MPs call for chancellor to reconsider caravan VAT levy plan

The loophole on static caravans has remained unchanged since the introduction of VAT in 1973

MPs in East Yorkshire are calling for the chancellor to reverse his decision on plans to close the VAT loophole on static caravans.

MPs Graham Stuart and David Davis are to meet George Osborne next Wednesday.

From 1 October, the 20% sales tax will be levied on static caravans which are currently VAT-free.

Manufacturers fear it could lead to job losses and "damage" sales. The National Caravan Council (NCC) said 95% of all UK caravans were made in the region.

The MP for Beverley and Holderness, Mr Stuart, said: "We will be working cross-party and as one in telling the government to think again about the impact this VAT rise will have on East Yorkshire and the caravan industry as a whole."

'Fragile industry'

Last week MPs David Davis, Diana Johnson, Andrew Percy, Graham Stuart and Karl Turner met local caravan manufacturers and councillors to discuss the impact of the proposed VAT levy on the economy.

Labour MP Ms Johnson said: "In our view it is a mistake to implement this 20% on static caravans and we will fight very hard in the House of Commons to get the government to see sense and drop this proposal."

The caravan industry suffered more than 1,500 job losses in 2008, blaming the economic downturn.

John Lally, from the NCC, said: "This attacks a British manufacturing success story and a British holiday industry that makes a significant contribution to domestic tourism.

"The industry's slight recovery at present is fragile; the imposition of VAT will put manufacturing output levels and sales below those at the worst point of the recession with significant economic and social consequences."

A Treasury spokesman said: "This change addresses a long-standing anomaly and brings static caravans in line with other holiday caravans.

"We have issued a consultation document with draft legislation so that if businesses wish to raise any particular technical implementation difficulties, they have an opportunity to so before 4 May."