I first wrote to the government on the challenges facing the caravan industry in a letter dated 20th May, jointly with my fellow Hull MPs Karl Turner and Dame Diana Johnson and addressed to the prime Minister. In it we asked that caravan dealerships should be opened at the same time as car dealerships and that, in line with the then current guidance for estate agents on house viewings, caravan parks should also be allowed to open for sales and lettings. I am happy to say that those asks were met by Government and I would like to take this opportunity to thank you for heeding the calls from the industry and acting upon them.
Like businesses across the country, caravan manufacturers have also benefited from the
Government’s economic support measures, including the Job Retention Scheme and the Business Interruption Loan Scheme.
Unfortunately, all these measures have not been enough to alleviate sufficiently the pressures on the industry and without further intervention the future is stark. The position of the caravan manufacturers sets them apart from others in the manufacturing sector as they are entirely dependent on trade in the leisure and tourism sector, but are not eligible for the extra Government support leisure and tourism enjoys. So I am here before you today to make the case for an industry facing unique challenges and one which plays a pivotal role in the prosperity of a region which is has no capacity to withstand its loss.
The caravan industry is a great British manufacturing success story. The entire sector, including the manufacturers and sellers of static caravans, holiday homes, park lodges, traditional caravans and motorhomes, contributes £9 billion a year to the UK economy and is a growing exporter. Employment within the supply chain stands at 207,580.
When the lock-down came on the 24th of March, 3,361 caravan parks closed along with 381 caravan dealerships. Restrictions on travel were introduced and the public were ordered to stay at home. At a stroke, 2.4 million people were denied use of their caravan, either static or towed. This resulted in the entire caravan manufacturing industry coming to an abrupt halt. Notwithstanding the requirements for effective social distancing and hygiene in workplaces, as no more orders were arriving on the companies’ books 208 caravan manufacturers and 647 suppliers closed.
The manufacturers have been working hard ensuring their factories can re-open safely for their workers, respecting the relevant distancing and hygiene guidance. However, the caravan industry is a seasonal business with the prime selling period occurring between March and August. The lock-down could not have come at a worse time – right at the start of this crucial period. The longer the closures have continued, the greater the losses have become. As I speak in mid-June, with possibly the entire season in jeopardy, the prospect of business failures and substantial redundancies looks inevitable without further Government intervention. As the 2020 caravan peak selling period was ended early, there is now an excess of unsold stock in the supply chain. This means whenever the caravan parks do reopen there will be little demand for the production of new units.
The independent forecasts for 2020 sales are worse than experienced in the Global Financial Crisis. Compared to 2019 touring caravans face a market decline of 49%; holiday, or static caravans a decline of 56% and motorhomes a decline of 55%.
Thousands of employees are currently furloughed. These will be either made redundant – current estimates are around 40% – or lose their jobs through company failures. The economic and social impact will be directly felt in areas already under tremendous economic pressure and with high levels of deprivation.
The Hull and East Riding caravan industry originally developed in the region in the 1950s, taking advantage of the plentiful imports of timber through the ports of Hull and Goole. Leading companies based in the area now include, Swift, Willerby, ABI,
Atlas, Delta, Coachman, Europa and Victory. They are responsible for producing over 75% of the country’s static caravans and holiday homes, as well as park lodges, traditional caravans and motorhomes. In addition, the wider industry produces modular homes and relocatable buildings. These companies, and other smaller manufacturers, support many others as part of their supply chain. A typical static caravan requires two and a half thousand parts and require hand-finished by skilled crafts-people. Around 10,000 are employed directly with an estimated 10,000 more in the supply chain.
Prior to the 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 also anticipated demand for static caravans and lodges – based on bulk orders emanating from lodge and caravan parks – as well as demand for touring caravans and camper vans will be significant. 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 replaced by imports, with jobs and money flowing out of the country? This is surely not what is meant by the Government’s aspirations to a “Global Britain”?
This was the very real danger facing the motorhome industry recently, and one which I was proud to take up the fight for. Changes in Europe-wide legislation on vehicle emissions had led the Treasury to alter UK vehicle emission duty in such a way as to lead to a massive increase in road tax for motorhomes. The UK motorhome industry is healthy, but comprised of small to medium sized companies. The shock of the tax increase on the market would have driven them quickly out of business. However, their European competitors were part of large parent companies with deeper pockets and able to ride out the initial blow. The UK market for motor homes would not have disappeared – it would no doubt have recovered eventually – but the choice of buying British would have disappeared. The jobs would have disappeared along with the revenue to the Exchequer.
