A Moray garden centre says it is “pretty sure” a recession is looming as UK inflation hit double digits for the first time in decades.
Threaplands Garden Centre in Lhanbryde, Elgin, employing 62 staff and also running a thriving cafe, is feeling the squeeze as a succession of financial strains, most notably energy rises, pose significant challenges while business rates continue to be applied at full cost – unlike south of the border.
In particular, the business cites its soaring electricity costs which will see monthly bills rise from £4,000 last year to a staggering £10,000 in October.
Threaplands director Ben Laing told The Press and Journal the government needs to take “drastic action” on business rates after energy costs more than doubled.
He said: “Last year when we fixed the (electricity) contract for another year we thought the prices were very high then and it has come as a bit of a shock just how increased they are.
“Obviously rates is another one for us in Scotland. England has still got 50% rates relief on hospitality and retail which we would fall into but in Scotland you don’t so it is full rates.
Drastic action needs to be taken”
– Threaplands director Ben Laing
“There is nobody listening on the cost of rates in Scotland. That is just ignored because the SNP would rather shout about what Westminster could be doing rather than what they could be doing.
“They say they are trying to help people; helping people is one thing, if they don’t have any jobs because businesses are failing then there will be greater need to help people.
“Some drastic action needs to be taken.
“We are part of the Horticultural Trades Association and they have been saying for years rates are too high. It is about a 23-year high for rates in Scotland.”
Passing on costs to customers
Threaplands’ comments on energy bills and rates come on the day the UK saw inflation rocket to 10.1% as measured by the Consumer Prices Index compiled by the Office for National Statistics (ONS).
Companies are also enduring intense pressure according to the British Chambers of Commerce (BCC) which noted producer price inflation hit 22.6% in July, one of the highest since records started.
BCC director of policy and public affairs Alex Veitch said: “There is a limit to how much additional cost firms can absorb and it is limiting growth and investment.”
Mr Veitch urged the government to address the more than one million vacancies in the UK, while also cutting VAT on businesses’ energy bills from 20% to 5%.
Threaplands has had to pass on some of its extra costs to customers as the garden centre’s own suppliers feel the squeeze and it adapts to the increase in the minimum wage, although Mr Laing concedes there is “only so much you can put your prices up by.”
The business did benefit from VAT falling to 5% during the pandemic, but this has also now reverted to full cost, while the swingeing increase in fuel costs earlier this summer following geopolitical unrest led to “the biggest consumer confidence crash.”
Coupled with that, the change in rules regarding red diesel also impacted the Elgin garden centre, whose forklift and on-site equipment now have to use the more expensive conventional road diesel, while Co2 costs have headed north and a Covid loan is still being repaid.
‘Great relationships’ with suppliers
The garden centre did experience an increase in interest during various lockdowns as people with more time on their hands turned to improving their homes, with the Threaplands boss noticing an upswing in its café business.
“People have been visiting the cafe a lot during the day but that is questionable as to whether they are not eating out at nighttime,” said Mr Laing, adding: “It is potentially a cheaper option to join us for lunch.”
Noting Threaplands had “great relationships” with its suppliers, Mr Laing said he recognised they too were businesses with rising cost pressures although that does not prevent the garden centre from “shopping around for different suppliers, for energy, for diesel.”
He added: “You can’t take and not give back to suppliers because otherwise they will go under. Although they could potentially help, that is not a resolution to the issue. We can’t not pay people – that is not our ethos.”
Staff wages at Threaplands rose when the minimum wage increased with the company offering an 8% rise to employees and with some students returning to university shortly, full-time employees will have to cover some more of their work.
However, Mr Laing has not had to let anyone go due to the current situation and has even recruited for some posts as “we need to keep the level of customer service up,” but the garden chief is pointing to stormy weather ahead.
Tough 18 months ahead
“I am pretty sure we are going to hit recession and are going to find it tough for the next 18 months or so,” said Mr Laing, adding: “We have thankfully got a very loyal base of customers that we have built up.
“We did a lot of home deliveries, delivering food to people who were shielding. We got great benefit from that as a business because we were willing to go out and support the customer, so the customers have supported us.”
Ironically, Threaplands is “busier than we have ever been” but the surge in costs is overtaking that extra custom.
Mr Laing noted: “We are growing but we can’t keep up with the increase in cost which is hard to believe considering the growth we have had.”
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