Finance (No. 4) Bill

Stephen Gilbert Excerpts

Wednesday 18th April 2012 Commons Chamber

[Karl Turner]

My hon. Friend makes an excellent point.

The Government’s impact assessment suggests that sales will drop by 30% as a result of VAT on static caravans. That would be disastrous for the static caravan manufacturing industry in Hull. I appeal to the Government to listen to the representations that have been made from both Members Opposition and Government and to think again. The measure will be disastrous for that industry.

[Stephen Gilbert (St Austell and Newquay) (LD)]

I shall speak to new clause 5, in my name and the names of all Cornish MPs. We have a Cornish coalition moving forward to try to protect the Cornish pasty. The proposals from the Government are, I fear, unfair and unworkable and will be bad for the economy of Cornwall.

Let us consider the economic impact first. Cornwall is already an extremely disadvantaged part of the United Kingdom, being the only part that qualifies for convergence funding, yet the 86 million pasties that are produced contribute £37 million directly to the Cornish economy, and the 40 Cornish Pasty Association members turn over £150 million a year.

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

Does my hon. Friend agree that the small bakeries in our town centres and villages are keeping or helping to keep those town centres and villages alive? This measure could push them beyond economic viability.

[Stephen Gilbert]

My hon. Friend makes an entirely relevant point. Some 2,000 people in Cornwall are employed directly in the production of the 84 million pasties a year and that 2,000 does not count the many scores of others who work in bakeries on the high streets of many towns across Cornwall.

We know from YouGov research that 32% of people said that they would stop buying pasties altogether if the VAT extension went forward. Let us assume that one in three is too high a number and that there is a 20% fall in sales. What will that mean? The Cornish pasty producers will lose £30 million a year, £7.5 million will be lost in secondary spend in the Cornish economy and 400 jobs will be lost directly in the industry.

[Alison Seabeck (Plymouth, Moor View) (Lab)]

The hon. Gentleman will appreciate that we also have a pasty industry in Devon. He is talking about job losses and I have already come across workers for pasty companies in Cornwall who live in Plymouth and who are already on a three-day week. It is already having an impact and it will get much worse.

[Stephen Gilbert]

The hon. Lady makes an accurate point. Pasty producers tell me that they are already feeling the squeeze. They are feeling the same pressures as us all through fuel costs and so on. They simply do not feel that they can reduce the net price and therefore absorb that extra 20% so there are serious concerns that it will add problems to an already damaged industry.

The Government’s change is supposed to be about simplification and replacing the subjective test of the purpose of selling the pasty under the current VAT rules with a much simpler test, but in fact we are only replacing one set of anomalies with another. VAT will be charged if the pasty is bought hot but not if it is bought cold. Will we have an army of HMRC inspectors going around with their standard issue thermometers and testing pasties?

[Nadhim Zahawi]

In my constituency, the Subway franchisee sells cold sandwiches without VAT and must charge VAT when the sandwiches are heated. Spudulike has to charge VAT. The idea that when one serves hot food one has to charge VAT—even in the chip shop in Stratford—is only about levelling the playing field—

[The Second Deputy Chairman of Ways and Means (Dawn Primarolo)]

Order. That is not brief enough and interventions should ask a question.

[Stephen Gilbert]

I understand the point that my hon. Friend is trying to make, but there is a big difference between eating cold fish and chips, which would not be very pleasant, and eating a cold pasty, which, when it is a good pasty, can be enjoyable. My hon. Friend will also see in the amendment paper that I have not tried to oppose any simplification in this area. I have tried to be helpful to the Government by suggesting that no VAT should be charged on products when no effort is made to keep the product warm. By phrasing it in that way, my intention was to encourage the Government to think again about whether we can achieve the aim of hitting the sale of rotisserie chickens while keeping an exemption for baked products. Perhaps when he sums up, the Minister will be able to tell me that he has considered my suggestion and that there are some good reasons why he would agree with me, but I doubt it.

This unfair tax unfortunately plays to the perception that some Government Members do not understand what day-to-day life is like for millions of people in our country. It plays to the perception that an attack is being made on quite an iconic Cornish dish. This is not just about the Cornish pasty, but about the meat and potato pie of my hon. Friends in the north and, as we heard from the Opposition spokesperson, the Scottish bridie. I simply think that the Government do not understand that millions of people eat those every day as part of their routine. We need to reconsider whether we have the balance right.

When my right hon. Friend the Chancellor visited Cornwall in 2008, he said:

“Cornwall is having a tough time with the economy and businesses are finding it hard. There are things that the Conservatives can do.”

I am desperately proud to be part of a coalition Government who have introduced a local enterprise partnership in Cornwall, produced an enterprise zone in Newquay, taken 19,000 Cornish people out of income tax, delivered a council tax freeze and made sure that Cornwall is the first part of the country to have access along its entire length to superfast broadband, but, when my right hon. Friend the Chancellor says that there are things that the Conservatives can do, I ask, please, that this is one thing that the coalition Government do not do. I shall request a separate Division on new clause 5.