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.
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.
The hon. Lady has highlighted the importance of the caravan manufacturing industry, but it also depends on the people buying caravans 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?
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 caravans, 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.
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 borne out by 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.
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.
I congratulate my hon. Friend the Member for Kingston upon Hull West and Hessle (Emma Hardy) on securing this incredibly important debate. I want to reiterate some of the points she made.
We are incredibly proud of the caravan manufacturing industry in our neck of the woods. Those jobs are incredibly good jobs and they pay very well. In 2008-09, despite the previous Labour Government’s interventions to mitigate the damage from the economic crash, we saw tens of thousands of job losses in our region. The reality is this: most of those jobs have not been replaced. We have had investment from Siemens, and a massive £350 million investment in offshore wind turbine manufacturing, which we are incredibly grateful for as well, but the reality is that once those jobs are lost, we often never see them replaced. The frank truth is that we simply cannot afford to lose these incredibly good, well-paid, skilled manufacturing jobs in our region. As my hon. Friend has said, 90% of all static caravans are manufactured in Hull and the East Riding, 50% of all tourer caravans are manufactured in our area, and 30% of all motor homes as well.
We have got not much of an ask for the Minister. We need support, and we are very grateful to the Government for the support and the interventions they have made already, but we need that flexibility in the job retention scheme to be extended for this unique and specific industry, and we need the Government to think carefully about the business rate relief grants as well.
We will get over this, with support from the Government. We only need to get into next year and then the industry will absolutely be booming once again. My wife mentioned to me earlier today that she does not intend going abroad on holiday for quite some time, and it is true that staycations are going to be the thing in the next year or two. So, Minister, I finish with a plea—
Order. The hon. Gentleman must not say, “So, Minister”; the hon. Gentleman has to say, through the Chair, “Will the Minister”. I am sorry to stop the hon. Gentleman in his tracks just as he was about to make his plea, but if I do not get this right from Members with experience in this Chamber, we will lose the rules whereby we keep order here, and it is very important that that should be done, especially for new Members to understand how things are done properly. I would be grateful if the hon. Gentleman would just address the Chair.
Madam Deputy Speaker, you are absolutely right of course, and I take your advice on board, and apologise indeed.
Madam Deputy Speaker, I finish, as I was saying, on a plea to the Minister: if the Government support us now, that will be repaid tenfold in this manufacturing industry. Thank you very much indeed, Madam Deputy Speaker.
I congratulate the hon. Member for Kingston upon Hull West and Hessle (Emma Hardy) on securing this evening’s debate, and I congratulate the hon. Member for Kingston upon Hull East (Karl Turner) on his passionate speech. A number of colleagues were ingenious in their interventions, certainly my hon. Friend the Member for North West Durham (Mr Holden), because of Elddis in his constituency, but also the hon. Member for Strangford (Jim Shannon) and my hon. Friends the Members for Waveney (Peter Aldous) and for North Cornwall (Scott Mann). There is also, however, one Member present who cannot speak as he is the Whip in charge, my hon. Friend the Member for Mid Dorset and North Poole (Michael Tomlinson), who has Regal in his constituency. As we can imagine, my constituency of Stratford-on-Avon has some wonderful caravan parks and caravan holidays, and I urge anyone looking for a staycation, which the hon. Member for Kingston upon Hull East rightly reminded us about, to visit Stratford, or at least have it on their schedule.
I would like to take the opportunity to thank the hon. Member for Kingston upon Hull West and Hessle for her work, but also those in the public, private, community and voluntary sectors, and partners across Hull and East Yorkshire, for all their outstanding work and support during this difficult time. Hull and East Yorkshire, along with north Lincolnshire on the Humber south bank, is one of the UK’s most significant industrial and manufacturing clusters.
The hon. Member for Kingston upon Hull East rightly reminded us of the capabilities of Siemens Gamesa. Of course, there are Ørsted in the offshore wind sector, RB in health and Wren Kitchens in manufacturing, together with a strong small and medium-sized business base in the region. That has enabled the area to make real strides in improving economic performance.
As I said in my speech, I am aware of and grateful for the furlough scheme that the Government introduced, but I would really like to know from the Minister whether he will go to the Treasury and ask for the flexible furlough scheme that I mentioned in my speech, with the ability to continue to furlough workers right through until spring 2021 so that the industry can be ready to take off again with the new summer orders.
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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 to it 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 respond immediately 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 be 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 support that 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.
Since 2010, the employment rate in the Humber has increased by 4.7%. There is undoubtedly a bright and optimistic future for Hull and East Yorkshire and the wider Humber economy. The caravan manufacturing industry, with its long and proud history in Hull and east Yorkshire, can be an important part of that future. That is certainly how the Department sees it.
Thousands of people are employed directly in the caravan manufacturing industry and its associated supply chain, as we heard from the hon. Member for Kingston upon Hull West and Hessle. Theirs are important, skilled jobs, which make a significant contribution to the local and national economy. There is no doubt in my mind that the medium to long-term prospects for the industry are strong. The British public have a long-standing love affair with their caravans, which transformed the holiday habits of generations of families following the post-war boom in the 1950s and up to the present day.
I believe that there are exciting new opportunities for the industry, with the prospect of more families holidaying in the UK. The industry has shown that it can diversify its products to meet the changing demands of a new generation that wants to have that wonderful caravan holiday. There are new, modern luxury caravans and mobile homes that can provide higher-quality, safe-distancing accommodation as we transition out of the current crisis. They can also provide flexible and environmentally friendly leisure experiences, tailored to different tastes and pockets for decades ahead.
The industry is also a major exporter, as we heard from the hon. Lady, and it is well placed to exploit new potential overseas markets. However, I recognise that it faces challenges in the immediate future. I am well aware that large parts of the caravan sector have been furloughed and, regrettably, some people have been forced into redundancies. For caravan workers and their families, along with many others throughout the country who may have been furloughed or made redundant, I recognise that that must be deeply unsettling and worrying. The hon. Lady made a powerful point about the interventions that we are making in the economy.
However, in 2008, the caravan industry in Hull and the East Riding of Yorkshire was severely impacted by the financial crisis, as the hon. Member for Kingston upon Hull East said. It bounced back. Backed by the Government’s determination to do all we can to support the industry and its workers, it can bounce back again. There are early positive signs. Coachman Caravans in Hull recently reopened its factory following a temporary closure due to covid-19. It has followed the Government’s guidelines to restart production while keeping its staff safe. It is not alone. East Yorkshire-based Victory Leisure Homes is investing in immersive visitor experiences as it looks to capitalise on the future staycation.
We are listening to the industry, too. The Chancellor’s decision to take action on the rise in vehicle excise duty on new motor homes in the Budget demonstrated that the Government are determined to maintain a vibrant caravan and motor home industry in the UK. Members of Parliament, including the hon. Member for Kingston upon Hull West and Hessle, should be congratulated on highlighting the impact the proposed increase would have had on the industry.
I would like briefly to set out the Government’s business support package, which already supports the caravan industry and its workers. The Government are committed to doing all we can to support UK business through the current crisis. The Chancellor has announced an unprecedented package of support. To help firms continue to keep people on the payroll, the Government introduced the job retention scheme, more commonly referred to as the furlough scheme. Since it opened on 20 April, it has protected nearly 9 million workers and 1.1 million businesses, including in the caravan industry, through the crisis. On 12 May, the Chancellor announced that the scheme will continue until the end of October. It will continue in its current form until the end of July, and then changes to allow more flexibility, which many colleagues appreciate, to come in from the start of August. That flexibility will help to support furloughed workers as they return to work.