by Patrick McGuigan

Small bakery firms have slammed government proposals that will oblige businesses to automatically enrol staff in pension schemes and make contributions rising to 3% of each worker’s salary.

The National Employment Savings Trust will come into force from October 2012, with businesses required to set up pensions for all employees earning over £7,500 and contribute 1% of the worker’s salary, rising to 3% by 2017. Employees will have to pay in 1% of pay, rising to 4% by 2017.

Alan Clarke, CEO of trade organisation Scottish Bakers, formerly the SAMB, described the new rules as "an additional form of taxation" on bakers, who are currently struggling with rising ingredient and utility costs. "Scottish Bakers find it incredulous that [there will be] mandatory introduction of pension schemes, even for businesses that only employ one person," he said. "Such an initiative adds to the difficulties of running a small business. Bakers will now have to identify appropriate pension providers and set up systems to enable staff to participate.

"Scottish bakers want a government that supports busines-ses to assist with the much-needed economic recovery, not one that deflects bakers away from what they do best."

The Forum of Private Business said the proposals would lead to a drop in the number of permanent jobs being provided by SMEs and an increase in the use of temporary staff and self-employed labour. The NAMB’s Anthony Kindred, of Kindred Bakery in SE London, which employs 11 people, said: "This will push bakeries to look at using temporary staff and short-term contracts. They will also start looking at sub-contracting production to other firms and importing baked goods from abroad, so they don’t have to employ people themselves."

At Price & Sons in Ludlow, which has six members of staff, director Peter Cook said: "The way the economic situation is at the moment and with flour costs increasing by the week, finding extra funds and time for this kind of bureaucracy is very difficult. It’s another expense that will have to be passed on to consumers."