Below is the text of the speech made by Emma Hardy, the Labour MP for Kingston upon Hull West and Hessle, in the House of Commons on 15 June 2020.
As many Members will know, Hull is the capital of caravan manufacturing in the UK, and the Hull MPs have a strong tradition of standing up for the sector. My hon. Friend the Member for Kingston upon Hull North (Dame Diana Johnson) was instrumental in protecting the industry after the global financial crash in 2008. She was joined by my hon. Friend the Member for Kingston upon Hull East (Karl Turner) in the fight against the caravan tax under the coalition Government. I take up the baton with my Hull colleagues today to ask the Government to act to protect this vital industry.
I first wrote to the Government about the challenges facing the caravan industry in a letter addressed to the Prime Minister on 20 May, jointly with my hon. Friends the Members for Kingston upon Hull North and for Kingston upon Hull East. In it, we asked that caravan dealerships be opened at the same time as car dealerships and that, in line with the then current guidance for estate agents and house viewings, caravan parks should also be allowed to open for sales and meetings. I am happy to say that those asks were met by the Government, and I would like to take this opportunity to thank them for heeding the calls from the industry and acting upon them.
Like other businesses across the country, caravan manufacturers have benefited from the Government’s economic support measures, including the job retention scheme and the business interruption loan scheme. Unfortunately, all those measures have not been enough to alleviate sufficiently the pressure on the industry, and without further intervention, the future is stark. The position of caravan manufacturers sets them apart from others in the manufacturing sector, as they are entirely dependent on trade in the leisure and tourism sector.
Peter Aldous (Waveney) (Con)
I congratulate the hon. Lady on securing the debate. She is making a very good point. Does she agree that there is a need to consider the whole caravan industry supply chain, from the manufacturing that takes place in Hull and East Riding right through to coastal communities like my constituency? When you sneeze, we get a cold as well.
The hon. Member is quite right. Hull is the capital of caravan manufacturing in the UK, but that is not to say that it is not a vital industry in other areas of the country as well.
Because caravan manufacturers are not officially part of the leisure and tourism sector, they are not eligible for the extra Government support that leisure and tourism enjoy, so I am here to speak up for an industry which faces unique challenges and plays a pivotal role in the prosperity of a region that has no capacity to withstand its loss. The caravan industry is a great British manufacturing success story. The industry’s supply chain comprises caravan manufacturers and their suppliers, which feed into the UK retail network of caravan parks, dealerships and distributors. The industry contributes £9 billion a year to the UK economy and is a growing exporter. Employment within the supply chain stands at 207,580, and I understand that the hon. Member for Strangford (Jim Shannon) has the third largest caravan site in Northern Ireland in his constituency.
Jim Shannon (Strangford) (DUP)
The hon. Lady has highlighted the importance of the caravan manufacturing industry, but it also depends on the people buying them and the caravan season. In Northern Ireland, we have announced that the caravan sector will reopen on 26 June. Would she love to see that happen for the caravan sector in England, so that the tourism sector can progress from that?
Madam Deputy Speaker (Dame Eleanor Laing)
Order. The hon. Gentleman has made his point well, but I must point out that this is a very narrow debate, and we will stick to the rules. We are talking about the caravan industry in Hull and East Riding.
I am happy to support caravan manufacturing everywhere.
When lockdown began on 24 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 the use of their caravan, either static or towed. The result was that the entire caravan manufacturing industry came 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, and 90% of the workforce is currently furloughed. The manufacturers have been working hard, ensuring that their factories can reopen safely for their workers, and respecting the relevant distancing and hygiene guidance. However, the caravan industry is a seasonal business, with the prime selling and order period occurring between March and September. This lockdown could not have come at a worse time; it came right at the start of a crucial period.
Scott Mann (North Cornwall) (Con)
I am aware of the Deputy Speaker’s insistence that we bring this debate back to the issue of Hull. One great thing about Hull is that it produces this great British manufacturing that trundles down the motorways to places such as North Cornwall. Will the hon. Lady join me in not only supporting this great British manufacturing industry, but calling for the safe reopening of tourism, so that many of the tours can then take place in the south-west?
I thank the hon. Gentleman for his intervention. Of course, wherever we can prove and make the case for safe reopening, I urge the Government to consider that.
The longer the closures have continued, the greater the losses have become. As I speak here, in mid-June, with possibly the entire season in jeopardy, business failures and substantial redundancies in the winter look inevitable without further Government intervention. The tourer and motorhome industry has lost its income from seasonal sales, and the lack of orders taken will leave it unable to sustain itself over winter. The unsold stock in the supply chain will depress whatever demand there is. The static caravan manufacturers face the prospect that whenever caravan parks and holiday parks reopen, there will be little demand for the production of new units over the winter for the yearly refreshing of rental units. Those businesses will be either unable or extremely reluctant to spend money, because of the loss of revenue, and will choose instead to make do with last year’s model. That is born out of independent forecasts for 2020, with sales predicted to be worse than those experienced in the global financial crisis of 2008. Compared with 2019, touring caravans face a market decline of 49%, holiday or static caravans face a decline of 56% and motorhomes face a decline of 55%. Thousands of employees are currently furloughed. They will be made redundant—current estimates are for about 40% of the entire workforce—or they will lose their jobs through company failure. The economic and social impact will be directly felt in areas already under tremendous economic pressure and with high levels of deprivation.
Mr Richard Holden (North West Durham) (Con)
The hon. Lady is making a powerful case for a very competitive sector, in which her constituents are competing with some of my constituents in Delves Lane in Consett who make the Elddis caravans. As she says, we are talking about a competitive sector, and the Government support is to prop up not a dying industry, but a thriving industry, in order to allow it to survive and succeed into the future.
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 the hon. Member for North West Durham (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.