Hair and Beauty Sector: Government Policy

Harriett Baldwin Excerpts

Wednesday 23rd April 2025 Westminster Hall

[Dame Harriett Baldwin (West Worcestershire) (Con)]

It is a pleasure to serve under your chairmanship, Ms McVey. I add my congratulations to my hon. Friend the Member for Hornchurch and Upminster (Julia Lopez) for securing this important debate, and for clearly setting out the issues with Government policy for the hair and beauty sector.

It is truly SOS time—save our salons. In the debate, we have heard from across the country—from Ribble Valley, Bromsgrove, Stourbridge, Gosport, Strangford, South Northamptonshire, Solihull and Chippenham—about how important these businesses are to our constituents. They make not only a huge economic contribution but an enormous contribution to our personal wellbeing, to fostering community spirit and to tackling loneliness. We have heard about the economic contribution of over £8 billion, but the impact of salons in giving people an opportunity for a moment of peace in a frantic life should not be underestimated.

It is regretful that the Government’s recent decisions have put such uncertainty into the sector. We all acknowledge that the sector has had a long-standing issue that VAT cannot be reclaimed on its biggest expense: labour. We have also heard that, given about 60% of the sector’s costs are wages, the Government’s decisions in the Hallowe’en Budget, particularly the change in the national insurance threshold, have made things considerably worse for businesses in the sector. Many of the businesses are small or medium-sized, and they add so much to our high streets. They are being gravely affected by the Budget.

The British Beauty Council states that the assumption that these businesses

“can simply absorb the costs is hugely misguided. Instead, it will most likely prevent wage increases and deter people from hiring more staff therefore stifling growth”,

which is the very growth that the Government wish to see. Additional pressure has come from the rise in the national minimum wage, and another impact of the Hallowe’en Budget was that, as we have heard, the Chancellor reduced retail, hospitality and leisure relief from a 75% discount to a 40% discount. That has been another major hammer blow to the sector’s financial wellbeing.

We know that the Budget has had a big impact on the hair and beauty sector because the National Hair & Beauty Federation has just published a report examining it. It says that businesses in the sector are expected to incur an additional £139 million in costs, and that is before making any operational adjustments. Labour expenses alone will rise by £100 million. The report revealed that, as a result, 72% of businesses anticipate having to raise prices; no wonder the IMF is calling out the inflationary impact of this Budget. Furthermore, 45% of the businesses intend to cut their staff hours and another 45% plan to reduce their workforce. On average, each business expects to lay off 2.7 full-time equivalent employees and an apprentice. Overall, the sector’s profits are expected to decrease by 15%, with turnover down by £20 million and corporation tax therefore decreasing from £240 million to £200 million. Indeed, the sector’s total tax contribution is anticipated to fall by £44 million, which is a great example of the Laffer curve in reverse.

Following the Budget, the Hair and Barber Council polled hair professionals across the country. Of the 2,000 respondents, 42% are now considering closing their businesses in the next 12 months, 80% said they are now being forced to consider moving to self-employment, 94% said they are either extremely concerned for the future, or believe that a generation of apprenticeships will be lost, and 98% do not believe that the sector is valued by this Government.

Can the Minister confirm whether the Government commissioned any kind of impact assessment of the potential impact of the changes to national insurance in the Halloween Budget on the number of apprenticeships offered by high street businesses? We already know that the Employment Rights Bill will add a further £5 billion of costs across the whole of UK businesses, so what assessment has he made of the potential impact of the 2024 Halloween Budget on the level of employment of women in the hairdressing and beauty industries?

Another long-standing concern that we heard raised in the debate was about tax avoidance and criminal activity, particularly by illegal barber shops linked to money laundering. I tabled a written question to the Home Office on this subject and received the following response:

“According to a report by the Local Data Company and Green Street, the average number of barber shops per 10,000 people has more than doubled in the last 10 years, from 1.4 per 10,000 people in 2013 to 3.1 per 10,000 in 2023.”

What assessment has the Minister made of criminal activity among barber shops and what steps are the Government taking to tackle it?

We have heard today how important the hair and beauty sector is to our high streets and to everyone in our constituencies who uses it. The Government’s Halloween Budget has delivered a devastating blow to the sector and put its future in jeopardy. Will the Minister commit to reversing these damaging tax increases?