Reid's Bakery in Thurso says government financial help is 'a very positive step' – but it still faces rising bills
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A director of a Thurso firm says businesses still face a challenging time ahead with rising bills despite government help that will ease the pressure for now.
Gary Reid, who with his wife Tracy runs Reid's Bakery, said support outlined this week for businesses is "a very positive step" but is concerned that details are lacking and that the help is only available for a six-month period from October 1.
"This financial package will assist us but we will still have hefty increases in our bills," he said. "The government help will allow us to turn on the lights and the ovens and bake the goods for people in Caithness and further afield, but we still face challenging times.
"The assistance will enable the business to be manageable but we are still waiting for clarity on how it will work. The help is for six months. What happens after that?" he asked.
Under the UK government scheme, the wholesale price of energy will be capped for businesses at a level which will see their bills reduced by around a half over the winter. The plan should result in prices being fixed for all non-domestic energy customers at £211 per MWh (megawatts per hour) for electricity and £75 per MWh for gas for six months.
It is estimated the scheme will cost between £25 billion and £40 billion, with the money being borrowed by the government. The package is expected to be reviewed in January and comes after a £150 billion, two-year plan to help households with their soaring bills.
Mr Reid said the past six years have been "extremely tough" with Brexit, the coronavirus pandemic, the war in Ukraine and the massive rise in energy costs.
"I have not known anything like this before in 20 years running Reid's Bakery. You think, 'how can things get worse' but it keeps getting worse," he said.
His new electricity contract comes into effect at the start of November and he hopes by then the government assistance will be available.
Mr Reid explained that without the government help it would have been impossible to do business in the longer term. He said his electricity bills had gone up from between £2500 and £2800 a month to between £12,500 and £15,000 a month, plus VAT.
"How could any business withstand something like that?" he added.
He said the firm paid £3000 for a ton of butter last year but that figure has gone up to over £6000 a ton now. "That is an enormous increase," said Mr Reid, who pointed out the firm uses over a ton of butter a week. He explained that his bill for raw ingredients such as flour, sugar, butter and vegetable oil has risen by over 100 per cent and in some cases more. Overall, his costs have gone up by £360,000 a year. "That is unsustainable," he stated.
"An accountant told me that if no support was received from the government, 50 per cent of all UK businesses would be struggling to survive," he added.
Mr Reid said the bill for the financial assistance should not be paid out of general taxation and thought the energy companies should make a contribution as they are making record profits.
Local MP Jamie Stone said: "The dither and delay from the government in providing support to businesses and charities facing eye-watering bills has highlighted just how out-of-touch the Tories are. Treasured pubs, cafés and high street shops have gone to the wall because the government refused to act for months.
"I'm relieved that a package has finally been announced to help local employers like Reid's to deal with mounting costs, but the government needs to go further so that businesses have certainty going into the new year."
The Caithness, Sutherland and Easter Ross Liberal Democrat MP added: "The government needs to get a move on with their promised support package for businesses and organisations that rely on off-grid fuels.
"Drip feeding support is no way to help businesses to thrive."
Reid's employs 40 staff in Thurso and outwith Caithness, and sells its products in the UK, Europe, the USA, Canada, Australia and New Zealand.
