The Construction Products Association has written to the Chancellor demanding the move as part of the “Budget for Growth”.
Association chief executive Michael Ankers said: “The Green Deal will provide a framework for people to invest in certain energy efficient measures at no upfront cost to themselves.
“However, as the Green Deal will not come into effect until 2012 and we are currently well behind our refurbishment targets, there is an urgent need to encourage a higher level of domestic refurbishment before the Green Deal becomes available.
“The Budget could provide a real opportunity by allowing all work, up to the value of £10k on a domestic property, to be eligible for a 5% rate of VAT, as long as it improves the Energy Performance Certificate rating of the house by more than 10 points. By doing this the Chancellor could stimulate much needed refurbishment work.
“If there is no incentive, we are concerned that people will hold back on improvements whilst waiting for the Green Deal to come into effect.
“This would not only reduce the level of economic activity at a time when the government is keen to see growth, but also hold back even further the progress we need to make towards the 2050 carbon reduction target.”