Hot Takeaway Food (VAT)

Sheryll Murray Excerpts

Wednesday 23rd May 2012 Westminster Hall

[John Mann (Bassetlaw) (Lab)]

Thank you, Mr Scott, it is an honour to serve under your chairmanship for the first time. I congratulate the hon. Member for St Austell and Newquay (Stephen Gilbert) on securing the debate and on his accurate description of the problem that the Government have got him into. I appreciate his panic, because with this betrayal of Cornwall one almost expects Mr Sacha Baron Cohen to appear at the door.

For 100 years, the Liberals have been out of power, then the first time that they can get into a real argument and debate it is on the destruction of the core Cornish industry. One could not make that up. Of course we know why it has happened. When I asked my innocent question of the Chancellor in the Treasury Committee, he was somewhat stumped by the fact that there might be a problem. The reason he was stumped is that he is not a man who pays any attention to detail—that has been proven time and time again. Ask him a factual question, he gives a vague answer. That is a problem for someone who is the Chancellor of the Exchequer meddling with detail. There is good reason why no Chancellor has meddled with such details since 1984—because the detail is so complex that whatever rules they come up with, it is possible to find a way round them. I shall explain some likely scenarios in a minute.

What has been the Government’s stock response, fed to their loyal Back Benchers over the past month or so? Fish and chips. Yet, coming from the country’s heartland of fish and chips, I do not recall anyone in my lifetime who eats fish and chips cold. Unless the Government surreptitiously intend to continue to spread VAT to include cold foods, in which case the nation would like to be informed of the plan, they need to reverse the absurd decision that was made.

Let me give some examples, because it is not only Cornwall that has been betrayed—England has been betrayed. I mentioned Bakewell pudding in the Finance Bill Committee yesterday, and Ministers started muttering about almonds. Attention to detail is everything for Treasury Ministers. When I talk about the Bakewell pudding, I am not talking of a processed derivative created by a Mr Kipling, sold in supermarkets with almonds on top and bearing no comparison to the traditional English Bakewell pudding. The Bakewell tart is an entirely different product and, because it is cold, is zero-rated. No, I am talking about the Bakewell pudding, the quintessential English product made as it has been for many centuries, using traditional methods, of which Prince Charles and many others, myself included, would wholly approve—doing things in the traditional way, passing on the skills needed to create the product. Now, solely because Bakewell pudding is made in the traditional way, it will be taxed at 20%. If the manufacturers of the Bakewell pudding were to use processed ingredients, they would be able to concoct a product—vastly inferior, but in some way with the same name; as I pointed out, a major manufacturer has already done so—which would be zero-rated, but we lose the English tradition, we lose the real food. There are other such examples.

By definition, the businesses involved are small businesses. Those traditions, kept in the traditional way, cannot be transported into some mass-produced product sold in supermarkets throughout the country and the world. That is the point and that is what we will lose if those traditional producers are disadvantaged by being charged 20% VAT under this cack-handed measure.

Let me give another example. There has been a rush to eat pasties among senior politicians, including the Chancellor. The Prime Minister allegedly once ate a pasty on Leeds station—a station I know extremely well, coming from Leeds—but from a shop that had closed two years previously, so it was a time-lapsed pasty which, by definition, must have gone cold in the time. But he ate the pasty.

Let us take a railway station such as Knutsford—let us assume that there is a station there, although I have not been to the Chancellor’s constituency—or think of our own stations. We might have a traditional English baker outside the station, baking away, producing Cornish pasties and the rest. Currently, those products are VAT-free, but they will now have the 20% applied, although the Government are still looking at how to define their new criteria. Inside the station we have a café; the baker passes the baked products on to the café, which sells them, and the Government might say, “Ah, hot product, it has got to be VAT-ed.” But how do we do that? It has been passed on and is no longer baked on the premises, so it must be zero-rated. We must make sure that there is no anomaly.

What about seats? If there are seats, we might apply VAT because it is a café. Yet it is in a railway station, and the railway station decides in this beautiful temperature to have some seats outside the café. The Government have their test of ambient temperature, so we have ambient temperatures inside and outside the café—I hope that hon. Members will go to Bakewell and see the on-street seating available for those who wish to purchase Bakewell puddings there. So, inside and outside, there are different ambient temperatures—ah, clever Government! We might therefore ensure that all the chairs are incorporated inside the café, but it is a railway station and Network Rail has put a couple of benches outside. Will we have different temperatures between the railway bench and the café seats, and between the café seats inside and outside? There is also the baker who serves inside and the baker who has a little hatch and serves outside. Such examples show precisely why since 1984 the concept of ambient temperature has been ducked, as Treasury officials have tried to persuade every single Chancellor since then to extend VAT. Of course, now that has happened, although things could get worse.

