UK Politics

'Pasty lover' David Cameron defends VAT hike

David Cameron has said he "loves a hot pasty", but defended the decision to slap VAT on all sales of the snack.

The prime minister told a press conference ministers had to make sure the rules were "fairly applied".

He said small businesses had paid the tax on their takeaway food for 20 years, but big supermarkets had not.

The move, announced in the Budget and dubbed the "pasty tax", would see all food sold "above ambient temperature" carrying 20% VAT.

It is not charged on most food and some drinks - which are described as "zero-rated" - but it is payable on takeaway food sold to be eaten hot.

However, baked goods which are put on display warm and subsequently cool down are also zero-rated, and the government says some retailers and bakeries have argued their food is sold hot to improve its appearance, or to comply with health and safety regulations - not for consumption that way - and therefore should not attract VAT.

'Pasty eater'

At a press conference for the London Olympics, Mr Cameron said that since VAT on takeaway food was introduced there had been "a number of businesses trying to find ways around that rule and fighting court cases".

"What the government has to try and do is make sure the VAT rules are fairly applied," he said.

"I don't think it's fair, for instance, that the small businessman running the fried chicken takeaway is having to charge his customers VAT, but the big supermarket is not having to pay VAT for their fresh hot chickens."

The PM continued: "I am a pasty-eater myself. I go to Cornwall on holiday. I love a hot pasty.

"I think the last one I bought was from the West Cornwall Pasty Company. I seem to remember I was in Leeds station at the time and the choice was whether to have one of their small ones or large ones, and I have a feeling I opted for the large one and very good it was too.

"But I would be pretty sure that would be already paying VAT because it was hot takeaway food."

It later emerged that the West Cornwall Pasty Company outlet in Leeds station shut down several years ago, although another store selling pasties at the station - Cornish Bakehouse - closed last week.

The prime minister's love for a pasty does not appear to be shared by his chancellor.

When George Osborne appeared before the Treasury select committee on Tuesday he said he could not remember the last time he had bought one from the food chain Greggs.

The company has led criticism of the pasty tax, and its chief executive Ken McMeikan told the BBC's Newsnight on Tuesday it 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."

If the new rules are passed, all food sold at "above ambient temperature" will attract VAT - although the definition of that temperature has not so far been made clear.

'Sausage rolls'

Mr McMeikan said the issue would create "huge complexity".

During the select committee hearing, Labour MP John Mann agreed, saying: "With the weather as it is today, a lukewarm pasty from Greggs is not VAT-able because the ambient temperature outside is the reference point, whereas if it is the middle of winter and freezing cold it is VAT.

"It is an extraordinarily complex situation when you are having to check with the Meteorological Office on whether or not to add VAT on pasties in Greggs."

Pressed on whether the move was fair, Mr Osborne said: "If it's cold when you buy it, it will not be VAT-able."

At the same time as Mr Cameron was discussing the pasty tax, Labour leader Ed Miliband, shadow chancellor Ed Balls and shadow Treasury minister Rachel Reeves were visiting a Greggs shop in Redditch, Worcestershire.

Mr Miliband said they had "popped in to buy some sausage rolls" and said the pasty tax was yet another example of the government "hitting people's living standards".

"And the chancellor's excuse? Well, he says you can buy them cold and you can avoid the tax. It just shows how out of touch this government is," he said.

Mr Balls, who is training for next month's Virgin London Marathon, said sausage rolls were part of his regime.

He said: "You need to make sure you keep your carbohydrates up - that's what we're doing today - even if it's costing people quite a lot more in tax to come here in the future."

Asked if he would celebrate crossing the finish line with a couple more of his beloved energy-rich snacks, he answered: "Well, Greggs sausage rolls - who can beat them?"

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