黑洞社区

The UK government is to defend lower VAT rates for insulation against a European Commission ruling that they are illegal.

The move is an attempt to save the Green Deal from being scuppered by potentially huge cost increases for energy efficiency work driven by Europe鈥檚 demand for a quadrupling of the VAT rate on energy-saving materials such as insulation and follows industry lobbying of cabinet minister Oliver Letwin.

In June, the European Commission told the government to amend UK legislation to bring VAT on energy-saving materials in line with other products. Currently energy-saving materials are taxed at 5% but the Commission said this contravened EU law and they should be taxed at the standard 20% rate.

If enacted, this would endanger the Green Deal by making it very difficult for projects to meet the scheme鈥檚 鈥榞olden rule鈥�, which states the cost of the work must be less than the energy savings generated.

On Monday, that it would contest the Commission鈥檚 ruling, which could see it having to make its case in the European Court.

It has now emerged that Letwin was urged to do so earlier this month in a letter signed by the heads of 18 industry organisations including Federation of Master Builders鈥� chief executive Brian Berry.

In the letter, seen by 黑洞社区, Letwin was told to 鈥渕ount a robust defence of its [the government鈥檚} existing position鈥�.

It said: 鈥淨uadrupling the current rate of VAT would dampen demand for the government鈥檚 flagship Green Deal scheme by making it more difficult for energy saving measures to meet the golden rule.

鈥淭his in turn would have a highly damaging effect on the already depressed state of the energy efficiency industry, and do little to help boost jobs in the construction sector.鈥�

The signatories of the letter also included included Andrew Warren, director of the Association for the Conservation of Energy, Ian Fletcher, director of policy at the British Property Federation and John Alker, director of policy at the UK Green 黑洞社区 Council.