VAT conundrum

Countless builders across Yorkshire offer anecdotal evidence to suggest that this 20 per cent tax is deterring many families from pressing ahead with home extensions or improvements – orders that could provide more solid foundations to Britain’s desperately slow recovery.

The downside is that a modest five per cent reduction could cost the Treasury up to £7.8bn at a time when George Osborne’s borrowing targets have been blown off course by the longest slump since the war.

Yet, if such a move injects some much needed confidence into the wider economy and stimulates jobs for those people still dependent on benefits to make ends meet, it might be a price worth paying if this VAT cut accelerates the recovery.

Such a move has worked in other parts of Europe – and it has the potential to do so in Britain – if Mr Osborne can provide the ingredient that is proving to be the most elusive of all: confidence.