British Baker has compiled the key dates in the pasty-tax campaign over the past two months, which have shaped the government’s decision to scrap its proposal for 20% VAT to be added to all hot takeaway bakery products.
Chancellor George Osborne announced the Budget, highlighting government plans to enforce a 20% VAT on hot takeaway products, including freshly baked products such as pies, pasties and sausage rolls. A consultation document entitled ‘VAT: Addressing borderline anomalies’ described the move to tax hot products such as pies and pasties, which would take effect as of 1 October 2012.
High street bakery chain Greggs experienced a £20m drop in value and share prices decline by 4% to 528p.
British Baker launched its ’Say NO to the 20% Pie Tax’ campaign at this year’s Foodex show at Birmingham’s National Exhibition Centre, in collaboration with the National Association of Master Bakers (NAMB). In a bid to overturn the proposed tax, the campaign included a dedicated online e-petition to drum up support among UK craft bakers.
Jim Paice, Minister of State for Agriculture and Food, spoke exclusively to British Baker regarding the government’s proposed plans.
Labour MP John Mann questioned George Osborne on the recent Budget in front of the Treasury Select Committee and asks him: “When did you last buy a Greggs pasty Chancellor?”, to which he replied: “I can’t remember the last time I bought a pasty in Greggs.” Mann retorted: “That kind of sums it up.”
Greggs chief executive Ken McMeikan appeared on BBC2’s Newsnight, saying he feared the changes would seriously damage the industry and cause job losses. “I think to a degree they have lost touch with the issue here – that for ordinary, hard-working families putting 20% on to a product that is freshly baked actually is going to make a severe dent in their pockets when they can ill afford it,” he said. “George Osborne, I think, would benefit from coming and spending time with us and spending time with our customers.”
Prime Minister David Cameron reminisces over his most recent pasty purchase, explaining it was from the West Cornwall Pasty Co at Leeds Railway Station and he opted for a large Cornish pasty. However, it came to surface that the bakery firm had not had a retail outlet at that location for over five years.
Labour party leader Ed Miliband decided to make a tactical visit to Greggs in Redditch with members of his party, purchasing eight sausage rolls.
British Baker and the NAMB’s joint e-petition received more than 500 signatures in its first few days.
The Sun launched its own campaign ‘Who VAT all the pies?’, including its ‘Save Our Savouries’ petition, as Greggs opened its 200th London store.
The ‘Say NO to the 20% Pie Tax’ campaign picked up pace and accumulated over 800 signatures on the e-petition since its launch a week before.
The Sun’s ‘Save Our Savouries’ petition reached the 100,000 signatures milestone.
The joint e-petition between British Baker and the NAMB reached 1,000 signatures, whilst thousands of supporters signed paper petitions in craft bakeries around the UK.
Phil Ugalde, founder of the Cornish Pasty Association (CPA) and owner of Bodmin-based Proper Cornish Food Company, spoke out about how the 20% tax on hot takeaway food could affect profitability and jobs in the region. He told British Baker: “The VAT will have a disproportional effect on the economy in Cornwall. The government has put millions of pounds into the Cornish economy making progress to raise its value, and now they are knocking us straight back down."
Liberal Democrat MP Stephen Gilbert (St Austell and Newquay) tabled an amendment to the 20% VAT in parliament, which was narrowly defeated by a slim margin of 35 votes. It was backed by the British Retail Consortium (BRC) in a bid to scrap the government’s planned £50m ‘pasty tax’.
Treasury minister David Gauke said current tax rules on hot food were “complex and unfair” because, while a fish and chip shop would have to charge VAT on a sausage roll, a bakery next door would be tax-exempt for selling the same snack.
More than 500 bakers from across the nation met at a demonstration in Westminster as over half a million signatures on petitions from British Baker, NAMB, CPA, Greggs and The Sun were handed in to 10 Downing Street.
McMeikan addressed the crowd dressed in bakers’ whites, saying: “We come here today with peaceful intentions but resolute determination to fight to the bitter end this proposed tax that will have a devastating impact on ordinary people who simply can not afford to pay 20% more for every day food. This government are showing themselves to be out of touch; out of touch with ordinary hard working people; out of touch with the challenges facing High streets; out of touch with the poorest in this country that need higher aspiration and hope not higher prices.”
Representatives from the industry, including NAMB chairman Mike Holling, Greggs chief executive Ken McMeikan, Mark Muncey, CPA chairman, Conservative MP George Eustice and Stephen Gilbert, were asked to meet with members of the HMRC to discuss the proposed levy of 20% VAT.
David Gauke, exchequer secretary to the Treasury and his team gave the craft bakers’ delegation an undertaking to take on board the points raised regarding concerns over the proposed levy, and indicated a final announcement would be made during the summer.
The consultation period closed on the ‘pasty tax’, which was extended from the initial date of 4 May.
British Baker named and shamed the MPs who voted against the first amendment to the 20% VAT on hot takeaway bakery products in parliament.
A group of MPs questioned the decision to put 20% VAT on hot baked goods in parliament, after the International Monetary Fund (IMF) called on the UK government to actually lower VAT to stimulate the economy. Labour’s John Mann claimed the proposals had been 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”.
After weeks of campaigning, the government performs a dramatic u-turn and Osborne announced the decision to revise plans to charge 20% VAT on hot takeaway bakery products.