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The UK’s biggest bed manufacturer is campaigning for value added tax to be ditched on beds in an effort to boost sales from cash-strapped consumers and give a fillip to UK manufacturing.
Silentnight, which sells 550,000 beds each year, said the health benefits of sleep are such that divans, headboards and mattresses should be considered in a similar manner to health products and services, which are subject to lower rates of VAT or exempt altogether.
It is calling on the government to reduce or eliminate the headline 20 per cent VAT rate on beds.
“The bed is a health product,” said Adrian Fawcett, executive chairman, arguing that more rest could help reduce stress-related illness, the number of traffic accidents and even divorce rates.
The appeal for reduced VAT also reflected his hope that politicians would be willing to show support for UK manufacturing after Ed Miliband this month called for a government-backed “Made in Britain” mark to inject more patriotism into British economic policy.
The campaign comes as Silentnight promotes its products as health and lifestyle goods rather than just furnishings following a period of restructuring after it was bought out of administration by a private equity firm last year.
“It is a necessity, but a replacement product, and you can delay the purchase,” said Mr Fawcett, who welcomed the increase in personal tax allowances and reduction in corporation tax announced in the Budget last week.
The company had been grappling with a pension deficit of £100m when it was bought by HIG Europe, an arm of Miami-headquartered HIG Capital, for an undisclosed sum.
However, its exposure to the homeware sector – one of the hardest-hit areas on the high street as household budgets came under pressure – had also hurt revenue.
Sales fell 3 per cent to £107.1m in the 12 months to January 30 in 2010.
Bed and bedding manufacturers were also vulnerable as their fortunes are linked to that of the muted housing market, added Mr Fawcett.
He has slimmed the business down, closing one of its three factories, but said changing lifestyles and increased life expectancies should still encourage people to replace their beds.
The company has updated the logos and ranges of its five core brands and is targeting certain products for particular age groups
“People are buying beds for different reasons than before and the way households have changed is very important for us,” said Mr Fawcett.
The less expensive Layezee brand, geared towards younger customers, has been updated to offer a wider range of designs while the company’s premium brands are being targeted at older consumers.
Silentnight has also strengthened its online presence by allowing direct sales from its website, instead of only through retailers, from next month.
The bedmaker, which has just over 1,000 employees, hoped to reverse some of the 220 job losses that were implemented last year.
Mr Fawcett added that the increasing presence of computers and televisions in bedrooms, turning them into more public living and entertaining spaces, would also influence consumer buying.
“Technology has transformed the use of bedrooms,” says Mr Fawcett. “It [has] become a living space and beds have moved from being a functional product to being a lifestyle, design-led product.”