Hair and Beauty Sector: Government Policy

Alberto Costa Excerpts

Wednesday 23rd April 2025 Westminster Hall

[Julia Lopez (Hornchurch and Upminster) (Con)]

I beg to move,

That this House has considered the impact of Government policy on the hair and beauty sectors.

It is a real pleasure to serve under your chairmanship, Ms McVey. This debate is about giving a voice to the thousands of small business owners crushed by the weight of tax demands. They are frustrated and exhausted —penalised, it seems, for doing everything by the book. They are expected to keep taking personal risks, to employ others and to pour all they have into building businesses and serving customers, even as the rewards for doing so shrink year after year. Those assumptions have bred a troubling complacency in Whitehall that these businesses will always just be there to tap up, and the crisis now gripping the hair and beauty sector is a stark example of the consequences.

High street hairdressing and beauty salons offer jobs and training to thousands of young people. These businesses are disproportionately led or staffed by women, many of whom need flexible hours to balance their caring responsibilities. We all know these people, because we have been served by them—even counselled by them—sometimes over many years.

However, today salons are under threat. The combination of the pressures they face is turning into a crisis, and the result will not just be a loss of revenue to the Treasury.

[Alberto Costa (South Leicestershire) (Con)]

I thank my hon. Friend for securing this important debate. Only a few weeks ago, I visited Sue Davis’s hair salon in Blaby in my constituency, and she introduced me to two of the young people my hon. Friend has in mind, Tegan and Poppy. Does she agree that the measures the Government have brought in not only damage the hair salon industry, but risk reducing the number of apprenticeships, making it possible that there will be no future Tegans and Poppys going into the hairdressing business in the first place?

[Julia Lopez]

That is precisely one of the issues I wish to highlight in today’s debate. This avenue of employment is being closed down for too many young people, because hiring apprentices has become far too expensive. I am sure other hon. Members are seeing apprentices being shed across their constituencies because the sheer cost of employing them makes it too difficult for salons to retain them. That is a terrible loss for those young people and for salons that need those skills and that skills pipeline.

As I was saying, the result of salons closing will not just be a loss of revenue to the Treasury: it will be young people without an apprenticeship; high streets where the empty units left behind are filled with front businesses—perhaps a dodgy nail bar, a vape shop or a barber that may not be playing by the rules; customers who lose a service that they loved and that gave them a sense of place; and entrepreneurs who wonder why on earth they bothered to do the right thing and who now question whether this country is the right place to put their energies.

I will set out the challenges facing these businesses, explain why we should all care and, finally, share with the Minister the asks from my local salons, so that we can keep these vital businesses alive, with the benefits that flow to us all. Let me start by setting out some of the pressures on high street salons.

Salons have weathered some extraordinarily difficult years with the pandemic. Take Wyndham Hair in Hornchurch, a business that has been operating since the late 1970s. Owners Johnpaul and Jane returned from covid burdened with debt due to the stop-start nature of operating restrictions. They restructured and streamlined, and are now debt-free and at their most efficient, but the business offers little more than a wage. Why? Well, VAT is a major factor.

Johnpaul and Jane chose to employ staff rather than rely on self-employed workers. That offers better security for their employees and quality control for them, but it comes with a financial penalty: as an employer, they pay VAT on services. Meanwhile, mobile or home-based businesses, or salons staffed entirely by self-employed workers, often avoid that. Those operating outside premises also duck regulatory costs such as those for trade waste, music licensing and more. That creates an unfair playing field. It is a bizarre situation, because we can effectively have two businesses, identical to all intents and purposes, operating under two different tax systems.

Hair and beauty is a labour-intensive sector, and around 60% of costs are wages. As I heard from Toby from the Salon Employers Association, salons trade in skill, not goods, and cannot reclaim VAT on their biggest cost, which is people. That pushes legitimate businesses to the brink and rewards those operating in the grey market. Self-employment is a legitimate business choice, but employment tribunal case law demonstrates that it is increasingly being used as a means of avoiding tax and employment laws. Without VAT reform, the British Hair Consortium forecasts that there will be a 93% drop in direct employment in the sector by 2030. That is not a typo; that is an emergency.

The long tail of covid and VAT were existing challenges. Rent and utilities increases also created pressure. Let us now add into that mix Labour’s disastrous October Budget, starting with the withdrawal of business rates relief. During covid, Conservatives supported high street businesses with grants and rates relief but, as of April, those have gone. Coal House Cuts in Upminster now faces a rates bill of £2,000, up from zero. The Vanilla Room in Hornchurch saw its rates bill rise from £7,500 to more than £18,000. Those are not minor figures; they are bills that keep people up at night.

Let us add in the increase in employer national insurance contributions. There is something pernicious about what the Chancellor has done here. Because of the change to thresholds, the NICs hike is hitting the types of business that employ a large number of lower-paid or part-time workers. For the Utopia beauty salon in Hornchurch that means a rise in employer NICs from £750 to £1,000 a worker. Many of its workers are single mums providing for their families, and it has already had to let go one of its tight-knit team. Because Utopia’s suppliers are facing exactly the same pressures, it is seeing cost increases of 5%, and energy and utility bills have trebled.

I am seeing an unmistakable theme in my constituency work: female business owners, with many female employees, are approaching me for the first time. I have been an MP for nearly eight years, and these are the types of people who never get in touch with their MP. To put some numbers on it, over 80% of the workforce in hair and beauty are women; 86% of businesses are female-owned; 40% of the workforce is part time, compared with 25% in the wider economy; almost one in three workers is under 30, so it is a young workforce; and 45% of the sector’s jobs are in areas with the highest levels of unemployment.

I want to say something that does not come easily to me because I loathe identity politics: it is hard to ignore the impact, let alone the irony, of a Chancellor celebrating herself for being the first woman to hold that office, while simultaneously hammering sectors that employ, serve and are often led by women.