Greggs the bakers hails government 'pasty tax' u-turn
Tuesday 29 May 2012
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."
Culinary experts in The Netherlands thought it was 'fresh' and 'tasty'
Of all the computers Apple has ever made there’s only one that Steve Jobs had to sell his car to finance
- 1 Nokia no more: Microsoft drops once-ubiquitous mobile name – in favour of its Lumia brand
- 2 Renee Zellweger on plastic surgery: 'I'm living a more fulfilling life and I'm thrilled that perhaps it shows'
- 3 Jimmy Carr's controversial Oscar Pistorius joke goes too far at the Q Awards
- 4 Australian café owner sparks debate after saying 'No' to having unruly children on premises
- 5 NHS staff banned from drinking tea or coffee on the job because it looks like they're not working hard enough
Renee Zellweger on plastic surgery: 'I'm living a more fulfilling life and I'm thrilled that perhaps it shows'
Isis releases first video showing the stoning of woman accused of committing adultery as her father shouts 'don't call me Dad'
Diwali: What is the festival of lights – and how is it celebrated around the world?
Nathan Cirillo: Final pictures emerge of soldier moments before he was shot dead by Ottowa gunman
Ottawa shootings: Terror strikes Canadian capital as attacks leave one soldier and one suspect dead
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Of course, teenage girls need role models – but not like beauty vlogger Zoella
Support for EU membership 'at highest level since 1991' with most Brits wanting to stay 'in'
Residents should throw a street party and mix with immigrant neighbours, councils told
Russell Brand threatened with arrest after filming outside Fox News headquarters
London bus driver 'kicks gay couple off for kissing'
£25000 - £30000 Per Annum: Clearwater People Solutions Ltd: Our large organisa...
£20000 - £22000 per annum: Ashdown Group: Systems Tester - Functional/Non-Func...
£350 - £360 per day: Ashdown Group: SQL Developer with T-SQL, Watford, Hertfor...
£65000 - £80000 per annum: Ashdown Group: Business Intelligence Consultant - C...