Osborne out of touch: Greggs boss

First published in Business Daily

© Press Association 2011

THE boss of Greggs has accused George Osborne of having "lost touch" after the Chancellor admitted he could not remember the last time he bought a pasty from the baker.

Chief executive Ken McMeikan said ministers did not appreciate the impact changes to VAT rules would have on ordinary people.

The high street chain saw millions wiped off its shares after the Budget closed a loophole that has meant some hot takeaway foods, such as sausage rolls and pasties, escaped the duty.

The move - quickly dubbed the "pie tax" - sparked outrage, with critics pointing to the contrast of a cut in the 50p top tax rate.

Appearing before the Commons Treasury Committee, Mr Osborne was forced to confess he was not a regular customer of the chain. Asked by Labour MP John Mann the last time he bought a pasty there, he replied: "I can't remember the last time I bought a pasty in Greggs." Mr Mann retorted: "That kind of sums it up."

He ridiculed the Treasury consultation document setting out the new criteria on what qualifies as "hot" food for VAT purposes.

"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," Mr Mann said. "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, which is what your consultation paper does."

Mr Osborne insisted it was all straightforward. "We don't do a check on every single product sold. We actually come to a sensible arrangement between the Inland Revenue and the company about what proportion of their products are sold hot. There are perfectly sensible ways of working this out," he said.

Speaking on BBC Two's Newsnight, Mr McMeikan said 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."

Mr McMeikan said the Government was also inadvertently creating "huge complexity" over what constituted an "ambient temperature".

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