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Greggs warns jobs at risk from Pasty Tax

16 May 2012 No Comment

The retailer said the 20pc levy on hot takeaway food, would have a “disproportionate impact on the specialist bakery sector, resulting in further unemployment, high street closures and reduced investment”.

The Pasty Tax, which was announced by Chancellor George Osborne’s March Budget, has met with resistance from retailers and some MPs. A proposed consultation period over the plan ends on Friday, with the proposed change due to take effect from the beginning of October.

On Wednesday, Greggs blasted the measure as “unworkable”, claiming 300,000 people had signed its petition against the tax.

Casting doubt on the revenue that the tax would bring in, Greggs said the Government has made “insufficient allowance for the Income Tax, NI contributions and Corporate Tax that would be lost, as well as the cost of extra unemployment pay” if stores were to close and workers lost their jobs.

With “savoury sales” making up a third of Greggs’ turnover, the company said the move could have “a material impact on our sales and profits”. As a result, the group has proposed a change to the law. It wants to see VAT charged “on all food kept hot for sale in a heated environment after cooking, all food re-heated to order and all food supplied in heat-retaining packaging. This will very clearly differentiate between fresh bakery food and food that is being sold intentionally hot.”

In an interim trading trading statement on Wednesday morning, Greggs blamed the recent wet weather and reduced household spending for a 1.8pc fall in like-for-like sales in the 19 weeks to May 12.

Despite the reduced footfall caused by cost-conscious customers and “six disappointing weeks of trading as a result of the exceptionally wet weather in April and early May”, Greggs opened 25 new shops in the period. It closed five others, leaving a total of 1,591 outlets.

The company also launched its second “Greggs moment” coffee shop, in Middlesbrough, and has extended the food range available in Iceland stores.

Greggs expects disposal income to “remain under pressure from high fuel, energy and food costs”, but the Diamond Jubilee, London Olympics and Euro 2012 football championships could entice people to spend.

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