I know that the Chancellor likes his football, and the nation groaned during the Champions League final. People support their own team, but the Prime Minister, who is allegedly an Aston Villa fan, was cheering Chelsea. That is a contradiction. As the cup was lifted, the Minister for Sport and the Olympics was, rightly, in his place, and who was alongside him? The Chancellor, the new Chelsea supporter. When politicians are having problems, they pretend to support a football team that is winning. If it loses, they disappear into the hospitality room, but if it wins, they are there, beaming. I know what the nation said when it saw him on their telly screens. The Chancellor’s local team is Macclesfield Town, and I happened to be there for a match in January.

[Sheryll Murray (South East Cornwall) (Con)]

Will the hon. Gentleman explain the connection between hot baked food and football matches? I would be fascinated to hear it.

[John Mann]

I am about to do that. Macclesfield Town’s stadium, like every football stadium, has a pie shop, but the Chancellor does not know that. When he goes to a football match, he is in the corporate hospitality room, so VAT is not an issue because he does not pay, just as he does not pay for his ticket or his travel, but that is another issue. The Chancellor does not pay for corporate hospitality, so whether something is VAT-ed does not matter to him. But I was stood there, hungry, having gone to Macclesfield to watch a cup match between Macclesfield Town and Bolton. I went to the pie stall, where pies are heated up on the premises. Will they be VAT-ed or not? If I buy a takeaway, will it be VAT-ed or not? If I heat it up in a microwave in the corner, will it be VAT-ed or not? If the shop staff heat it up in the microwave, will it be VAT-ed or not? Will there be a fancy process to avoid the VAT? It is fairly obvious how that can be defined.

The Government could introduce criteria for seating, so that if I sit down in the nice seats—there are not many seats at Macclesfield Town—I might pay VAT, but not if I stand up, as I did. Those anomalies will arise whatever way the Government move. My appeal to this out-of-touch, anti-English, inept-on-detail Treasury team and Government is to do their friends the Liberals a favour. They are up 4% in the north of England, and 2% in recent elections in my area, but the Government should give them a fighting chance in the south-west, and do the decent thing for England: get rid of this nonsense, and introduce a system that the country wants, which is no VAT on pasties, and no VAT on Bakewell puddings. Keep things as they are.

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[Sheryll Murray (South East Cornwall) (Con)]

It is a pleasure to serve under your chairmanship, Mr Scott, and I congratulate my neighbour and hon. Friend the Member for St Austell and Newquay (Stephen Gilbert) on securing this debate.

As the granddaughter of a Cornish baker, nobody knows more than I what it is like to make a pasty. Yes, I know the ingredients, and yes, I can crimp a pasty. Today, I speak on behalf of my constituents in South East Cornwall who are all exceptionally concerned about the proposed VAT on hot baked food, although of course that is not restricted to the pasty.

The only time that I lived away from Cornwall was when I spent some years in Stoke-on-Trent, where the meat and potato pie was very popular. However, the pasty in particular is a big part of the famed Cornish heritage and history, of which we are all so proud. I will be discussing my deep concerns about the introduction of VAT on pasties and other hot foods, because this tax will affect many small businesses such as traditional bakeries in my constituency and will no doubt have knock-on effects on the already struggling town centres. In South East Cornwall, there are six very small town centres, which are seeing the life drained from them. If we see the bakeries decline as well, we will be going completely against the principle of what Mary Portas has been trying to do.

[Ian Swales (Redcar) (LD)]

Does the hon. Lady agree that one of the unintended consequences—I believe that they are unintended—is that small bakers will be further hit by this tax applying to freshly baked products such as scones, doughnuts and muffins? They happen to be warm because they have just been baked, but are a whole category of food that clearly is not intended to be eaten hot. The tax will further penalise those bakers as against supermarkets.

--- Later in debate ---

[Sheryll Murray]

That was an issue that I intended to come on to, because where is the definition of baked food? Will we find that we are paying VAT on hot bread that comes out of the oven? I urge my hon. Friend the Minister to consider all these implications.

I feel uneasy about how the tax will be implemented with the highly ambiguous term “ambient temperature”. That is variable and therefore very difficult to enforce. Thirteen businesses in my constituency are members of the Cornish Pasty Association. That is just over a quarter of the whole membership. Many of those are small businesses and they are mostly family-run businesses. They have spoken to me and to my hon. Friends the Members for Truro and Falmouth (Sarah Newton) and for Camborne and Redruth (George Eustice), who would have loved to be here today.

