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  1. Business
  2. Economics
28 March 2012updated 30 Mar 2012 6:11am

Labour exploits Osborne’s pasty problem

Osborne's "pasty tax" comes under fire from Miliband.

By George Eaton

Full marks to whichever Labour staffer positioned Ed Miliband in front of Greggs during his interview with Sky News earlier today. George Osborne’s decision to apply VAT to hot supermarket food [raising the price by 20 per cent], an obscure change announced in last week’s Budget, has become a political problem for the government following yesterday’s select committee hearing. After admitting that he “can’t remember” the last time he bought a pasty at Greggs, Osborne suggested that cold pasties would not be VAT-able, a comment that inspired today’s Sun to compare the Chancellor to Marie Antoinette [“Let them eat cold pasty,” reads its headline].

Shadow chief secretary to the Treasury Rachel Reeves made a well-timed visit to Greggs.

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The tabloid’s editorial goes further, declaring that “the Chancellor and his rich Cabinet colleagues cannot begin to understand what it’s like to be so hard-up that a sharp rise in the price of a pasty will hurt.

“Unlike Sun readers, they don’t worry how to pay for food, rent or petrol. If they ever have done, they certainly can’t remember how it feels now — any more than Mr Osborne can remember the last time he bought a pasty in Greggs.”

It’s tempting to dimiss this as a bit of knockabout fun but symbolism matters in politics and the current row both reflects and reinforces the view that the government is out of touch with ordinary people. Put simply, it has cut taxes for millionaires and raised them for pasty-eaters [the two categories are, of course, not mutually exclusive, though Osborne’s performance suggested they might be]. As ConservativeHome’s Tim Montgomerie has written, class is the Conservatives’ “Clause IV” and this week’s ComRes poll showed that 66 per cent of voters regard the Tories as “the party of the rich”.

Miliband told reporters outside Greggs:

“Not just fuel duty going up, child benefit taken away, tax credits being cut, now even putting 20 per cent on the cost of pasties, sausage rolls, and the Chancellor’s excuse? Well, he says you can buy them cold and you can avoid the tax.

“It just shows how out of touch this Government is and it shows that we’ve got a Budget that is hitting millions of people while cutting taxes for millionaires.”

In an attempt at damage limitation, David Cameron told a press conference that he “loves a hot pasty” [although he bought his from the West Cornwall Pasty Company] but offered no hint of a U-turn. Has any Budget ever offered an opposition party so many easy hits?

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