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Business Comment

James Moore: Hot and tasty, and that's just the shares

Outlook Go Greggs! The baker's market value increased by the thick end of £30m after the Government backed down on plans to add a bit less than 30p (give or take) to some of its more popular products.

In such turbulent times it's nice to have some sort of normality. And Pastygate has provided some of the most entertaining silliness we've seen for some time, in a country which excels at it.

The hated "pasty tax" would have imposed VAT if the pastries were sold above a certain temperature (thus classifying them as takeaway food). Under the compromise VAT is only paid if the retailer cooks on demand. If you turn up at the right time and the pasty just happens to be hot, well, lucky old you.

Having bandied around threats to fight to the bitter end (aren't pasties supposed to be savoury?) Greggs was busy being conciliatory yesterday, as well it might.

The compromise is tailor-made for a company that can afford expensive lobbyists to help it get its way. Greggs bakes its pasties, its sausage rolls and the rest in the morning and doesn't store them under hot lights. You'll only get them warm if you turn up early. "This changes nothing operationally," a spokesman haughtily declared of the Government's U-turn.

But smaller firms without the services of influential lobbyists might still find it all rather tough to swallow. Cue attempts to evade the tax by, say, baking fresh batches every 15 minutes or so (when required). Or by posting baking times on the wall. Cue also an army of snoops – sorry, VAT inspectors – to cast eagle eyes over such practices to see if they violate Clause 3, Paragraph 12 of the new rules. Or something like that. Pastygate may be over, but the silliness is sure to continue.