Professional Builders Merchant

The issue of cutting VAT has been hotly debated in recent weeks and has been vehemently supported by the industry to the point there is now an official Cut the VAT campaign that 27 organisations have signed up to.

The continuing tough economic climate has affected all aspects of people’s lives and consumer spending is still very low. The effect of this on the heating industry has been a slow but steady growth — a pattern that looks set to remain over the course of the next twelve months. The boiler scrappage scheme in 2010 undoubtedly gave sales a much needed head start for 2011 and it’s clear that as we approach 2012, similar types of incentives or schemes need to be used to ramp up the heating industry.

Whilst the FiT, the RHI and the Green Deal have all dominated the headlines throughout the last year, none of the above schemes have been particularly favourable to boilers; neither do they encompass a wide range of energy efficient systems, despite such measures offering high efficiency rates. For example, if the 5% VAT cut is applied to all ‘energy saving products’ it means flue gas heat recovery systems such as Alpha’s GasSaver would be eligible, as would many high efficiency boilers.

This may serve to increase customer spending and therefore bring more advantages and business opportunities to the sector in the run up to the launch of the Green Deal next year. And this is where the majority of industry concerns lie as many feel that without the VAT cut, many consumers will hesitate to take up Green Deal offers. But the reality is that Green Deal or not, energy prices are soaring and homes need to be made as energy efficient as possible. The heating industry has the means to deliver such measures, which is why we’re asking for the Government to listen to our calls.

Furthermore, there is still a sector-wide commitment to meeting the carbon reduction target of 80% set out by the Government and without a forecast of a steady demand, it throws doubt on the investment in training and new energy efficient work in order to reach these targets. This is where existing systems like the GasSaver have a large role to play in reducing both emissions and fuel usage. Using waste flue gas to pre-heat water means the boiler doesn’t have to work as hard to heat the water up to the required temperature, therefore it is not firing up as often or for as long as it would trying to heat cold water straight from the mains.

A VAT reduction in such systems would encourage more sales in merchant stores and bring boilers and other energy efficient measures into line with products like solar panels, insulation, wood fuelled boilers and both air source and ground source heat pumps that are already under the 5% VAT umbrella.

Without the cut to VAT there is a real risk that merchants will not see a marked increase in sales and will continue to suffer tough economical times over the next twelve months. Yet there are plenty of avenues for growth in the heating industry and opportunities for merchants, and now is the key time for those to be taken advantage off by ramping up consumer demand with incentives like the 5% reduction.

Everyone would win from a cut to VAT — the end customer, for example, from reduced heating bills from the energy efficient products whilst the cost of the installation would also be less due to the VAT reduction. The government, meanwhile, is helped to move ever closer to its carbon reduction targets, whilst improvements would also be seen throughout the economy and the whole heating industry as the benefits are felt from greater production and sales.

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