The construction of new buildings in the UK emits 48 megatonnes of CO₂ each year – equavalent to Scotland’s entire net emissions. The materials, transportation and construction processes for new buildings are all carbon intensive. Existing buildings already embody significant CO₂ emissions which makes it all the more important to upgrade and refurbish – rather than demolish and rebuild – wherever possible. But as it stands, the UK’s tax system actually puts a significant financial penalty on refurbishment, while incentivising new construction.
Construction VAT rates for all dwellings should be simplified: with all new or existing building works charged at 5% rate, as experts have long called for. It is also proposed that the existing 0% VAT rate for new dwellings be redefined, so that developers can only obtain financial rewards if they use low-carbon construction techniques certified on completion to deliver qualitative change and create highly energy efficient buildings.
This could accelerate reductions in CO₂ emissions and improve the quality of outputs while creating long-term economic benefits by reducing demands on energy supply and materials consumption – all of which could be done quite simply.