George Osborne under fire over 'pasty tax'


A group of MPs from across the political divide lined up today to urge the Government to rethink its proposals to slap 20% VAT on baked goods.

Chancellor George Osborne came under fire from the bakery industry, small businesses and pasty fans after unveiling proposals for a so-called "pasty tax" in his Budget.

Lib Dem Stephen Gilbert told MPs during a Westminster Hall debate on VAT on hot takeaway food, that the plans were unenforceable, undeliverable and created fresh anomalies.

The MP for St Austell and Newquay said: "The Government's proposals are unenforceable, they're undeliverable by business, they replace one set of anomalies with another, they are likely to be heavily contested and they will do significant damage to the Cornish economy and high streets across our country."

He reiterated industry concerns that the move could place 2,000 jobs at risk and put 300 bakeries under the threat of closure.

Mr Gilbert voiced support for the principle that baked goods were zero rated except where they were kept hot for consumption.

He said: "In short we are seeking to amend the Government's proposals to include the provision for baked goods to be charged VAT, only if they are kept in heated cabinets or in other paraphernalia that has the effect of keeping them hot for sale in the same way that the battered fish and chips would be kept hot for sale in the cabinet in fish and chip shops across the country."

The amendment, he argued, was "clear and consistent, it is enforceable by the revenue, it closes the loopholes exploited by the supermarkets and therefore raises the vast bulk of the revenue that the Treasury is seeking to obtain from this move.

"It creates the level playing field with the fish and chip shops that the Prime Minister rightly demands, it is deliverable and would be publicly welcomed by the baking industry."

Labour's John Mann (Bassetlaw) claimed the proposals were put forward by an "out of touch, anti-English, inept on detail Treasury team and Government" and urged them to "do the decent thing for England, get rid of this nonsense".

His party colleague Simon Danczuk (Rochdale) queried whether the move would affect samosas sold by businesses in his constituency, adding: "I get the impression that the Government just doesn't understand ordinary working people's lives ... I believe there is actually a snobbery with regard to pies, pasties and samosas."

Lib Dem Dan Rogerson (North Cornwall) spoke about the "cultural element" of eating pasties, stating: "There is also in Cornwall a feeling of the Government taxing something which in Cornwall people would eat instead of a sandwich."

Tory Sheryll Murray (South East Cornwall), who said she was a grand-daughter of a Cornish baker, raised concerns over the impact of the move on small businesses. The ambient temperature test was, she feared, a "highly ambiguous" term.

Exchequer Secretary to the Treasury David Gauke said it was a complicated matter, adding the Government was considering suggestions put forward and would respond to the extended consultation as soon as possible.

Current rules, he added, had been made complex and unfair by previous legal decisions and was one the Government sought to change to create a level playing field.

He said: "I have of course been listening to the contributions to this debate and will ensure that they are taken into account in the Chancellor's decisions."