This evening saw the success of the massive campaign for the Treasury to reverse the planned VAT rise to 20% on static Caravans.
The Treasury may have seen this as a way to stop an anomaly on which holiday caravans that were not built to the BS 3632 and sited on non residential site were to be given a VAT rate of 20%. This would match up with a similar stance to motor homes and touring caravans, due to the 20% rate being applied on a size basis of <7m in length and <2.55m wide.
The big problem to this rise is that it would provide a rise in price to the consumer on an industry that is struggling. Several people in the boom years of growth were able to afford a caravan as a family holiday investment and is seen as long term asset for a family. A caravan is not a cheap asset to be buying for most and when the recession hit, it hit the Caravan and Lodge industry hard. After all who would rightly invest in a holiday home for their family if there were uncertain times over peoples jobs and pay. The adding of 20% would have to be passed on to customers and would result in a huge price increase for all caravans and lodges.
The caravan and lodge industry has been through hard times over the years with several manufacturers going to the wall, this has been really tough times for manufacturers and parks alike. The UK has such high standards for manufacturing of lodges compared to other countries, which is why we at French Lodges only use UK built lodges to BS 3632. Many other sellers will agree the UK is the best when it comes to the static caravan and lodge industry.
The planned rise would probably have seen many of the remaining manufacturers go to the wall and with that hundreds of job losses for suppliers, manufacturers and parks. In one fell swoop one industry that had just about weathered the recession would have been brought to its knees. Many jobs that have been saved over the past few years across the country and focussed in Yorkshire & The Humber would have gone. An area of the country that is often seen to be an afterthought to many in the capital and Government, which is odd having so many prominent politicians from the region.
Luckily several MPs had signed up to the Early Day Motion 31 and the Treasury have been lobbied by the entire caravan, lodge, holiday park and tourism industries to see sense over this issue.
An Englishmans home may be his castle, but the average persons holiday home is a caravan or lodge and not a 3 bed cottage in the Cotswolds (that would only have stamp duty). It was a tax on the wrong people at the wrong time. It is a welcome relief to see that George Osborne has thought about this planned 20% VAT rise and is expected to reduce it to a more reasonable level of 5%. This was seen by many as the civil servants pushing through an anomaly, as it would only have raised an extra estimated £30m p.a. over the next 3 years. 5% is a manageable figure for the industry and from the people I have spoken to it should not result in job losses.