Job fears for up to 1,000 caravan workers in East Yorkshire after VAT hike
JOBS are at risk in East Yorkshire's caravan industry after tax was added to the sales of static vans.
Tax breaks for static caravan manufacturers are to be scrapped in October, the Chancellor George Osborne revealed in the Budget.
This will lead to a 15 per cent price hike for customers, which may reduce demand by 30 per cent, according to the Government's consultation document.
Industry leaders claim this will lead to at least 1,000 job losses in East Yorkshire as sales plummet below the levels seen in 2008 to 2009, when caravan-makers were forced to lay off more than 1,500 staff in just six months.
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Mel Copper, chief executive of Beverley's ABI (UK), said: "Looking at the effect it will have on us and our clients, and bearing in mind we make up about 25 per cent of the UK market, this will lead to about 1,000 job losses.
"The retail consumer is going to be asked to pay 15 per cent more, which in the current economic climate is a major worry."
About 6,000 people are currently employed at caravan manufacturing firms across East Yorkshire.
Between 15,000 and 20,000 are understood to have jobs related to the industry – which is one of the biggest in the region.
As the recession gripped in 2008 to 2009, sales of static caravans dropped to 12,800 units.
It is now back up to 16,000 but, if the VAT change causes the predicted 30 per cent reduction in demand, it will see levels fall to just 11,000.
The UK's three biggest static caravan manufacturers, ABI, Willerby Caravans and Swift, are all based in East Yorkshire.
They are holding a meeting with their industry lobbying body, the National Caravan Council today, to discuss the change and decide how best to challenge it.
Mr Copper said: "I don't think whoever has made this decision has understood the human cost of it.
"The £30 million they claim will be generated by the extra VAT will be neutralised by the cost of job losses and people being unemployed, facing uncertain futures.
"Hull and the surrounding area is where most of the key manufacturers and suppliers are, so it will be particularly badly hit."
Hull North MP Diana Johnson yesterday demanded a Commons debate on the threat to the caravan industry.
In response to the Budget announcements, she said: "This will have a real impact on the economy in Hull because we manufacture a great deal of the caravans in this country.
"I understand it could almost reduce demand by 30 per cent – another hammer blow."
Since the recession, the industry has seen a fragile recovery but recent sales successes at Swift Group, Coachman Caravans and Victory Leisure Homes has bought renewed confidence.
Mr Copper is concerned the VAT change will reverse three years of progress.
He said: "We have always tried to keep a core number of staff in the belief the market would come back, which it did.
"This will dent customer confidence and makes it unaffordable for a lot of people."