Real Bread Campaign reacts to business energy support cut

On 9 January 2023, Chancellor Jeremy Hunt announced a cut to governmental support for non-domestic energy users. The existing Energy Bill Relief Scheme for UK businesses, charities and public sector organisations will be replaced a new Energy Bills Discount Scheme, which will run from 1 April 2023 to 31 March 2024.

According to an HM Treasury media release, Mr. Hunt said: “My top priority is tackling the rising cost of living – something that both families and businesses are struggling with.” He had been previously quoted as saying the existing scheme was “unsustainably expensive”.

Campaign reaction

Real Bread Campaign coordinator Chris Young said: “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.”

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?” 

This echoes the response of other organisations. UKHospitality Chief Executive Kate Nicholls said: “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.”

Real Bread bakers say

Real Bread Campaign ambassador Eddy Sleiman, who runs Ed Baker in Lewisham, said: “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.”

Campaign supporter Andy Walsh, owner of The Coffee Kitchen Bakery in Cockermouth: “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.”

Some responses from Campaign supporters to a @realbreadcampaign Instagram post:

@purekneadbakery: “it means us having to price our loaves way above most people's pockets therefore poor sales and job redundancies, or teetering on the edge trying to shore up years’ worth of graft just to watch it fail. We're backed into a corner with no way out...”

@thebearbakery “We receive and have received zero government help through Covid and now the energy crisis, so we continue to earn less than minimum wage and work more hours in order to attempt to pay our staff something near to what they should earn.”

@hampshirerealbread “Running my bakery from home means my gas and electricity bill this month is £750….and that’s without me being able to turn my ovens on (due to other issues) so I have no income at the moment. With no options to switch, the energy cartel is robbing us blind and we all know prices won’t drop as quick as they rose with the change in wholesale gas prices.”

Have YOUR say

Bakery owners:
> Is this the support that your small bakery business needs?
> If not, what are your concerns and what do you need the government to do as well / instead?
> Is there clarification or further assurance that you need, beyond what we have called for?
> Do you want to make a comment that you'd be happy to be quoted on by us and potentially in the media?
> Would you be happy to put figures to what the cut in support means for you financially?
Please email us.

Everyone: What do you think that the Real Bread Campaign should do (and enable our supporters and other friends to do) next? Click here to send us your suggestions.

Key points of the scheme

• The discounts will be up to £6.97/MWh for gas and up to £19.61/MWh for electricity.
• Discounts will be applied automatically to bills by energy suppliers.
• 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.
• Greater discounts apply to ‘Energy and Trade Intensive Industries’ (ETII). Types of business on this list include those engaged in SIC class 10.71 ‘manufacture of bread; manufacture of fresh pastry goods and cakes’ and 10.61 ‘manufacture of grain mill products’. 
• It is not clear if this includes all businesses working in these classes, or only those working at an industrial scale.
• ETII ‘businesses will receive a discount reflecting the difference between a price threshold and the relevant wholesale price.’
• The price threshold for the ETII scheme will be £99/MWh for gas and £185/MWh for electricity. ‘This discount will only apply to 70% of energy volumes and will be subject to a maximum discount of £40.0/MWh for gas and £89.1/MWh for electricity.’

Business owners will need to contact their energy suppliers for confirmation of the discount they will receive. 

Other support

While the government still has not replied to the Real Bread Campaign’s September 2022 calls for further support for small bakery businesses, the Treasury media release outlines the following:

• Businesses in England will receive support with their business rates bills 
• A UK-wide fuel duty cut
• Businesses with profits below £250,000 ‘will be protected from the full corporation rate rise’, with no rise for those with profits below £50,000.

See also

• Government set to turn its back on bakers?
• Do Sunak and Shapps care about small bakery owners?
• Real Bread rejected: what now?
• Bakery owners’ support