Caravan Industry: Hull and East Riding

Part of the debate – in the House of Commons at 9:04 pm on 15th June 2020.

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Photo of Emma Hardy Emma Hardy Shadow Minister (Education) 9:04 pm, 15th June 2020

I thank the hon. Gentleman for his intervention, and he is right to say that this is a thriving industry—or at least it was until covid-19. With the right support, it can be a thriving industry once again. The Hull and East Riding caravan industry originally developed in the 1950s, taking advantage of the plentiful imports of timber through the ports of Hull and Goole. Leading companies in the area now include Swift, Willerby, ABI, Atlas, Delta, Coachman, Europa and Victory Leisure Homes. We are proud that they represent the largest caravan manufacturers in the UK and in 2019 produced 50% of the national total of touring caravans, 30% of the motorhomes and a staggering 90% of the holiday caravans. As I mentioned, we are the caravan building capital of the UK. In addition, the wider industry that has developed around this skill base produces park lodges, modular homes and relocatable buildings. These companies and other smaller manufacturers support many others as part of their supply chain. For example, a typical static caravan requires 2,500 parts and requires to be hand-finished by skilled craftspeople. In our area, 20,000 jobs rely directly or indirectly on the manufacture and sale of caravans and motorhomes.

As Mr Holden mentioned, prior to this crisis these companies’ order books were full, and at least one of the major manufacturers was planning to expand its facilities. In the medium to long term, it is anticipated that demand for static caravans and lodges, based on bulk orders emanating from lodge and caravan parks, as well as demand for touring caravan and camper vans, will be significant.

I understand that 2021 bookings for holiday parks are extremely high already. It is entirely plausible that in our altered circumstances they will see an increase in demand beyond that anticipated as people prefer to holiday in the UK on sites where social distancing can be achieved. Static and mobile caravan sites are well placed to meet those requirements. The question will be, who will meet that demand? Will another once-proud British industry be allowed to go to the wall and see demand filled by imports, with jobs and money flowing out of the country? This is surely not what is meant by the Government’s aspiration to be a global Britain.

As I said, caravan and motorhome manufacturers have benefited from the Government’s economic support measures: most staff are furloughed and they are able to access the coronavirus business interruption loan scheme. However, the industry is entirely dependent on trade in the leisure and tourism sector, which was rightly identified by the Government at the start of their pandemic response as uniquely impacted by the requirements of the lockdown, with the new rules on social distancing and the initial restrictions on even small gatherings. The Government introduced extra support for the sector. However, the caravan industry has not been made eligible for this support, despite the fact that it is totally reliant on the sector. Because of the destruction of the 2020 selling and order season, even as the restrictions on the leisure sector are eased and caravan parks and campsites reopen, the caravan manufacturing industry will see very few new orders. As things stand, it can only hope to struggle on until winter before the crushing economic realities can no longer be avoided.

Some 95% of caravans are privately owned. They are self-contained, and the generous separation distance between units is actually far greater than the spacing of many new detached homes. As such, they offer perhaps the safest form of leisure and holiday accommodation. Now that the restrictions due to the covid-19 pandemic have been imposed on us, and are set to be with us for quite some time, the demand and opportunities for overseas travel are likely to be reduced, while the demand for safe domestic holidays will increase, without doubt. A caravan-based holiday could soon register towards the top of the list of holiday accommodation choices. I speak as someone who has been taking my children—my two daughters—on caravan holidays every year to various Haven sites up and down the country since they were born, so I can personally vouch for the enjoyment of a static caravan holiday.

But that demand will not be fully realised until the summer of 2021, at the very least, and whether it is met by British manufacturers or their overseas competitors will depend entirely on the actions that the Government take right now. On 5 June, the Labour leader of Hull City Council and the Conservative leader of East Riding of Yorkshire Council jointly wrote to the Chancellor asking for clarification on whether the caravan industry is eligible for the business rate relief funded by the Government. As the fortunes of the industry are tied directly to the holiday and leisure sector, it would seem to be wholly reasonable for the Government to extend them to the same facilities. The council leaders’ position, and that of the industry, is that granting such access would allow the local authorities to offer significant support and be invaluable in preventing further job losses while retaining the capacity to immediately respond to any eventual upturn in the market. I ask the Minister to urge his colleagues at the Treasury to make this relief available.

