UK bakery coalition voices concern over possible closures

13-Jan-2023 - Last updated on 13-Jan-2023 at 12:43 GMT

The UK bakery sector is on the brink of crumbling under the pressure of rising energy costs, among other challenges. Pic: GettyImages/Maren Caruso

Scottish Bakers, Federation of Bakers, Craft Bakers Association, ABIM and UKAPY have sent a letter to the Chancellor of the Exchequer Jeremy Hunt, urging him to review his ‘new’ Energy Bills Discount Scheme.

According to the quintet, Hunt’s extended Energy Bills Discount Scheme announced on 9 January will “lead to increased energy costs for businesses” and leave them “dangerously exposed to fluctuating wholesale energy price.

“This, coupled with a general lack of transparency on wholesale prices from suppliers, will bring further instability to businesses as they try to plan their budgets for the year ahead with little certainty,” they wrote.

“We fear that this … will make some businesses consider their future.”

A vital part of the UK economy

Tray of sourdough bread Phil Boorman — Our daily bread. Pic: GettyImages

The letter was signed by James Slater, president of the Association of British Ingredient Manufacturers (ABIM); Karen Dear, director of Operations for the Craft Bakers Association (CBA); Andrew Pyne, CEO of Federation of Bakers; Alasdair Smith, CEO of Scottish Bakers; and Sonia Lourenco of the UK Association of Producers of Yeast (UKAPY).

The group represents an industry that delivers around £10bn annually to the economy and employing more than 70,000 people across the country baking the nation’s fresh daily bread, snacks and sweet treats, so it’s vital to be “protected during these continuing challenging times.”

While it “broadly welcomes” the scheme due to take effect from 1 April, the group is concerned, “the increase in the threshold price for relief for gas (£99 mwh) means businesses will pay a minimum of 32% more. With high levels of gas usage in the sector and wholesale gas prices remaining volatile, we fear many businesses will be placed under intolerable strain.

“We note the threshold price for electricity will drop by 12% on current limits, current market prices in the range of £260-£280 per mwh mean businesses will be paying at least an additional c 12% for their electricity.

More clarification needed

Unhappy baker trying times ljubaphoto — Pic: GettyImages

The alliance is also asking for more clarification:

“It is our expectation that bakeries of all sizes and structures will fall within this higher level of relief (as one of the Energy and Trade Intensive Industries) and we would ask for confirmation that this is indeed the case.

“We are further concerned about the lack of detail in how rebates will be applied.

“The scheme links the discount to wholesale prices, but we would wish to know if the discount will be calculated based on daily prices, or weekly, monthly, or other period averages.

“This, coupled with a general lack of transparency on wholesale prices from suppliers, will bring further instability to businesses as they try to plan their budgets for the year ahead with little certainty.

The association heads have also requested a face-to-face opportunity with Hunt “to share the pressures its collective membership is facing.”