In the UK, fears are growing following the announcement by Chancellor, Jeremy Hunt, who has said the government will be reducing financial support offered to businesses to help combat skyrocketing energy costs. This will, of course, affect bakery businesses operating in the UK as they struggle with increasing gas and electric costs.
The existing Energy Bill Relief Scheme for UK businesses, charities and public sector organisations will be replaced by a new Energy Bills Discount Scheme, to run from 1 April 2023 to 31 March 2024. Jeremy Hunt has said his “top priority” is dealing with the cost of living, “something that both families and businesses are struggling with.”
According to James Cartlidge, Exchequer Secretary to the Treasury, the government will be providing UK£5.5 billion of transitional support to businesses, starting from 1 April 2023. However, businesses who have energy costs below £107 a megawatt hour will not be provided support, concerning small businesses with smaller costs.
In response, the Real Bread Campaign – who have been lobbying the government to properly label sourdough over concerns that bakeries have been responsible for ‘sourfax’, bread which is mislabelled as sourdough and sold at a higher price – have criticised the government for “pulling the rug like this”, leaving small bakeries and flour mills to struggle with energy costs.
“Over the past couple of years, we’ve seen a number of small bakeries and flour mills being forced to close due to the multiple whammy of Brexit, successive lockdowns and huge hikes in the price of energy and ingredients. The government pulling the rug like this will see many more going under,” said Chris Young, Coordinator, Real Bread Campaign.
He added: “How will small bakery owners being forced to put their prices up, let alone those having to make people redundant, help anyone with their cost of living? How economically sustainable will an increase in former bakers and bakery owners claiming benefits be?”
UK Hospitality Chief Executive Kate Nicholls has echoed this response, as she said the support was “crucial” for hospitality businesses.
“It was crucial for hospitality businesses to receive an extension to energy support […] the absence of a sector-specific package that helps vulnerable sectors like hospitality will still result in higher bills. This will simply be unsustainable for many.” More bluntly, Martin McTague, National Chair of the Federation of Small Businesses, told Radio 4’s Today Programme that the new scheme is a “massive disappointment,” she explained.
Other responses have come from Real Bread Campaign employees and campaign supporters, with bakery businesses among them.
“I’m just in the process of renewing my electricity contract and am being quoted three times my current tariff – at best. This means my relatively small bakery needs to find about another £2k per month from somewhere. I’ve had to put my prices up about 10% this week and now I may need to lose staff. It’s ridiculous,” said Andy Walsh, Owner, The Coffee Kitchen Bakery.
A press release supplied by the Treasury announcing the reduction has said businesses in England will receive support with business rates bills, there will be a UK-wide fuel duty cut and businesses with profits below £250,000 will be protected from the corporation rate rise, and no rise for those with profits below £50,000.
Different discounts will apply to ‘Energy and Trade Intensive Industries’ (ETII). Types of business includes those engaged in ‘manufacture of bread; manufacture of fresh pastry goods and cakes’ and ‘manufacture of grain mill products’, although the Real Bread Campaign have argued that this is not clear whether this refers to all bakeries and mills, or just those working at an industrial scale.
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Editor, International Bakery
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