Scottish Bakers welcomed a statement by government confirming that a price cap is to be introduced for business energy users, but added that the support must be extended into the next year.

The Energy Bill Relief Scheme will see gas and electricity costs for UK food and drink businesses capped, according to a government announcement. The Scheme covers those on fixed-term contracts, agreed on or after 1st April, and will see wholesale prices for electricity capped at £211 per megawatt hour (MWh) and £75 per MWh for gas.

Chief executive officer Alasdair Smith of Scottish Bakers said that the organisation welcomed the price cap for business energy users. It said: “This price cap, set at 21.1p per kw/h for electricity and 7.5p per kw/h for gas, provides much needed relief for bakers across Scotland struggling with soaring input costs.”

According to Scottish Bakers, the average increases across all major input costs for its members are as follows:

  • Electricity – 214%
  • Gas – 207%
  • General Insurance – 83%
  • Ingredients – 41%
  • Motor Fuel – 44%

Commenting on the latest government measures, Smith said that there is “a sense of relief throughout the trade and a sense that this cap will help protect businesses from the worst excesses of recent market prices.” 

He added: “However, there remains disappointment that the time frame for relief has been limited, currently, to six months. 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 as required to secure the long term future of the trade.”

Soaring input costs

At the end of August, Scottish Bakers wrote to Holyrood and Westminster politicians to ask for financial support for businesses affected by rising production costs.

In his letter, Smith said that “the current economic crisis” is the biggest that Scotland has seen in nearly 50 years and is placing “unprecedented strain” on the Scottish baking industry.

He said: “Many of our members report an existential threat to their survival due to soaring input costs and widespread recruitment challenges.

“Throughout the darkest days of the pandemic, our members worked hard to keep baking, recognising the vital role they have in Scotland’s food chain. Many businesses went above and beyond by ensuring deliveries of products went to those most vulnerable in our communities or those on the front line helping to protect and treat us.”