Fury as 1,000 jobs at risk after Osborne’s shock VAT decision

Hull North MP Diana Johnson spoke of a “hammer blow” to the area’s caravan manufacturing industry after Treasury figures revealed the Chancellor’s decision to start charging VAT on static holiday caravans may cause demand to fall by 30 per cent.

George Osborne slipped the caravan tax into Wednesday’s Budget as part of a package of measures designed to address what he called “some of the loopholes and anomalies in our VAT system”.

But industry leaders in East Yorkshire – where 95 per cent of the UK’s static caravans are built – have reacted with fury at the decision, warning it will cripple an industry only just starting to recover after the recession.

“My real concern is for our 350 staff, and all our suppliers around the area,” said Mel Copper, chief executive of Beverley-based ABI, one of the largest static caravan manufacturers in the country.

“The Treasury is saying this will hit demand by a third – that’s 100 of my staff alone. You’re probably looking at 500 jobs directly in East Yorkshire and at least the same again among our suppliers.

“And to say they’re closing a loophole is bunkum. There’s been an exemption for static homes since VAT was first introduced.”

Peter Nevitt, managing director of Hull-based Victory Leisure Homes, described the announcement as a “bombshell”.

“This will have a severe impact,” he said. “It will add £6,000 to the price of a £30,000 caravan. What are we supposed to do?”

The National Caravan Council warned of “significant job losses” and a knock-on effect on tourism.

“This is effectively a tax on leisure holidays in the UK,” said director-general John Lally.

The Treasury expects the measure to bring in £15m next year, rising to £45m per year by 2016.

A spokeswoman said the move would “close loopholes” by bringing tax on static holiday homes “in line with mobile caravans.”