MP warns caravan tax would cancel out every job aid scheme

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A Caravan Tax would “at a stroke” cancel out every benefit to East Yorkshire of a string of flagship Government schemes aimed at boosting local business, Ministers were warned as pressure mounts on the coalition to drop its controversial proposal.

During a heated Commons debate last night over plans to introduce VAT on static holiday caravans, Hull MP Alan Johnson revealed that the Humber’s most senior business leader fears the various policies upon which the Government is pinning its revival of the local economy would count for nothing if the new tax came in.

“I spoke to Lord Haskins this afternoon, who is the chair of the Local Enterprise Partnership - the business leader in Hull,” the Labour MP said.

“His view is the damage from this measure will at a stroke remove all the advantages of our two enterprise zones and our enterprise partnership.

“Should not the voice of business really take precedence in this debate?”

The Commons debate had been called by Beverley and Holderness Tory MP Graham Stuart amid mounting concern over the impact of the Caravan Tax, which was included in the small print of George Osborne’s Budget last month.

The Treasury’s own estimates state sales of static holiday caravans – 90 per cent of which are made in East Yorkshire – will fall by almost a third as a result. Industry estimates put manufacturing job losses alone at up to 1,500, with 2,500 more in the wider tourism industry.

Mr Stuart made clear the knock-on effects for rural and coastal economies would be greater still.

“I ran a street surgery in Withernsea on Saturday, and as many as three out of 10 people said ‘I’m not from round here,” the Tory backbencher said. “They weren’t staying in B&Bs, they weren’t staying in hotels – there aren’t many in the area – they were staying in static caravans.

“That’s three out of every 10 people going into that Aldi, going into that bakery down the road, spending money in the pubs.

“The importance of visitors to the rural economy is immense.”

The tax rise narrowly cleared its first Commons vote last week as the Government faced down its biggest rebellion since the row over tuition fees, with well over a dozen Conservative MPs rebelling to slash its majority to only 25.

But a string of MPs spoke out against the tax last night who had previously voted in favour of it, suggesting opposition is growing and that the Treasury may yet be forced to give way or face the ignominy of a Commons defeat.

Pressure mounted further yesterday as an Early Day Motion was put forward in Parliament calling for the tax to be dropped, ahead of the launch of a public petition in Hull tomorrow afternoon.

For now, Ministers continue to claim they are simply “removing an anomaly” in the VAT system by bringing tax on static holiday caravans in line with narrowboats, mobile caravans and tents.

But Mr Stuart dismantled that argument last night with a stinging rebuke to his own front benches.

“The 1972 Finance Act brought in ‘zero rating’ on certain caravans,” he said. “The notes to the clauses stated the caravans in the group are ‘akin to houses’.

(There is) no anomaly, no forgotten section... The intention was to treat caravans, other than those towed by cars, as domestic accommodation in the same way as houses. The Treasury didn’t do its homework – and now Ministers are in a tight spot.”

Treasury Minister David Gauke defended the policy, but insisted the Government was still open to suggestions. “We have listened to representations and extended the consultation period to May 18 to allow HMRC to engage further with representative bodies,” he said.

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