The new scheme – to come into effect when the current scheme ends in March – will provide a higher level of support to businesses with particularly high levels of energy use and trade intensity. The new scheme will mean all eligible UK businesses and other non-domestic energy users will receive a discount on high energy bills until 31 March 2024.
However, not everyone is enthralled with the plan.
Under the scheme, ‘eligibility’ means a business must drum up energy costs above the wholesale price threshold of £107/MWh for gas and £302/MWh for electricity. “This means that businesses experiencing energy costs below this level will not receive support,” said the HM Treasury.
According to Young, this could signal a further demise within the microbakery sector.
“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,” he said.
“The government pulling the rug like this will see many more going under.
“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?”
He's not alone in his misgivings.
Eddy Sleiman, founder of Lewisham-based Ed Baker, said rising energy bills will eventually kill the business.
“I endured a year of working on my own as the constantly rising costs of ingredients, equipment and materials have made it impossible to bear overheads. Rising energy bills will radically kill the prospective plan and will eventually kill the business.”
Andy Walsh, owner of The Coffee Kitchen Bakery in Cockermouth, added, “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.”
Support for those most affected
On 21 September 2022, the Real Bread Campaign wrote to then PM Liz Truss, calling for support for small bakery business owners.
The Campaign eventually received a reply at the end of December from the BEIS Correspondence Unit, noting “any support for businesses [will] be targeted to those most affected by high energy prices.”
Said Young, “There are around 2,500 small bakeries in the UK. Each plays a valuable role in its community, not least by supporting skilled, meaningful jobs and keeping money circulating in the local economy.
“After waiting over three months for further assurance, this delegated reply feels like another slap in the face for small bakery owners.”
Falling wholesale energy prices
According to the HM Treasury release announcing the scheme, Chancellor of the Exchequer Jeremy Hunt said, “My top priority is tackling the rising cost of living – something that both families and businesses are struggling with. That means taking difficult decisions to bring down inflation while giving as much support to families and business as we are able.
“Wholesale energy prices are falling and have now gone back to levels just before Putin’s invasion of Ukraine.
“But to provide reassurance against the risk of prices rising again we are launching the new Energy Bills Discount Scheme, giving businesses the certainty they need to plan ahead.
“Even though prices are falling, I am concerned this is not being passed on to businesses, so I’ve written to Ofgem asking for an update on whether further action is action is needed to make sure the market is working for businesses.”
Businesses with energy costs below the wholesale price threshold for the scheme (£107/MWh for gas and £302/MWh for electricity) will not receive support.
Different discounts apply to ‘Energy and Trade Intensive Industries’ (ETII). Types of business on this list include those engaged in ‘manufacture of bread; manufacture of fresh pastry goods and cakes’ and ‘manufacture of grain mill products’. It is not clear if this includes all bakeries and mills, or only those working at an industrial scale.