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(Clauses 1, 4, 8, 189 and 209, Schedules 1, 23 and 33, and certain new Clauses and new Schedules relating to value added tax)

I should like to draw to the Government's attention a couple of anomalies in the VAT rules that they have created with their Budget proposals. That is quite ironic considering that the reason that Ministers have given for their proposals to change the current VAT rates for pies, pasties and caravans is to iron out such anomalies. I start with hot food. The Government propose to amend note 3 in the existing legislation so that"““the current test for 'hot takeaway food' which is based on the purposes for which food is heated becomes a simpler and more objective test based on whether the food is above ambient air temperature at the time it is provided to the customer.””" That suggestion is nonsense, and I will explain why. I have in my constituency a baker who has a very small shop in which he bakes bread, pies and pasties. He takes his baked products out of his ovens and lets them cool in his glass-covered but unheated serving counter. My constituent, being a good citizen, starts baking his products at 5.30 in the morning, so by the time he opens at 9 o'clock his products are cold before he sells them to his customers. Sometimes his customers want a hot pie, so my baker friend has a microwave oven that he uses to heat up their pie. He then religiously—I have seen him do it—records that the sale of that pie is subject to VAT. However, when he is busy, my baker friend has to bake a second batch of pies to replenish his stock. If he is really busy, his customers snap up those pies before they have time to cool down. Under the existing regulations, my baker friend does not have to charge VAT on that batch of pies, but it is unclear whether he will have to do so under the new regulations. To be honest, my advice to him was to carry on operating exactly as he does now, but it would be good if the Exchequer Secretary could clarify exactly what his new proposal actually means. The Exchequer Secretary might also like to explain what is meant by ““ambient temperature””, because that is where the new regulations threaten to cause anomalies. For instance, the ambient temperature in my baker friend's shop is very hot, because his shop is so small that the ovens heat it up. Because he has no air conditioning, the temperature in his shop is even hotter in the summer. Further along the high street, there is a branch of a national chain of bakers, which is larger and air-conditioned, so the ambient temperature there is much lower. That means that under the new rules, one shop in my high street will be able to serve pies at a higher temperature than another without charging VAT. The new rules also mean that both shops can serve hotter pies without charging VAT in the summer than in the winter, when the ambient temperature is much lower. If that is not an anomaly, I do not know what is. How will the proposed regulation be monitored? Are we going to see hordes of VAT inspectors armed with thermometers swooping down on bakers' customers as they leave the shop and sticking their thermometers in their pies to see whether they are hotter than the ambient temperature?