Not for many years has a budget courted the kind of controversy and debate that George Osborne’s triggered almost exactly two months ago.
Budgets are supposed to be events that come, endure a couple of days of debate, then go. Not so this time. The fact that, all these weeks on, journalists and MPs alike are still grumbling about Osborne’s measures is a sign of just how badly both their content and presentation were handled.
If David Cameron finds himself as a one-term Prime Minister, many will look back to 21 March 2012 as the day when the seeds of his, and his government’s, demise were planted.
First there was the pasty tax which, as Geoff Lawler, former Conservative MP for Bradford North, noted on the Guardian Northerner just a few weeks ago, demonstrated a worrying lack of
astute advisers at No.10 and the Treasury who either know, or genuinely understand, what it is like to consider that 20p on a pasty actually is a lot.
Then there was the so-called granny tax, a measure that saw the Chancellor commit the kind of political mistake that all politicians in their right mind avoid: annoying the pensioner vote, a part of the electorate that can make life very uncomfortable for governments, with its traditionally high turnout at election time.
But despite the political headaches that both these initiatives have caused for ministers, could the more interesting battle ahead lie in a third Budget blunder: the decision to levy VAT on static caravans? Innocuous on the face of it, this is a measure designed, according to the Budget Red Book, to close a taxation loophole, bringing the sector into line with mobile caravans?
No, it doesn’t sound like a change that will have a direct impact on the mass of the electorate. In large part, it is unlikely to have a personal impact on people’s wallets in the same way as changes to income tax, VAT on hot pasties or increases in fuel duty. But what it does have, is a crucial element of genuine cross-party campaigning calling on the Government to reverse its decision.
We have in the UK a political system almost designed to prop up combative politics. One look at the House of Commons, with opposition and Government sat opposite each other, eyeball to eyeball, demonstrates that the mother of Parliaments was designed not for consensus building but for lively debate.
Likewise, we have a media which enjoys nothing more than a good old argument between opposition and Government to fill our pages and websites. It is for this reason, because the system itself is so stacked against consensus politics, that when it is found it has so much force. One only has to look at Tuesday’s joint article for the Guardian Northerner by a Conservative Minister and a Labour Mayor of Liverpool to understand that when parties come together it makes for a more persuasive case.
Bring on static caravans. As this article was written, more than 70 MPs from all parties, and 22 from the north alone, had expressed their support for Parliamentary Early Day Motion 31, outlining concerns over the economic impact the measure would have on growth and calling for ministers to scrap the plans. Unable to claim that it the controversy is merely got up by the Labour party seeking to gain cheap political points, the Chancellor finds himself in a pincer movement, caught between opposition and Government MPs.
Why then do I write about this on the Northerner? In the words of the TV meerkats, it’s simples. Statistics show that 95% of all UK static caravans are manufactured in east Yorkshire and hundreds of thousands are sited and very well-used along our northern coasts. With the European-wide buzzword right after the election of President Hollande in France now “growth”, what were ministers thinking when they decided to proceed with a policy which HM Revenue and Customs has forecast will lead to a 30% reduction in demand for such caravans and many thousands of job losses?
How does this one square with the need to grow out way out of recession, particularly across northern England?
In the last Labour government, the former Foreign Secretary, Margaret Beckett was famously a keen enthusiast for caravan holidays. One doubts that she would have let such a change go by unchallenged. The question is: who in Government will now champion the caravanning industry?
In a statement a spokesperson for the Treasury tells the Guardian Northerner:
Over time significant anomalies have developed in the VAT system, causing very similar products to be taxed very differently. The zero VAT rate was only ever meant to apply to residential caravans, so this change brings static caravans in line with other holiday caravans, which are already subject to VAT. The Government is currently consulting on the implementation of the change and has extended the consultation period until 18 May. We are particularly keen to use the consultation to ensure that the new rules are workable and simple for businesses to administer.
It is not however a view shared by Diana Johnson, Labour MP for Hull North and Andrew Percy, Conservative MP for Brigg and Goole who in a joint article today for the Northerner argue
In the debate about how to achieve sustained economic growth there is much upon which we disagree. The dangerous proposal to put VAT on static caravans is, however, an issue that unites us across the party divide.
The Caravan Tax must be stopped now, before it can cause huge damage to an important private sector industry that has been working hard to recover from the global downturn of 2008/09.
It would be perverse for any Government keen on creating the conditions for growth, and which speaks so often about the importance of ‘rebalancing the economy’ towards the North, manufacturing exports and private sector jobs , to do such damage to all these objectives. All for the sake of a tax adjustment of no real importance.
What do you think? How will the proposed tax affect the northern economy?