National chairman of the business organisation John Walker says that when the French government cut VAT for the construction industry it led to the creation of some 53,000 new jobs in the country.

He also references the successful targeted cuts employed by Belgium and Italy.

‘When the Belgian government cut VAT on construction it saw an increase both in turnover and employment. It is time we do the same in the UK,’ says Walker.

The FSB is also calling for the government to raise the threshold at which small firms start paying VAT to £90,000, which it argues would help to provide small businesses with much needed cash flow, allowing them to invest back into the business through lower prices or taking on more staff.

The action would save the government up to £162 million per year from the reduction in red tape, the organisation claims.