Pasty tax – A half baked idea for our high streets?
March 11th, 2012Three months after Mary Portas’ high profile review, the UK Government has dealt a hammer blow to one of the current cornerstones of our beloved high streets. The timing of this blow is even more unfortunate when you consider the UK’s town centres currently have the highest average vacancy rates since records began (now 14.6%).
Bakeries, and in particular the rise of bakery chain Greggs, have been one of the few, if not only, high street success stories of recent years. The introduction of a 20% levy on some items in a sector that operates on tight profit margins will lead to some very difficult decisions for bakers up and down the country. If operations carry on in their current format, how and when to charge is the first obvious and well-documented grey area. If customers cannot stomach the price increase (sorry), bakeries may have to take a view on what temperature to serve their products at. In the past one would have said ‘woe betide anyone who serves me a cold sausage roll’. But at a time when everybody is watching every penny, we would probably prefer that to paying 20% more or anyone losing their job.
Unfortunately, this VAT change could mean another unwanted record in terms of average vacancy rates on our high streets, as bakers and your average blue-collar customer struggle to absorb the cost overnight.
The last thing our high streets need now is a VAT attack. Add to this the fact some big high street names, such as Game and Peacocks, are in administration and hanging on by a thread and you could be forgiven for feeling a tad cynical about Friday’s announcement that the Government will be adopting “virtually all” of Portas’ 28 recommendations (Taxing bakeries was not one of them). This will be of no comfort to high street bakeries.
There is an argument that other “take aways” are taxed in this way and this is just levelling the playing field. Bakeries are however an A1 use, one that we try to focus in our high streets and not one that we try and tuck away in the back streets. While the focus has been on Greggs, there are still many independent pasty shops who do not have the ability to cut costs in the way that larger companies do and will be hit hard by this.
In land use terms this will simply increase the number of voids in our principal shopping areas. Somewhat of a half-baked idea, then….