§ Mr. Spellerasked the Chancellor of the Exchequer if he will estimate the effect the decision to impose value added tax on the installation of energy conservation materials will have upon the implementation of energy conservation measures in a full calendar year.
§ Mr. HayhoeThe installation of energy conservation measures in the course of the construction of all new buildings will remain zero-rated. Moreover although installation services supplied to fully taxable occupants of existing commercial and industrial buildings will be liable at the standard rate after 1 June, the customers will be able to deduct the tax charged as input tax. In respect of new buildings and most non-domestic existing buildings therefore, the Budget measure should cause no fall-off in demand for energy conservation measures.
As far as existing domestic accommodation is concerned, the best energy saving measure is loft insulation. The bulk of this is probably done on a DIY basis which has always been liable to VAT. There may be some immediate fall-off in demand or such work as cavity wall insulation and double-glazing but it is difficult to estimate how much.