment to undertake a coordinated and long-term approach to decarbonise existing homes, instead of isolated activities and private market initiatives.
CIOB believes that a National Retrofit Strategy, as proposed by the Construction Leadership Council (CLC), will be an essential step in improving the energy efficiency of existing buildings. The Strategy has been backed by CIOB and many other bodies within the built environment. This monumental task will require significant Government intervention, private sector investment and, most importantly, long-term political will and cross-party commitment. CIOB would like to see the Government allocate the remaining £5.3 billion that was committed in its election manifesto for domestic energy efficiency improvements.  
In terms of the general funding proposed in the Spring Statement, we welcome additional measures to alleviate the pressure on businesses through a review of the apprenticeship levy, increased thresholds for National Insurance and Employment Allowance plus cuts to fuel duty. However, it is uncertain how long these measures will last and if there will be new changes come the Autumn Budget to adapt to the geopolitical situation.”