Currently the furlough scheme is proposed to start to be reduced in August, concluding in October, but this coincides with what is normally the last part of the industry’s sales season. As I said, the majority of that season has already been lost. Existing surplus stock is likely to cover any pick-up in demand before the winter, when sales and consumer orders are normally low, and there is no reason to believe that this winter would be any different. As already mentioned, at the same time holiday parks, which would normally be looking to replace old units and consider expansions, are probably going to make do because of a lack of funds and confidence. Therefore, while the rest of the economy might be expecting to show signs of recovery as activity and demand begin to grow, caravan manufacturers will remain in the doldrums, with little or no work available until the new cycle begins in spring 2021.

I therefore ask that consideration is given to a flexible, sector-focused approach to ending the furlough scheme that would allow its extension in the case of the caravan manufacturing industry so that companies are able to retain staff through an extended period of inactivity. The caravan manufacturing industry is the neck of the supply chain funnel and it is vital that the Government support it through autumn and winter until spring 2021. That would avoid job losses, safeguard capacity and enable it to respond quickly to improvements in market conditions when they arrive. May I ask that the Minister impress on his colleagues at the Treasury the exceptional circumstances of this industry, circumstances that set it at odds with what may be happening with the economy as a whole?

The people of Hull and East Riding, and no doubt the rest of the country, want to work. They do not want to sit at home. Far better than furlough would be orders. As a way of stimulating demand, I urge the Government to consider mechanisms such as allowing static caravan site owners to be able to accelerate capital write-offs or other value added tax measures. The French Government have moved to protect their own caravan manufacturing industry with a special loan scheme for their tourism and leisure sector, which specifically allows the purchase of holiday caravans with no capital payback for the first two years. I bring that to the Minister’s attention not only because it is worthy of consideration, but to underline the fact that the Government cannot assume that foreign competition will be as badly affected as the UK industry currently stands to be. I should also note that France already has a flexible furlough scheme in place for the tourism and leisure industry. The National Caravan Council and its members have lobbied hard for the supply chain to be unlocked. It is now vital that the reopening of caravan parks begins as soon as is safe to do so. I urge the Government to give clarity to the sector, so it can start to make critical preparations.

Following the 2008 financial crash, three out of every 10 caravan manufacturers in Hull closed their doors. The workforce of the manufacturing sector and industry was reduced by 55%. That was a body blow to the city and the surrounding area. Thousands of families were affected and the effects can still be felt. Hull remains one of the most deprived local authority areas in the country on every metric. The last two years have seen the unemployment rate actually rise in Hull. It now faces a round of closures and redundancies that are set to eclipse even the disaster of 2008. If the Government’s stated intention is truly to level up the country, Hull and the areas that accompany it at the top of those lists must be the places where they begin the process. Those within the industry assure me that without further intervention from the Government the impact of covid-19 is likely to hit the industry twice as hard as 2008. I cannot bring myself to contemplate the devastation that that would bring. It simply cannot be allowed to happen.

I remind the Minister that before the pandemic enveloped us this was a healthy and growing industry. It can be again, so long as it is given the support it needs now. I urge him to consider its unique circumstances and its vital contribution to some of the most deprived areas in the UK. I once again ask him to consider the specific calls for the support I have made here today: the inclusion of the caravan sector in the business rates relief available to the leisure and tourism sector; a flexible sector-specific extension to the furlough scheme; and a package of measures designed to stimulate the leisure and tourism sector to purchase new and replacement stock, as it would under normal circumstances.

The Minister must engage with the industry and the National Caravan Council and take their case to the Treasury to avoid the destruction of thousands of jobs, and the families and communities those jobs support. The Government were elected with a promise to level up. It is now time to prove that that is more than just a slogan by supporting the Hull MPs’ call to protect the caravan industry. The Government cannot once again be too slow to act. Along with the 207,580 people employed in the caravan supply sector, I look forward to the Minister’s response.