Buns in a deck oven with an LCD screen

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An Energy Bill Relief Scheme which will see discounted energy prices for businesses has been welcomed by the Craft Bakers Association (CBA) and Scottish Bakers.

Under the scheme unveiled by business secretary Jacob Rees-Mogg, the government will provide a discount on wholesale gas and electricity prices for all UK businesses whose current prices have been ‘significantly inflated in light of global energy prices’.

It will apply to fixed contracts agreed on or after 1 April 2022, as well as to deemed, variable and flexible tariffs and contracts. It will apply to energy usage from 1 October 2022 to 31 March 2023, running for an initial six-month period. The discount will be automatically applied to bills.

The move was cautiously welcomed by the bakery trade bodies which have been campaigning to the government for support as their members faced skyrocketing bills.

“Whilst it is indeed a relief to our members that they will not be facing the huge bills many were expecting – ranging from an increase of 83% to 533%, most will still be paying at least a third more than last year,” said Karen Dear, director of operations at Craft Bakers Association. “This on top of a significant increase in ingredient and other costs, means that it will still be a tough winter.”

Alasdair Smith, CEO of Scottish Bakers, said the price cap – expected to be £211 per MWh for electricity and £75 per MWh for gas, less than half the wholesale prices anticipated this winter – was “much relief for bakers across Scotland struggling with soaring input costs”.

“Scottish Bakers members had recently shared their concerns that the soaring cost of energy and other input costs – including all major ingredients that go into our nation’s daily bread, savoury snacks and sweet treats – was threatening their long-term survival.

“Some businesses, for example, reported quotes for energy renewals at eight to 10 times their current rate per unit. And while there will still be some steep increases for some, 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.”

However, both trade bodies were disappointed at the timescale of the plans which run for six months and will be reviewed after three.

Dear said the timescale “makes planning almost impossible”, adding that the CBA would have preferred guaranteed support for 12 months not six alongside greater clarity on what it will include. As such, the Dear said the association will continue to liaise with the Department for Business, Energy and Industrial Strategy to secure “some guaranteed long-term support for our members to ensure their businesses can continue to operate without redundancies or worse”.