Greggs the bakers hails government 'pasty tax' u-turn

 

Bakery chain Greggs was celebrating today following the Government's U-turn on the unpopular “pasty tax”.

Chancellor George Osborne caved in on his plans to charge the 20% rate of VAT on hot baked snacks such as pasties and pies.

The climbdown, which followed a campaign to scrap the tax that was supported by 300,000 signatures, saw Greggs shares rise 8% today.

Greggs chief executive Ken McMeikan said: "This is fantastic news for the customer more than anything.

"If we had to put up prices by 20% in the current marketplace when consumers are having a very difficult time we expected there would be an impact on sales but we don't know what it would have been.

"I think the Government deserves to be applauded."

The U-turn means the 20% tax will now be charged only on cooked pies and pasties that are kept hot, but not those that are still warm after coming from the oven.

Under previous plans in the Budget, savouries were to be charged VAT until they had cooled to ambient temperature.

But the pasty industry - including Greggs - claimed the plans were unworkable and marched on Downing Street to deliver a petition.

The furore proved a major embarrassment to the Government, which faced allegations that the hike would hit the poorest hardest.

The tax as previously planned would have hit Greggs' savouries range, which accounts for about a third of its sales. Some £30 million was wiped off Greggs' share price following the Budget in March.

The wider industry warned that the tax could cost at least 2,000 jobs.

Mr McMeikan said the new rules had cleared up anomalies in the tax system and would mean bakers who kept their savoury products hot would now not be able to avoid paying VAT.

He added: "It's a much clearer, workable way forward. We are very pleased for our customers."

The Treasury also scrapped plans for 20% VAT on static caravans and will instead charge 5% from April 2013 rather than October.

Graham Stuart, Tory MP for Beverley and Holderness, said: "We are delighted. It is great news for the manufacturing industry and also for the park and coastal communities all around the country."

The U-turns on pasties and caravans, which in total will cost the Treasury some £70 million, won praise from coalition backbenchers - some of whom rebelled against the Government in the Commons - but were mocked by Labour.

Shadow Treasury minister Chris Leslie said: "They are not U-turning out of the kindness of their hearts, it is because they are being forced to do so.

"What a chaotic way to run a country. How on earth can you have a budget process that unravels in a day when you've got this kind of shambolic business?"

A Treasury spokesman said: "The Budget announced a consultation on a change to VAT on hot takeaway food, designed to remove inconsistency and ambiguity in the system and level the playing field across the takeaway food market.

"After extensive engagement we have improved the policy, addressing practical concerns, ensuring that the new regime could be as simple as possible to apply."

PA

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksNow available in paperback
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Savvy Media Ltd: Media Sales executive - Crawley

£25k + commission + benefits: Savvy Media Ltd: Find a job you love and never h...

Austen Lloyd: Corporate Solicitor NQ+ Oxford

Excellent Salary: Austen Lloyd: CORPORATE - Corporate Solicitor NQ+ An excelle...

Reach Volunteering: Financial Trustee and Company Secretary

Voluntary Only - Expenses Reimbursed: Reach Volunteering: A trustee (company d...

Recruitment Genius: Senior Project Manager

£45000 - £65000 per annum: Recruitment Genius: This is a fantastic opportunity...

Day In a Page

In a world of Saudi bullying, right-wing Israeli ministers and the twilight of Obama, Iran is looking like a possible policeman of the Gulf

Iran is shifting from pariah to possible future policeman of the Gulf

Robert Fisk on our crisis with Iran
The young are the new poor: A third of young people pushed into poverty

The young are the new poor

Sharp increase in the number of under-25s living in poverty
Greens on the march: ‘We could be on the edge of something very big’

Greens on the march

‘We could be on the edge of something very big’
Revealed: the case against Bill Cosby - through the stories of his accusers

Revealed: the case against Bill Cosby

Through the stories of his accusers
Why are words like 'mongol' and 'mongoloid' still bandied about as insults?

The Meaning of Mongol

Why are the words 'mongol' and 'mongoloid' still bandied about as insults?
Mau Mau uprising: Kenyans still waiting for justice join class action over Britain's role in the emergency

Kenyans still waiting for justice over Mau Mau uprising

Thousands join class action over Britain's role in the emergency
Isis in Iraq: The trauma of the last six months has overwhelmed the remaining Christians in the country

The last Christians in Iraq

After 2,000 years, a community will try anything – including pretending to convert to Islam – to avoid losing everything, says Patrick Cockburn
Black Friday: Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

Britain braced for Black Friday
Bill Cosby's persona goes from America's dad to date-rape drugs

From America's dad to date-rape drugs

Stories of Bill Cosby's alleged sexual assaults may have circulated widely in Hollywood, but they came as a shock to fans, says Rupert Cornwell
Clare Balding: 'Women's sport is kicking off at last'

Clare Balding: 'Women's sport is kicking off at last'

As fans flock to see England women's Wembley debut against Germany, the TV presenter on an exciting 'sea change'
Oh come, all ye multi-faithful: The Christmas jumper is in fashion, but should you wear your religion on your sleeve?

Oh come, all ye multi-faithful

The Christmas jumper is in fashion, but should you wear your religion on your sleeve?
Dr Charles Heatley: The GP off to do battle in the war against Ebola

The GP off to do battle in the war against Ebola

Dr Charles Heatley on joining the NHS volunteers' team bound for Sierra Leone
Flogging vlogging: First video bloggers conquered YouTube. Now they want us to buy their books

Flogging vlogging

First video bloggers conquered YouTube. Now they want us to buy their books
Saturday Night Live vs The Daily Show: US channels wage comedy star wars

Saturday Night Live vs The Daily Show

US channels wage comedy star wars
When is a wine made in Piedmont not a Piemonte wine? When EU rules make Italian vineyards invisible

When is a wine made in Piedmont not a Piemonte wine?

When EU rules make Italian vineyards invisible