Exchequer secretary, James Cartlidge MP has announced non-domestic energy bill relief for businesses, which includes meat, fish, dairy and cheese makers. The Provision Trade Federation (PTF) and Scottish Bakers have given it a cautious welcome.
PTF director, Rod Addy said: “Dairy, meat and fish processors face substantial rises in their energy costs this year, threatening to tip them over into financial difficulties. Consumers are grappling with a cost-of-living crisis, of which energy will continue to be a big driver, causing them to rein in retail spend over Christmas.”
The main points from the Treasury statement were:
- Up to £5.5 billion of support between 1st April and 31st March 2024
- Non-domestic customers with a contract with licensed energy supplier automatically compensated: up to £6.97/MWh for gas (price threshold of £302/MWh) and up to £19.61/MWh for electricity (price threshold £107/MWh)
- Special support for energy and trade intensive users (specifically those in the Energy and Trade Intensive Industries list – this includes meat, fish, dairy and cheese makers) such as major manufacturers: gas and electric bill discount based on a price threshold capped at a maximum unit discount of £40/MWh for gas and £89.10/MWh for electricity. This discount will only apply to 70% of energy volumes and will have to be applied for
- Intensive and trade intensive users will continue to be supported at source based on a price threshold of £99/MWh for gas and £185/MWh for electricity
- This means a typical medium-sized manufacturer would expect to receive nearly £700,000 of direct support over 12 months
- Additional support based on Autumn Statement of £150 for off-grid small and micro businesses powered by oil and large users of oil receiving additional top-up payments.
Addy continued: “Wholesale gas prices have reduced, but the market remains vulnerable to developments in the Ukraine war, a cold snap and/or a surge in demand as China eases Covid restrictions. This further Government help for all sizes of business is therefore vital and welcome and provides longer term security. However, the battle to cut inflation must continue to protect businesses’ profits, safeguard food sector investment and guarantee shoppers access to affordable nutritious food.”
Scottish Bakers view
Scottish Bakers, the membership organisation which supports the bakery trade throughout Scotland, has also tentatively welcomed the scheme.
Chief executive officer, Alasdair Smith, said: “Energy is one of the major input costs for bakeries and Scottish Bakers has continued to work hard in recent months to bring to the Governments’ attention the very real challenges our members continue to face in relation to energy and ingredient price rises.
“Whilst we welcomed the initial package of support, we had called for a continuation of this scheme to offer protection for all of our members during the brutal cost of living crisis.
“As we understand it, todays update indicates that higher users of energy who are typically less able to pass on the costs will qualify for a higher level of relief than most other sectors and the list of business sectors eligible for the higher level support includes bakeries which is good news. But this move offers little or no comfort and so could still spell disaster for many small businesses who have no slack left to soak up or indeed pass on ever increasing energy bills. The relief offered will both lead to increased energy costs for these businesses while leaving them dangerously exposed to fluctuating wholesale energy prices.
“We are further concerned about the lack of detail in how these rebates will be applied. Coupled with a general lack of transparency on wholesale prices from suppliers, this will bring further instability to businesses as they try to plan their budgets for the year ahead with little certainty. We fear that this burden of pressure, in addition to the inevitable higher energy costs will make some businesses consider their future.”
Scottish Bakers members continue to share their concerns that the soaring cost of energy and other input costs – including all major ingredients that go into the nation’s daily bread, savoury snacks and sweet treats – was threatening their long term survival.
As a vital part of the country’s food chain, and where energy represents a disproportionately high percentage of input costs, Scottish Bakers once again call for this relief to be extended to small and medium sized businesses to secure the long term future of the trade.
