Finance (No. 4) Bill

Karl Turner Excerpts

Wednesday 18th April 2012 Commons Chamber

[Alan Johnson (Kingston upon Hull West and Hessle) (Lab)]

I join the hon. Member for Waveney (Peter Aldous) in supporting new clause 6, and I wish to make a few brief points.

First, on the anomaly issue, in the early ’70s a Conservative Chancellor looked at towable caravans, which are VATable, and residential caravans, which are not, and decided that so-called static caravans should be classified as residential property and therefore not be subject to VAT. In the ensuing 40 years, every Chancellor, both Labour and Conservative, has made the same decision.

In the global recession of 2008, the caravan industry was hit hard. In my neck of the woods, east Yorkshire, we know how difficult that was. I took a delegation to meet the well-known caravan user Lord Mandelson, to make the argument that the industry needed a bit of help from his Department—which was not at that time known as the Department for Business, Innovation and Skills. [Interruption.] Yes, yachts were his main form of holiday. In the entire history of the caravan industry, so great has been its feeling that it could survive independently without Government help that not a single official in the whole vast empire of that Department knew anything about it. Frankly, apart from a bit of tinkering around the edges of the car scrappage scheme, there was not much that we could do for the caravan industry. As a result, companies went bust, people went bankrupt and the supply chain was hit very hard.

Through its own efforts, however, the industry is now getting its head back above water. Atlas Leisure Homes in my constituency went into receivership in 2008 and lost 250 jobs. It has fought its way back and now employs 120 people in an area that has been badly hit by unemployment. Companies in the supply chain have had similar experiences. Meadley International Transport is involved in distribution. It is run by a father, his son and his daughter. He put in the whole of his pension and all his assets to get Meadley through the global downturn, and it, too, is now getting its head back above water.

This measure will destroy Atlas and Meadley. It will destroy small businesses across the country. It will destroy an industry that is almost the last purely British success story in the manufacturing sector. Some 95% of UK caravans are made in this region. In 2008 and 2009, people did not decide not to buy a caravan; they deferred that purchase. If those companies had gone out of business, German and Dutch firms would now be prospering from the fact that a market is developing again.

[Karl Turner (Kingston upon Hull East) (Lab)]

As my right hon. Friend will know, I have three such manufacturers in my constituency. One of the biggest is Willerby Holiday Homes. It is based in east Hull and employs 700 people. I spoke to its chief executive today. He tells me the firm has been operating a three-day week since the banking crash in 2007, but he hopes it may return to full-time work in the next few months. He says it is ridiculous to expect that to be able to happen if this VAT measure is introduced.

[Alan Johnson]

My hon. Friend raises a crucial point. I say the following to those on the Treasury Bench: this was meant to be a Budget for manufacturing; it was meant to be a Budget for growth in the British economy; it was meant to be a Budget that ended some of the anomalies in the north-south divide.

How can we go ahead with this measure, given that hon. Members in all parts of the House know the effect it will have on jobs and British manufacturing, and know that the savings of about £40 million to £45 million set out in the Treasury’s own document will be far exceeded by the costs in unemployment, waste and redundancies throughout the country? How can the Treasury possibly decide, after 40 years of looking at this, that this is the year in which it needs to put the price of caravans up? Again, its own figures show that that will lead to a 30% reduction in demand, although the National Caravan Council says that the real figure will be more like 75% or 80%. I believe Treasury officials now understand that their own analysis was deeply flawed.

--- Later in debate ---

[The Second Deputy Chairman of Ways and Means (Dawn Primarolo)]

Order. A large number of Members wish to participate in this debate, which ends in one hour. I ask Members to make shorter speeches in order to accommodate their colleagues, so that the Minister can hear all the views. Interventions from now on must be short, or I will stop the Member from speaking at length on an intervention. I hope that helps the debate.

[Karl Turner]

I shall speak to new clause 6. I am delighted to follow the hon. Member for Beverley and Holderness (Mr Stuart), although I disagree with some of the points that he makes.

This was certainly not a Budget for jobs and growth. For hon. Members on the Government Benches to make that point time and again, as they do, shows me and my constituents how out of touch they are. On the subject of VAT on static caravans, I have three manufacturers based in Hull East. One of them, Willerby’s, the biggest manufacturer, has 700 staff. I said in an earlier intervention that the firm had gone from a full working week to a three-and-a-half day week. The firm tells me that it is probably ridiculous to suggest that there is a possibility of returning to a full working week if the proposed VAT is implemented on 1 October.

I want to address the question of whether there really is an anomaly. I do not think there is. I do not think people buy static caravans for the same reasons that they buy trailer caravans. A static caravan is often a second home, but if I accept that there is an anomaly, surely there should be time for a proper consultation and an opportunity for people to think about the impact on their businesses and jobs. It is the wrong time, while the economy is flatlining, to try to deal with an anomaly, if that is what it is. We need jobs and growth in this country. We do not need a savage attack on manufacturing industry.

[Helen Goodman (Bishop Auckland) (Lab)]

Does my hon. Friend agree that a Budget which increases taxes on static caravans and pasties, but cuts taxes on ski lifts tells us far more about the consumption patterns of those on the Government Front Bench than anything else? The Chancellor said he has never eaten a pasty. Has my hon. Friend found out whether the Chancellor has ever stayed in a caravan?

--- Later in debate ---

[Karl Turner]

My hon. Friend makes an excellent point.

The Government’s impact assessment suggests that sales will drop by 30% as a result of VAT on static caravans. That would be disastrous for the static caravan manufacturing industry in Hull. I appeal to the Government to listen to the representations that have been made from both Members Opposition and Government and to think again. The measure will be disastrous for that industry.

[Stephen Gilbert (St Austell and Newquay) (LD)]

I shall speak to new clause 5, in my name and the names of all Cornish MPs. We have a Cornish coalition moving forward to try to protect the Cornish pasty. The proposals from the Government are, I fear, unfair and unworkable and will be bad for the economy of Cornwall.

Let us consider the economic impact first. Cornwall is already an extremely disadvantaged part of the United Kingdom, being the only part that qualifies for convergence funding, yet the 86 million pasties that are produced contribute £37 million directly to the Cornish economy, and the 40 Cornish Pasty Association members turn over £150 million a year.