George Osborne's 'Pasty Tax' threat to Devon and Cornwall jobs

Jobs are under threat in the Westcountry after a "pasty tax" emerged from George Osborne's Budget.

The Chancellor is considering slapping VAT on sales of the iconic dish, a cornerstone of Devon and Cornwall life, meaning the cost would rise by one-fifth, or add 50p to a £2.50 pasty.

There was anger across the region last night as pasty- makers, bakeries and politicians rounded on Mr Osborne's tax raid.

Hundreds of disgruntled pasty lovers signed an online petition and joined Facebook campaigns urging the Government not to press ahead with closing a tax "loophole". MPs told the Commons the move would undermine a sector worth £150 million to Cornwall alone.

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Councillor Alex Folkes, deputy leader of the Lib Dem group on Cornwall Council, said: "This ill thought-out 'pasty tax' will cost Cornwall jobs. As well as being a cultural icon and great food, Cornwall's pasties are one of only a few successful manufacturing industries in Cornwall. At a time when the Chancellor should be doing all he can to save manufacturing jobs, this proposal risks many of them disappearing."

On Wednesday, Mr Osborne announced VAT at 20 per cent should be added to take-away hot food – including chicken rotisserie, sausage rolls and pies – sold at fast-food restaurants, bakeries and supermarkets.

A 50-page Treasury consultation document, posted quietly on the department's website, states that any food hotter than surrounding room temperature when handed over the till should be subject to the sales tax. The note mentions pasties by name, which the Chancellor did not in his Commons statement.

But the same selection of products – including the pasty – can be sold cold without VAT applying. Bakers yesterday called for the Chancellor to give the pasty the same status as baked bread, which is exempt from the tax grab.

Take-away pasties are a central feature of Westcountry holidays and staple meal for many workers stretching back to its origins in the tin-mining industry. The public consultation ends on May 4.

Mr Folkes added: "Adding 20 per cent to the cost of a pasty will hit sales and this will inevitably threaten jobs and the amount of money in the general Cornish economy.

"The Government has said that they are consulting on this proposal. I hope that they are genuinely going to listen to what people say and that they decide that a pasty tax is a bad idea."

Ann Muller, who makes award-winning pasties in her family shop on the Lizard peninsula, said the extra cost would mean either hiking the price of her top-crimped pasties or cutting back on staff.

She said: "We are a pie and pasty nation. It is very important for the working man, and it is they who will be hit by the tax. The pasty is a wholesome meal, and the Government should spend more time stopping the rich avoiding tax. But that's the Tories for you."

Mark Muncey, chairman of the Cornish Pasty Association, said he was "disappointed", but said some retailers already applied VAT.

"Local councillors have already expressed their concern about the impact this will have on the Cornish economy and we are equally concerned," he said. "We will be working with our members hoping to find ways to minimise the impact of any price increase to our consumers."

Councillor Andrew Long, deputy leader of Mebyon Kernow, said: "This tax could have a devastating impact on the pasty producers and retailers in Cornwall, and it would also hit the wallets of ordinary people throughout the Duchy."

Labour's sole councillor on Cornwall Council, Jude Robinson, said: "Will it be cream teas next? Are our MPs going to defend our pasty, our businesses and our exports from the Lib Dem-Tory coalition or are they going to do what they did over the 'Devonwall' boundary changes and the NHS?"

St Ives Lib Dem MP Andrew George vowed to fight the change in a Commons debate yesterday.