I am happy to say the Government listened to industry on that occasion, the increases were dropped before implementation and there was a huge sigh of relief all round. The key to that success was that Government listened, it recognised and understood the problems and the need for urgent action. Making the changes after a year would have been too late, the damage would have been done. I hope the Government will recognise the same need for urgency in the case of the wider caravan industry – which, let us not forget, includes the recently saved motorhome sector – and will act with the same speed and effectiveness.
Why the sector needs special consideration
As I said earlier, caravan manufacturers have benefited from the Government’s economic support measures. Most staff are furloughed and they are able to access the Corona Virus Business Interruption Loan Scheme. However, the industry is entirely dependent on trade in the leisure and tourism sector. This sector was rightly identified by the Government at the start of their pandemic response as being uniquely impacted by the requirements of the lock-down, the new rules on social distancing and the initial restrictions on even small gatherings. It introduced extra support for this sector. However, the caravan industry has not been made eligible for this support despite the fact that it is totally reliant on the sector. There are no alternative outlets for its products, there are new markets to expand into.
In fact, because of the destruction of its 2020 selling season and the consequent remaining unsold units, even as the restrictions on the leisure sector are eased and caravan parks and camp sites reopen, the caravan manufacturing industry will see very few new orders. As things stand it can only hope to struggle on until winter before economic realities can be no longer be avoided.
95 percent of all caravans are privately owned; they are self-contained and the generous separation distances between units required by law of 5 to six metres on parks is greater than the spacing of many new detached houses.
As such they offer perhaps the safest form of leisure and holiday accommodation now that the restrictions the Covid 19 pandemic has imposed on us look set to be with us for some time. The demand and the opportunities for overseas travel are likely to be reduced. 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.
However, this demand will not be fully realised until the summer of 2021 at the very least. The government must support our caravan industry now so that the demand, when it comes, can be met by British manufacturers.
Hull City Council and the East Riding of Yorkshire Council wrote to the Chancellor on the 5th June asking for clarification on whether the caravan industry is eligible for Business Rates Relief funded by 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 to them the same facilities. Their position, and also 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 would ask the Minister to urge his colleagues at the Treasury to make these funds available.
Currently the furlough scheme is proposed to start to be reduced in August. This coincides with what is normally the latter part of the industries sales season. Existing surplus stock is likely to cover any pick-up in demand before the winter when sales are normally very low and there is no reason to believe this winter will be any different. Therefore, while the rest of the economy might be expecting to show signs of recovery as activity and demand begin to grow, the caravan manufacturers will remain in the doldrums with little or no new work available for their employees.
I would therefore ask that consideration is given to a flexible, sector-focused approach to ending the furlough scheme, which 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. This will avoid job losses and enable them to respond quickly to improvements in market conditions when they arrive.
Can I ask that the Minister impress upon his colleagues at the Treasury the exceptional circumstances of this industry? Circumstances that set them at odds with what may be happening in the economy as a whole.
As a way of stimulating demand I would urge the Government to consider mechanisms for the caravan market such as site owners being able to accelerate capital write-down or other Value Added Tax measures.
I am also hopeful to see the phased reopening of caravan parks as soon as it is safe to do so. The NCC have suggested this begins with facilities for private holiday caravan owners and holiday makers with no on-park facilities like pubs or restaurants. When the wider hospitality restrictions are lifted caravan parks with hospitality and facilities should reopen to private holiday caravan owners and holidaymakers.
Call to action
Following the 2008 financial crash, three out of every ten caravan manufacturers in Hull closed their doors. This 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 to truly “level up” the country then Hull and those areas that accompany it at the top of these lists – lists which in my opinion are a damning indictment of ten years of Conservative economic policy – must be the places they begin the process.
Those within the industry assure me that without further intervention from 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 would bring. It simply cannot be allowed to happen. I would like to remind the Minister that before the pandemic enveloped us this was a healthy and growing industry – and it can be again, so long as it is given the support it needs now. I urge him to recognise its unique circumstances and its vital contribution to some of the most deprived areas in the UK. I ask him to consider the calls for support from the industry and the National Caravan Council, engage with them and take their cause to the Treasury to avoid the destruction of thousands of jobs and the families and communities those jobs support.