Victory in battle for caravan jobs hit by tax threat

Proposals to charge full VAT at 20 per cent on static caravans are expected to be watered down, with the tax being levied at just 5 per cent. The increase will also be put back from October to April 2013.

Regional MPs last night welcomed the move after a co-ordinated cross-party campaign had highlighted the crushing impact the full VAT increase would have, with the Treasury’s own estimates having predicted a 30 per cent fall in sales. An estimated 4,500 British jobs were at risk, many of them in East Yorkshire where 95 per cent of static caravans are manufactured. One firm had already launched a consultation over 350 redundancies.

Beverley and Holderness Tory MP Graham Stuart, who organised a mass petition of Parliament by more than 25 MPs, said: “We are delighted. It is a victory for the campaign to persuade the Government to think again.

“Many backbenchers and, privately, Ministers behind the scenes talked to the Government and we were successful in persuading them to review the original decision. It is great news for the manufacturing industry and also for the park and coastal communities all around the country.”

Mr Stuart said he was happy with the compromise, acknowledging the state of the economy and the need to raise revenue.

Brigg and Goole Tory MP Andrew Percy said: “It’s excellent news for Yorkshire where the manufacturing industry is largely based. It was clear last week during the petition handover in Parliament just how much strength of feeling there was on the Government backbenches and if they had pressed ahead, they wouldn’t have won a vote on it.

“They did say there were prepared to listen and it’s a sign of strength they have accepted the original proposals were badly crafted and would have had a disastrous impact – so all credit for reversing it.”

Hull North Labour MP Diana Johnson said: “The massive cross-party campaign against the Caravan Tax is clearly having an effect. We want to see proper analysis of what the Government’s revised plans would have for the industry.”

Her office also struck a note of caution with concern that an introduction of a five per cent tax could still have a damaging effect.

The Government is also set to announce a U-turn on heavily criticised plans for a so-called Pasty Tax – levying VAT at 20 per cent on all hot takeaway food.

Under revised proposals, VAT is expected only to be charged on food intended to be served hot – omitting food such as pasties which is cooked hot but left to cool in cabinets before being served.

Consultations on both planned new taxes ended on May 18 and Treasury sources said the change was about implementation and closing the gaps in the VAT system dealing with unfair anomalies.

A Treasury source said: “We rightly consulted, listened and are glad we have a solution that is fair.”

A spokesman for the Treasury said: “The Budget announced a consultation on a change to VAT on hot takeaway food, designed to remove inconsistency and ambiguity in the system and level the playing field across the takeaway food market.

“After extensive engagement we have improved the policy, addressing practical concerns, ensuring that the new regime could be as simple as possible to apply.

“We have addressed these in a way that allows us to remove the inconsistent VAT treatment, while not imposing any additional requirement on businesses to test the temperature of their products.”