Please help save the UK’s small bakeries

Having consulted bakery owners in our network, on 21 September 2022, the Real Bread Campaign sent the letter below.

Co-incidentally, a new Government Energy Bill Relief Scheme was announced later that day.

Bakery owners
Is the Government Energy Bill Relief Scheme the support that your small bakery business needs? If not, what are your concerns and what do you need the government to do as well / instead? Is there clarification or further assurance that you need, beyond what we have called for in our letter below? Please email us.

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Dear Liz,

A belated welcome to your new role. 

Government intervention is needed urgently: will you take immediate action to help prevent small bakeries from going out of business?

The crisis

Around 2500 micro and small bakeries in the UK  (including more than 500 in the Real Bread Campaign supporter network) represent the majority of businesses – and the key innovators - in the sector. In helping to feed people in their neighbourhoods, they generate a high local economic multiplier effect, not least by providing skilled, meaningful and rewarding jobs for people in their communities.

Due to a confluence of external factors, many of these formerly thriving small bakery businesses have suddenly found themselves in financial crisis. Some are under threat of imminent closure, following in the wake of a number that already have been forced to cease trading recently. This is largely due to skyrocketing energy tariffs, on top of already fast-rising ingredient, staff, premises and other costs of running their businesses. Please see below my signature for some examples.

What is needed

We welcome the Energy Price Guarantee for business that you promised in your speech on 8 September 2022. What small bakery owners now need most urgently are details of this guarantee, and your assurance that it will be backdated to when crippling rises began earlier this year, please.

Please also confirm that micro and small bakery businesses (ie 0-50 employees, including home-based sole traders) will be included in the ‘vulnerable industries’ that will receive ongoing, focused support after the initial six-month period, and what this support will be.

We urge the government to provide the following for micro and small bakery businesses:

• Easy-to-apply for grants to cover (what will hopefully be short-term) huge increases in operational costs.
• The ability to reclaim VAT on energy costs.
• Raising the small business rates relief threshold.
• Establishing a government-backed, not-for-profit collective procurement body to purchase electricity and flour at bulk rates to enable small bakeries to benefit from discounted prices.
• Government support in covering the costs of redundancies; dilapidations to buildings and early surrender costs on leases in the case that a small business is forced out of business.

Other support

In the medium to long-term, we call for: 

Grants (similar to the scheme available in Tees Valley) to enable micro and small bakeries get advice and assistance on how to reduce energy usage and become more energy-efficient – as well as switching to non-polluting renewables – and to help them with the necessary equipment refurbishment or replacement, insulation installation etc.

A local food voucher scheme to support people hit hardest by the cost of everything crisis, as well as small producers and retailers. The vouchers would be redeemable at independent outlets, such as small bakeries market stalls and local shops, rather than multiple retailers and other chains.

An Honest Crust Act of updated and improved composition, labelling and marketing legislation. At low-to-no cost to the government, these measures will help to level out the playing field on which small bakery businesses have a better chance of surviving and thriving. They will also give shoppers greater confidence about what they are spending their reduced food budget on. 

As business owners put it: “Help is necessary to protect the existence of a way of life that otherwise may well disappear, to the detriment of society […] Please, please, don’t let other bakeries die. Once these businesses close, they can’t come back.

We look forward to your answers and confirmation of the measures that you will introduce.

Yours sincerely,

Chris Young
Real Bread Campaign coordinator

Background notes

Open University research conducted between May and July this year found that steeply rising costs of ingredients and energy were small bakers’ greatest concerns,  since when the situation has become more acute. Here are just some examples:

Last year’s electricity bill for Seasons Bakery in Ingleton, North Yorkshire, was £19,362. For the forthcoming 12 months starting on 24 October, their supplier has quoted £100,137 (after Direct Debit and online payment discounts) an increase of more than 417%, Owners Dan and Charlotte Nemeth said: “Officially at the point of WHAT ARE WE GOING TO DO!!”

Kane McDowell, owner of Sugardough in Hove told us: “We’ve just been quoted £18k a month from October, a tenfold increase. It’s totally untenable! With no ovens, freezers and fridges we have no business.”

Similarly, Paula Watson of PureKnead Bakery in Whitley Bay said: “We cannot function with nearly tripling electricity costs. We are struggling to pay for increasing ingredients costs, NI rises and increasing rent reviews. I employ 18 people, who are all at risk of unemployment if the costs continue to rise.”

Emma Vine, owner of Vine’s Bakery in Lincoln until last month, fears that she might have been: “the canary in the coal mine.” She said: “My electricity supplier increased my direct debit to the point that I was unable to pay my staff’s wages, never mind my flour bill. The business that I spent years building and put everything into is closed. I am devastated. I have lost everything. Everything.” 

Cost of everything crisis

Everyone in the country has less money to spend after we've paid our own ballooning bills, so sales are falling even for bakeries that have held off making inevitable price increases that their spiralling costs will force them to implement. When their prices rise, sales fall further, making it even harder for small businesses to pay their bills and remain viable.

In an article for the Real Bread Campaign, Sophia Handschuh, owner of Sourdough Sophia in London, wrote: “what if I told you that when the energy crisis began our energy bill overnight went up by 300%? I am scared to raise my prices too much because I know all of my customers are facing price rises at home! So where am I supposed to find an extra few thousand pounds a month?”

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¹ According to ONS figures, collated by Open University researchers for a study to be published later this year, there were 2,720 micro (0-9 employees) and small (10-49 employees) bakery businesses in the UK. FAME data retrieved by the researchers put the figure at 2,444.

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Updates

3 January 2023: Having received a letter from BEIS during our seasonal office break, we replied. 

22 November 2022: We re-sent the letter by post to the current PM and Secretary of State for Business, Energy & Industrial Strategy, asking for a response to the outstanding points.

2 November 2022: We re-sent the letter by email and online contact form to the current PM and Secretary of State for Business, Energy & Industrial Strategy, asking for a response to the outstanding points.

6 October 2022: When we sent our email to the PM, we copied in BEIS and Defra. The latter responded: The issues you have raised fall within the responsibility of the Department for Business, Energy & Industrial Strategy (BEIS). We have therefore, transferred your email to the BEIS Correspondence Section, for the department to reply to you directly.

21 September 2022: Hours after we sent the above letter, a new Government Energy Bill Relief Scheme was announced. It will apply to business and other non-domestic energy usage from 1 October 2022 to 31 March 2023. We await the Prime Minister's response (ETA 15-20 working days) to the other points and questions in our letter, and will follow up accordingly.