Campaign to stop caravan tax goes to the political top

Beverley and Holderness Conservative MP Graham Stuart met David Cameron and George Osborne separately to discuss the impact of the tax, the day after more than 30 protest petitions containing tens of thousands of names were presented to Parliament by MPs from across the UK.

Mr Stuart said he remained “optimistic” about the campaign’s eventual outcome and said: “I am delighted to confirm that the Government, at the highest levels, is continuing to listen to the arguments before deciding the right way forward on the caravan tax. I had a good and constructive conversation with the Prime Minister, who acknowledged our concerns and emphasised what a thorough and proper review was taking place.

“The Government is right to probe every area of taxation and expenditure given the toxic legacy left by Labour. This consultation and review is being taken forward in an exemplary fashion and I remain optimistic that we will achieve the right outcome both for East Yorkshire and the country as a whole.”

The meetings follow a damning report by KPMG this week into the likely impact of the Chancellor’s plan to start charging VAT on the sale of static holiday caravans.

It concluded the negative impact of the new 20 per cent tax rate upon the economy would actually outweigh any financial benefit to the exchequer and said it would cost nearly 4,500 British jobs, strip almost £1bn from the national economy over five years and may ultimately cost the Treasury revenue rather than raising funds.

One caravan manufacturer in East Yorkshire – Willerby Holiday Homes – has cited the proposed tax as the reason behind a 90-day consultation over 350 redundancies – half of its workforce at its factory in Hull.

The Treasury has agreed to extend the deadline for its consultation into the plan to charge VAT on static holiday caravans after a Commons rebellion saw its majority slashed to just 25. That closed last Friday and a final decision is expected in the coming weeks.

Mr Stuart said a vote did not necessarily need to be held in the Commons: “It comes down to the Government deciding. My hope and expectation is that they will not need to bring it to a vote in the House and the Government will take on board arguments and act appropriately.”

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 if the tax is imposed. The National Caravan Council says the industry is only now making a fragile recovery and imposing VAT “will put manufacturing output levels and sales below those at the worst point of the recession.”