The Government carefully considers all representations for changes to the VAT system, and all taxes are kept under review. To date VAT reduced rates have been applied only in respect of goods and services where we consider that a reduction in the rate of VAT is consistent with our EU VAT agreements, and provide the best-targeted and most efficient support for our social objectives, when considered against alternative policy instruments.
Since 1997 the Government have introduced a range of measures to improve the energy efficiency of residential housing, in addition to VAT reduced rates. In the latest pre-Budget report alone, the Chancellor announced further support for the Government’s Energy Efficiency Commitment, which requires energy suppliers to achieve energy efficiency targets for the household sector. Other measures and initiatives announced in the pre-Budget report include an examination of new methods for financing energy audits and energy-saving measures; tax measures to support ‘zero-carbon’ homes, along with an ambition that all new homes will be ‘zero-carbon’ within a decade; and an extension to the Landlords Energy Saving Allowance.