Irish construction sector set for stimulus?
Fine Gael

Irish construction sector set for stimulus?

The Irish Independent reported earlier in the week that the Irish construction sector is set for a stimulus package in next week's budget, including a cut to the 13.5% rate of Vat. 

The report says finance minister Michael Noonan wants the annual rate of house-building to increase from this year's estimated record low of 8,000 to 25,000 or more. It also says further financial supports to improve the energy efficiency of the building stock and boost the retrofit sector are expected in next week's budget. 

It'll be interesting to see what form that support takes. The government previously announced plans to switch from grants to a pay-as-you-save model for funding retrofit, and to replace retrospective grants with point-of-purchase price reductions, but neither policy has materialised yet. 

The Irish Independent story indicates that the government sees boosting the construction sector as one of the most efficient ways of getting large numbers of unemployed persons back into work.

The latest revisions to Part L of the building regulations (2008 and 2011), which deals with energy efficiency, drastically improved minimum standards for new homes, meaning that — at least in theory — homes built as part of a new wave of construction activity would be much more comfortable and energy efficient standard than those built during and before the construction boom. However, standards for non-domestic buildings still lag far behind. The government is only expected to go out to consultation on improved energy effiiciency standards for non domestic buildings next year. This means that any new wave of office, factory and commercial construction could result in quite energy inefficient buildings unless the government speeds up the introduction of new standards. 

Earlier this week the Construction Industry Federation called on the government not to extend a Vat cut that was introduced for the restaurant and hospitality sector in 2011, and to transfer it to the construction sector instead.  

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