I shall point out one particular case. Mr Richard Rice is the director of Dashers Pasties, a pasty shop in my local town of Torpoint. He spoke to me about his concerns. It is a small business, with an annual turnover of about £160,000 a year. Torpoint boasts two supermarkets, and Mr Rice is concerned that the supermarkets may be able to afford not to pass the VAT on to the consumer, whereas local businesses such as Dashers will have to charge 50p or 60p more per pasty, which is a massive increase in the price of the product. Bakers are already having to absorb ever-increasing utility bills and the rising cost of ingredients. They believe that the only winners will be the supermarkets, which have the ability to keep their prices low.

My hon. Friends the Members for Truro and Falmouth and for Camborne and Redruth also met people from Rowe’s bakeries, who gave them a similar message. That sentiment was shared by the chairman of the Cornish Pasty Association, who led the demonstration earlier this month

“to raise awareness of the greater implications”

of this tax. A petition has gained 500,000 signatures. That roughly equates to the population of Cornwall. I hope that my right hon. Friend the Chancellor of the Exchequer and the Minister can see the knock-on effect that the tax will have and how people will clearly be disadvantaged.

When considering how the Government will implement the changes, we meet a whole series of problems—things that need to be simplified. “Ambient temperature” is a dependent variable and very difficult to enforce against. It would result in products being taxed based on the weather and heat retention, as we have heard from many other hon. Members. That could lead to significant legal action while tax inspectors and local hard-pressed pasty makers argue over the tax due.

I believe in a much simpler distinction—that a baked product is VATable only when an effort has been made by the vendor to keep the product hot. I signed an amendment to the Bill expressing that sentiment after the Budget was announced. The tax code is complicated enough. I hope that the Chancellor will consider that proposal as a serious alternative to deciding whether VAT is chargeable based on the ambient temperature. On 28 March, I wrote to the Chancellor, outlining my views and saying:

“Surely the last thing we need is to employ an army of thermometer wielding tax inspectors poking our pasties to see if they have cooled enough”.

I still believe in that sentiment and I hope that the Chancellor will consider what I have said today.

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[Cathy Jamieson]

Indeed. That highlights the powerful case that, initially, the Treasury may have viewed the proposal as something that could be taken off the shelf, dusted down and presented as a way to correct some anomalies. However, as my hon. Friend the Member for Rochdale has argued, it did not consider the detail and the issue has become a problem. It has become a problem in relation not only to pasties—I am aware that we cannot deviate too far from the issue under discussion—but to the proposals for VAT on work on church buildings, on which there has been some movement.

Moreover, last night, multiple petitions were presented in relation to the caravan tax, and yesterday, I, along with a number of other Members, met representatives from the newly formed—it was formed in response to Government proposals—UK Specialist Sports Nutrition Alliance, which has pointed out that some of its members’ products do not appear to fall under the categories for which VAT was originally intended to be charged.

This series of Government proposals do not seem to have been properly thought through. Their impact on our high street has not been considered. That is important. We want to see people shopping on their high streets and spending what cash they have on local businesses in particular, and to ensure that our high streets continue to thrive. When the British Retail Consortium, the Association of Convenience Stores and the whole range of organisations that represent the baking industry, as well as ordinary people, think that the Government have got it wrong, it is time for the Government to think again.

I will not speak for much longer, because I want to allow the Minister as much time as possible to respond to the debate, but I want to return to the widening scope of things affected by the proposals. The hon. Member for St Austell and Newquay suggested during his opening speech that the Government were prepared to listen, but I am disappointed to say that I have not found that to be the case. We have raised the issue on the Floor of the House and have continued to raise it and a number of other issues in the Finance Bill Committee, but on every occasion—no matter what the subject—when we have asked the Government to go away, make another assessment, come back with a report and consider the implications, they have not done so.

[Sheryll Murray]

Does the hon. Lady not accept that there is a consultation, so the Government are listening, and that we cannot expect them to respond until they have the results of that consultation?

[Cathy Jamieson]

I understand the importance of consultation, but consulting on something that will happen after the fact—when the Government say that they are going to do something and then ask people about it—is not necessarily the best way to do it. Those representatives of sports nutrition companies whom I met yesterday told me—the Minister will correct me if I am wrong or have misunderstood—that no one from that industry was consulted when the impact assessment was done.

There are issues to address. I am trying not to make this an attack on the Government, but I am disappointed at the lack of movement. I understand that consultations are important and hope that the Government will listen and consider making some of the changes that have been asked of them today. The torrid headlines that the Government had to endure when their proposals were first announced should make them realise that the country wants them to do something and change their plans. My favourite headline read: “Half-baked Tory tax a mistake-and-bake”. It was indeed a mistake—let us try to fix it.