THE UK Government is making more money from Alex Walker’s Aberdeen chippy than he is.
Last month he was unable to pay himself a wage at all, even though he is working 90 hours a week in order to keep Lows Traditional Fish And Chips open.
Like others in the sector, which has been severely hit by the rocketing cost of fish and energy, he is desperately hoping there will be some kind of help announced by the Chancellor this week. If no Government help comes, he predicts Scotland could lose two thirds of its fish and chip shops over the next few years.
Help with energy costs and VAT reform are essential if they are to survive, according to Walker.
“Last month I did not take any wage as I couldn’t afford to,” he said. “The Government is taking around £120,000 in VAT a year from me and now I am not even getting paid, so the Government is making more money from my business than I am. I work 90 hours a week and my yearly wage will be 16,000. It’s horrible.”
With VAT back up to 20% after being cut during the pandemic, his last VAT bill for three months came to £30,000. This was on top of a combined electricity, gas and water bill of £15,000.
“In one quarter just for utilities and VAT alone, you are talking about bills of £45,000, then there is £20-£25,000 to suppliers and around £20,000 for staff wages – so it is huge money,” he said.
Walker has already cut costs, including staff numbers, to keep the business going and says there are no more he can make.
“The total amount of cuts I have had to make to keep going has been £165,000, and I can’t cut any more because there is nothing left to cut,” he said.
“It is just a bit of a disaster. Oils and fats are up 100%, packaging up is up 76%, fish is up 100%, utilities are up 200-300% and gas alone is up 400%.
“Staff costs, VAT, you name it, it has all gone up. The price rises are scary.”
Walker has now had to put prices up for customers, and a regular haddock and chips – which cost £8 this time last year – is now £10.50.
“I feel really bad because I had to put prices up, but I absorbed the price increases for so long that I am now in a position where if I keep doing it, I am going to be out of business in months,” he said.
If VAT was cut back to 10% for hot food and he was able to claim 10% for his cold food costs, Walker says he would be “very happy”.
“That would be huge as it would cut our VAT bill in half and put £60,000 back into the business. If they did that, I think I could afford to pay myself and cope with the high energy costs. At the moment, we just collect money for the VAT man and don’t get it back.”
New Prime Minister Liz Truss has said there will be a six month cap on energy prices for businesses but Walker believes that won’t be much help.
“It is capping where we are already at and we are already screaming for help,” he said. “Anyone reading Liz Truss’s statement on energy bills was very underwhelmed. It doesn’t do anything for us, and if there is no help, I would say at least 60-70% of fish and chip shops in Scotland will end up shutting in the next few years.”
HE added: “Prices for the rest will be sky high and they will have a monopoly of the market so people will be forced to pay them. It is dire.
“We all had cash reserves pre-Covid but had to use them up through the pandemic and this is far worse.”
The industry’s official body, the National Federation of Fish Fryers (NFFF), has warned that fish and chip shops are facing an “extinction event” because of the high prices of energy and fish.
President Andrew Crook said the Government had to recognise that help for the industry was an “investment in the future” because of all the jobs the sector provides.
The NFFF is calling for a cut in VAT and a review of the energy supply system so that it rewards businesses investing in staff and using environmentally friendly practices.
“We’ve always had quite a tight margin because fish is expensive, and we’ve always had quite a low sale price, but we work on volume. We’ve always felt the pain of VAT – I think now the rest of hospitality are all saying the same thing,” Crook said.
