Senior Tory raises jobs fear over caravan tax

David Davis, the former Shadow Home Secretary and Tory MP for Haltemprice and Howden, told the Commons that the Government’s decision to introduce VAT on static holiday caravans for the first time in last week’s Budget could cost £45m in lost income tax and National Insurance revenues and in new benefits payments, due to the devastating effect on the caravan industry.

Around 95 per cent of static caravans are built in East Yorkshire, and the Treasury’s own estimates suggest sales will dip by up to 30 per cent as a result of the tax increase.

Industry leaders have warned 1,000 jobs in East Yorkshire are at risk, although Mr Davis claims this could rise to as many as 5,000 – with each jobless person costing the taxpayer an average of £9,000.

Calling for the new tax to be reviewed, Mr Davis said: “The VAT change on the production of static caravans will have an impact which (the Budget says) is £40m positive, but the cost in unemployment will be £45m.”

Danny Alexander, the Chief Secretary to the Treasury, defended the measure, describing it as an “appropriate” change to tax rules.