In theory it all sounds quite plausible. Forget the stalling economy and the calls for your head, Mr Brown. Here's a way to kick-start the flagging construction industry, give the UK a greener, more energy efficient future and drive cowboy tradesmen from the industry for ever. It might even help save your job into the bargain.

All you have to do is reduce taxes on building repair and maintenance work. It'll give fresh impetus to the building sector and promote increased demand for energy and water efficient products. It's a win-win situation - good news for house builders, good news for manufacturers and good news for the general public. After all, if you cut VAT, the cheaper price of installing a kitchen or bathroom would stimulate the market, while making consumers happier to use a qualified tradesman rather than a riskier option. Now all it takes is for the government to actually agree to the proposal. But therein lies the problem.

The idea of substantially cutting VAT on building repair and maintenance work - from 17.5% to just 5% - isn't a new one. In fact, it's already been successfully tested in many European countries including France, Italy and Portugal. Even the UK gave it a tentative try back in 1999, although only in the Isle of Man.
However, pressure is now building on the government to revise its thinking on the proposal. In January, the Federation of Master Builders (FMB) launched its 'Cut the VAT' coalition, which among other interested parties includes the Bathroom Manufacturers Association. The coalition now has the support of nearly 100 MPs and an Early Day Motion has been presented to parliament. They also intend to deliver 10,000 signatures calling for the cut to Chancellor Alistair Darling on June 26.

"The FMB has put some power behind the initiative and is encouraging the government to look at the improvements they can make to housing stock," explains BMA commercial director Yvonne Orgill. "That comes to about 26 million homes, seven million of which fall well below the decent homes standard in terms of things like bathrooms and kitchens. If the government are going to reach carbon omission targets they have to drive incentives and this is one way of doing it. For me, it's a way for them to put their power behind water efficiency. What better way than to cut VAT?"

There's a commercial side to this of course, and one Orgill admits is central to the BMA's thinking. "If we can capitalise on the commercial benefits for our members then all well and good because we can then make sure products meet standards, and there are a plethora of them that don't," she says. "That's what the BMA is all about - improving its members' profitability. It's no good hiding behind the idea that we're doing it for the greater good of everybody."

Unsurprisingly, kitchen manufacturers also support the initiative. "This would be a very positive move, stimulating the essential refurbishment and property marketplace during an obvious economic downturn," says Ellis Bardsley, business development director at ATAG UK. "The independent retailer should receive a substantial boost by the subsequent increase in consumer confidence and activity.

"It could also be a promising move towards the nation's environmental and carbon emission targets, which would contribute to stimulating the white goods market place - a very positive move for our industry. It would encourage homeowners to improve their homes and consider replacing appliances with energy-saving ones. The proposal should be wholeheartedly supported and could result in the stimulation the marketplace needs."

Stuart Frost, product marketing manager at Maytag UK agrees: The ramifications of cutting the VAT for building and refurbishments could be very beneficial in many respects," he says. "Encouraging consumers to trade their old appliances for more efficient ones should be encouraged and applauded. We will be avidly watching and waiting for the development of this bill with interest."

Resistance

The problem for the coalition is that the government are still understandably reluctant to take the hit of a major tax cut. "There's a lot of popular support for it, but whether the PM and his chancellor feel they can afford to lose money at a time when they seem to be looking very hard to increase taxes without anybody noticing is another matter," says Andy Stern of the Property Owners Directory - a coalition member.

However, as coalition coordinator Richard Hyslop explains, there are good reasons to be optimistic. "If the government want to incentivise people to make their homes more energy efficient then this is one of the best ways of going about it," he says.

Examples of where the tax cut has been implemented in other parts of Europe suggest the coalition has a point. "In Italy," Hyslop says, "30,000 construction companies came out of the informal economy and went legit and started paying VAT for the first time. So real life cases show that the treasury's argument is pretty weak and doesn't stand up to scrutiny. They seem unwilling to accept the evidence put forward by the countries that actually ran these reduced rates. Even the Isle of Man made money.

"Around 50% of consumers currently choose a VAT evading trader rather than pay a legitimate builder who will charge VAT. It's so much cheaper but it often it goes wrong. It's a huge issue. The reason the government only allowed it in the Isle of Man was that back then VAT was seen as a middle class tax. They didn't think people doing up their kitchen or bathroom deserved a tax break and they didn't want to lose the revenue. But that particular argument has been shot down."

But despite Hyslop's optimism, there seems little likelihood of the proposal being accepted any time soon. That's why the coalition is now broadening the scope of those it wants to get on board. "If I'm being honest, it's a long-term campaign," he says. "We're working closely with the Conservatives over this too. It now looks like they may stand a chance of winning the election so we're trying to persuade them. One of the more hopeful things is that the reduced rates in Europe were only supposed to come in for a short amount of time but the EU are very happy with them and want to keep them in place."

But Orgill also concedes that the coalition faces a long haul in convincing the government to accept the proposal. "If I'm being realistic, I don't think we'll achieve this in the next 18 months," she says. "It will be in the next five or 10 years, but I think we have a good chance of getting VAT on water efficient products down to 5%. It would be fabulous if they used our water labelling scheme as the benchmark. If it raises awareness and creates the market for our members to innovate, that's got to be good for the industry."

What's the proposal?

The Cut the VAT coalition is spearheaded by the Federation of Master Builders and involves 13 interested parties including the Bathroom Manufacturers Association. Its proposal is that reducing VAT on maintenance and home improvement work from 17.5% to 5% would help the government achieve its target of cutting carbon emissions by 60% by 2050. It would also help eradicate cowboy tradesmen, help those who can't afford repairs to their homes, bring empty properties back into use and protect the countryside.

Main benefits:

A boost to the economy
Reduce the number of rogue builders
Reduce the number of empty homes
Reduce the number of those living in substandard housing
Protect the countryside
Stop the destruction of decent existing buildings
Increase the number of zero-carbon homes
Help tackle fuel poverty
Help preserve our national heritage
Allow disabled people to have essential renovations made to their homes

More information:

The Federation of Master Builders
Tel: 020 7242 7583
www.fmb.org.uk/cutthevat

Property Owners Directory
Tel: 020 7722 4334
www.propertyownersdirectory.com

The Bathroom Manufacturers Association
Tel: (01782) 747123
www.bathroom-association.org