The Chancellor has softened some of the criteria of his proposals for the 'so-called' pasty tax.
In March George Osborne announced plans to introduce 20% VAT on hot foods sold by bakeries and supermarkets. Now there has been a climbdown in the extent of the proposals, meaning the tax will only be charged on cooked pies and pasties that are kept hot, but not those that are still warm after coming from the oven.
The change comes after a campaign calling for the tax to be scrapped, which gathered 300.000 signatures.
Last week ITV Meridian spoke to Robert Burton, the owner of a pretzel company in Reading who said the proposals could cost his customers up to £900,000 a year and put his firm's expansion plans on hold.
Now though, firms in the region are examining whether the changes will soften the blow of the tax on their trade and on any price rises that may have been passed onto their customers. Meanwhile the food firm Greggs has seen an 8% rise in its shares in the wake of the announcement.
– Ken McMeikan, Chief Executive of Greggs
"This is fantastic news for the customer more than anything. If we had to put up prices by 20% in the current marketplace when consumers are having a very difficult time we expected there would be an impact on sales but we don't know what it would have been. I think the Government deserves to be applauded."