Osborne caves in on pasty gate

LONDON — UK Chancellor of the Exchequer George Osborne yesterday reversed a plan to make hot takeaway snacks such as Cornish pasties subject to value-added tax (VAT), one of the most controversial measures in his March 21 budget.

The UK treasury said last night it had dropped the proposal to impose the sales tax at 20% on hot baked snacks such as pasties and pies, to align them with other hot takeaway food. It also amended a second budget plan to put the full rate of VAT on “static caravans”, mobile homes that are left on the same site. Instead, they will be subject to a tax of 5%.

“The government has done the right thing,” treasury minister David Gauke told BBC television. “We’ve listened to the concerns the people have raised.”

The original hot-snacks proposal drew anger from bakers including Greggs, the UK’S biggest such chain. It sparked the “pasty gate” affair, in which Prime Minister David Cameron tried to deflect the complaints and declare his enthusiasm for the west-of-England snack consisting of meat and vegetables baked in a pastry case. He had spent holidays in Cornwall and his youngest child was born there, and he told a news conference of the last pasty he had eaten, a large one from a stand at Leeds railway station in Yorkshire.

Local reporters discovered it had closed at least two years ago. A day earlier, Mr Osborne said he could not recall the last time he had eaten a pasty from Greggs, drawing derision from the opposition Labour Party.

Greggs rose 5,6% to 492,8p at midday in London, having earlier surged as much as 9,3%.

In a second policy reversal, Justice Secretary Ken Clarke said he would make “substantial changes” to his proposals to have evidence from security agencies at court hearings given in secret. Bloomberg