HUNDREDS of jobs in Bridlington and thousands more across East Yorkshire have been saved after the government performed a stunning u-turn on its plans to impose VAT on static caravans.
In a move which would have “devastated” the local caravan manufacturing industry and had a crippling knock on effect to coastal caravan parks and the tourism industry, Chancellor George Osbourne had announced that a VAT loophole would be closed from October this year and the 20% tax rate would be levied on the sale of static caravans.
But after a vigorous campaign in which local businesses and East Yorkshire MPs claimed the government “had not thought through” the plans, it was announced that a reduced 5% tax rate would be imposed from April 2013 instead.
Ron Austin, joint managing director of Carnaby Caravans – where around 70 jobs were at risk – has welcomed the move.
He said: “We would have preferred that there were no changes to the VAT rules on static caravans, but this announcement is good news.
“Working with our customers, the industry should be able to cope with this, and we can say from our point of view that we will not make any knee jerk reactions and that we do not have to lose any jobs because of the caravan tax – although it is still a very tight market place.”
Mr Austin, who was set to meet with local MPs yesterday to thank them for their support in lobbying the government, praised the efforts of the campaign.
He said: “It goes to show what can be done when people come together to oppose plans that were clearly illogical and not thought out.
“Although we have not seen the full plans as yet, the 20% rate will still apply to loose items in the caravans such as furnishings, so we will still see the overall price of a static caravan increasing by around 7.5 to 8%.”
Currently, VAT is not imposed on the sale of static caravans.
Around 95% of all UK statics are made in East Yorkshire, with around 6,000 people directly employed by caravan manufacturers – although the industry supports an estimated further 20,000 jobs in our region through its supply chain.
The industry is also linked with the local tourism trade, with the British Holiday and Home Park Association estimating that one person would have lost their job on a holiday park for every fifteen caravans affected by a VAT levy.
During the campaign, Bridlington MP Greg Knight initially attracted criticism for not voting against the government’s plans.
He explained that he had requested an extension to a consultation period, and then joined other East Yorkshire MPs in delivering a petition against the plans to the government.
Welcoming the compromise, Mr Knight said: “This is a sensible plan, it gives the industry time to plan for the changes and the tax is not levied at a job-destroying rate.
“Static holiday caravans are a vital part of the economy in East Yorkshire and provide employment for many.
“It is refreshing to have a Government who first extended the consultation period as I requested and then during that period listened to the concerns of the industry, and acted accordingly.”
Other MPs in East Yorkshire and Humberside have welcomed the move, but criticised the government for forcing those working in the industry to be concerned for their futures.
Coun Shelagh Finlay, Labour councillor for Bridlington’s south ward on East Riding of Yorkshire Council, said: “I am really pleased that cross party efforts have worked and that we have now reached a compromise.
“However, I would have preferred it if the status quo had been maintained and no VAT was levied on static caravans at all.”