CARAVAN manufacturers near Bridlington have voiced their dismay after Government plans to impose VAT on new static caravans were revealed in last week’s budget.
The proposals to introduce the standard 20% VAT rate on static caravans from October 1 this year have been met with widespread criticism across the industry and our region is set to be hit particularly hard.
According to the National Caravan Council (NCC), 95% of all caravans in Britain are manufactured within the UK and of that number 95% are made within East Yorkshire.
The Government’s own figures state that the VAT imposition could result in a 30% reduction in demand for static caravans, and manufacturers say the move could see jobs lost whilst adversely impacting on tourism.
Carnaby Caravans near Bridlington employs 100 people and won the Caravan of the Year Award for its ‘Essence model’ at the national Motorhome and Caravan Show last October, as a manufacturer of static caravans it will undoubtedly be affected by the chancellor’s budget announcement.
Ron Austin, Joint MD at Carnaby Caravans, said: “We have been doing OK in recent times but it has been a struggle. We have coped in a difficult market but this is only going to make it harder.
“Of course a move like this would lead to consequences, it would stop any expansion plans in their tracks and could lead to redundancies. The retail price of a unit would go up by 20% and on a £20,000 product that is quite a lot of money.
“I would ask the Government to reconsider its plans and we will be lobbying between now and October to try and stop this happening.”
The Great British Tourism Survey 2010 estimated that £334 million was contributed to the UK’s tourism economy by caravan trips in 2010.
Commenting on George Osborne’s announcement, Bridlington MP Greg Knight said: “I think the Chancellor had a difficult wicket to play. This country is trying to reduce its deficit and the chancellor set out a deficit reduction program in his budget.
“What would be awful for businesses around the Bridlington area is if we as a country lost our AAA credit rating, making the rates of interest on borrowing much higher.
“I have not yet received any concerns from caravan manufacturers in the area, but I would encourage people to contact me if they have an issue.”
Static caravans have been free from VAT since the tax was first introduced in 1973 and there has been anger at the government’s decision to close this ‘loophole’ in such financially challenging times for the industry.
A statement released by the NCC in reaction to the proposed imposition of VAT said: “This will inevitably have a grave effect across the industry. This tax targets one of the last great British manufacturing success stories and does nothing to encourage holidaying at home.
“There was no pre-consultation on this, and to expect companies to manage such a fundamental change within six months is unrealistic.”
The NCC also questioned the figure of 750 businesses the Government thinks will be impacted by the VAT rise, saying a figure of 2,380 businesses is nearer the mark.
One local caravan park owner who did not want to be named said: “An additional 20% on the cost of buying new caravans is going to decimate sales of new small caravans and we would find a lot of people on that kind of budget are simply not going to buy.
“At the other end of the scale, those buying the top end caravans could see the price rise by as much as £10,000.
“This move is going to stall tourism again as it did 20 years ago for touring caravan. Some caravan manufacturers can only afford to operate a three day week and this will bring many down to just a two day week.”