BAKERS have thanked North East customers after their support forced a Government U-turn on the dreaded pasty tax.
Greggs was among those with the most to celebrate yesterday as the firm’s share price rose 8.12%, recovering some of the £30m wiped of its value as a result of George Osborne’s Budget.
The firm faced financial troubles as a result of proposals announced in March to place 20% VAT on all food sold hot, ending a rule which had previously exempted pasties and sausage rolls. The Treasury has instead decided not to hit pasties with the tax if they are sold fresh from an oven but not kept on heated trays, as is the case in Greggs stores.
Greggs chief executive Ken McMeikan said the change in proposals shows ministers are prepared to listen.
He said: “They have listened to us, they took on our proposal and went with that. We don’t store savouries in a heated environment or use heat retaining packages for our savouries, we don’t cook to order, we don’t market them as hot, but if we did any of that then that would now be subject to VAT.
“The changes follow a tremendous showing of support. We are indebted to the people of the North East who signed our petition, to The Journal for its support and great credit to two MPs in particular.
“Mary Glindon and Ian Swales were tremendous in helping to get our alternative proposals listened to by the Government, also, the Duchess of Northumberland who personally signed the petition and lent her support.
“We couldn’t have asked for more, the people of the North East have been outstanding. But again, the Government has been good in seeing people wanted a better way forward.” Mr McMeikan praised Treasury minister David Gauke, who he said had shown a great willingness to listen to the arguments put forward.
The baking industry won its fight following a high profile campaign that was backed by thousands of people, including the many Journal readers who supported the Save Our Savouries campaign.
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 out of the oven. 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 and I think the Government deserves to be applauded.”
Michael Dickson, managing director at South Tyneside’s Dickson bakers also welcomed the news.
The firm collected 7,000 signatures in its campaign against the tax, bringing in support from former foreign secretary David Miliband along the way.
Mr Dickson said: “Bakers and members of the public across the UK have united in expressing their concerns to the Government, so it is great to finally see that Westminster has listened and brought some common sense to situation. It has been our aim since the initial announcement to have a tax system that is workable, where businesses like ours pay VAT on goods they sell intentionally hot but fresh bakery products sold from our deli counters – where it is impossible to determine with any accuracy whether these products are above or below ambient temperature – should remain exempt from VAT.
“I am pleased we have all finally arrived at the same solution.”
Caravan tax U-turn: Pages 34&39