'Lower VAT could help': Hielan Jessie pub owner on cost-of-living crisis in Glasgow

As part of our ongoing Spotlight investigation into how the crisis is impacting small businesses across the city, Hielan Jessie owner Billy Gold shares his concerns exclusively with the Glasgow Times.

An East End institution

Hielan Jessie is an East End institution with strong ties to the community that surrounds it and has been in Billy's family since 1986.

Massive price increases in energy, CO2 gas, stock, and water charges are contributing to the immense squeeze on the business.

Hielan Jessie was almost back to normal trading conditions after the pandemic, but hard times for both the pub and its customers are sparking fears for the future.

Billy said: “My energy unit costs have more than doubled, but my standard charge has trebled.

“Our water charges have increased by about a third, but the biggest one has been the electricity - it’s way, way more than doubled and we don’t know what’s coming down the line in the future.

“We’re just not sure what’s in front of us.”

CO2 'rises by 3000%'

The CO2 gas needed for dispensing draft beers has “rocketed” by almost 3000% since last year.

Billy has been “nibbling around the edges” trying to keep costs down, using methods such as timers on the fridges, but it’s not enough.

The two major appliances that use electricity, fridges, and the commercial glass wash, are non-negotiables for a pub.

Billy said: “We’ve not cut prices but we’ve been unable to pass on price increases.

“In most cases, brewers have put prices up, suppliers have put prices up. We’ve either had to not put prices up or mitigate them - put them up about half of what the increase is because we just can’t pass on these increased costs to our customers because it would just completely kill our trade.

“So, we’re working on very much reduced profit margins now, which is not really good for business.

“We’re looking to have a sustainable business, good cash flow, but our profit margins are quite significantly squeezed at the moment.”

On top of the price increases, Billy is also paying back a £50,000 bounce-back loan, a legacy debt from Covid.

The furlough scheme allowed Billy to retain his close-knit team of staff so shortages have fortunately not been a concern at this time.

He said: “As far as I’m concerned, the staff are the biggest asset I have in this business.”

The uncertainty around the cost-of-living crisis has caused Billy to be concerned about the future.

He said: “The markets are all over the place, the pound is down, interest rates are going up.

“Financial instability isn’t good for any kind of business and that does give us great concern, and there doesn’t seem to be any light on the horizon, any certainty coming, so that worries us.

“Is the economy really going to go down and down and down?

“And that means people have less money to spend on non-essential things like going for a meal, going for a pint.

“You need to buy food, you need to heat your home, but you don’t need to go for a pint or go for a meal, so I think our industry is going to get squeezed even more as the financial matter unwinds.”

Reduced VAT 'could help'

A reduced VAT rate would help the business to cut costs which could help boost trade, in addition to more clarity and certainty from the Government about how they are going to help with rising energy bills, Billy says.

He said: “That would give us a wee bit more confidence going forward, but basically any help we can get we will take it.

“The hospitality industry is a big employer.

“I employ 10 people in this business, and they all pay a bit of tax and national insurance.

“And I pay self-assessment, corporation tax, collect the VAT for the Government, so we all play our part.

“All these wee small businesses added up together play a big part in both the local and the national economy.”

Billy added: “This is a community venue, so we know a lot of our customers on first name terms, and we hear them talking and they talk to us.

“And they are very concerned about what’s going to happen with inflation, food prices, utility prices.

“We have some younger customers that have mortgages that are desperately worried about what’s going to happen when their fixed price deal comes to an end, and how much they’re going to be paying then.

“It’s impacting right across the age range and people that are working, people that are not working, everybody is getting impacted one way or another.

“We were starting to think okay, this is us, we’re finally starting to recover and regroup.

“Now we’re getting hit by all these cost pressures and all different things, it feels like a slap in the face to us.”