Hair and Beauty Sector: Government Policy

Julian Lewis Excerpts

Wednesday 23rd April 2025 Westminster Hall

[Julia Lopez]

My right hon. Friend is absolutely right: this is about a series of things hitting these businesses. It is about new legislation, new taxes and the withdrawal of reliefs that had been supporting businesses. I am glad my right hon. Friend intervened, because I was in Hornchurch yesterday speaking to staff at Wyndham Hair. Johnpaul, who runs that business, is one of my right hon. Friend’s constituents, and he told me how supportive my right hon. Friend has been of his local high street, so I appreciate the support he is giving me in the debate.

As my right hon. Friend said, this is about a whole range of people sectors. It is not just about salons being hit with these staggering tax bills; it is also about the early years sector. That sector supports many other businesses that require good workers. When I talk to nurseries in my constituency, some of the bills they talk about are just unbelievable. In fact, they are so unbelievable that when I tell people about them, they do not believe it—they think the nurseries must have got their sums wrong, but that is absolutely not true.

One after-school and holiday club provider has seen her annual NICs bill go from £10,851 to £26,040. That is a small business, and it is being absolutely hammered. One nursery provider told me that the combined impact of NICs and the minimum wage is adding £30,000 to her payroll costs every month. Those are unbelievable numbers, which risk driving many nurseries to closure. That will dismantle the support network that allows many other women to go into the workplace.

The minimum wage is right in principle, but when we force a small salon with razor-thin margins to meet that extra cost on top of everything else, it becomes untenable. When we add to that the looming Employment Rights Bill, many salons are telling staff to go self-employed just to survive. That is not giving people more protections but ripping up the ones they already have.

That brings me to apprentices. Salons are letting them go very fast. For decades, this industry has opened doors for young people to learn skills and earn a living, and that ladder is being kicked away. At Coal House Cuts, the owners once proudly trained apprentices; now they cannot afford to. Wyndham Hair used to employ four apprentices; now they have one. The Vanilla Room is getting daily calls from laid-off apprentices, but it too has had to cut learner hours. Its owner, Kerry, told me:

“For the first time in 30 years, we just can’t afford to run apprenticeships. Our costs are up £28,000 on apprenticeships a year. How much does the government think salons make?”

After I put in for this debate, more stories poured in from across the country. This crisis goes beyond hair and beauty, because I am hearing the same from construction firms—another traditional route for working-class youth. Two vital pathways into work for working-class girls and boys are collapsing. Is this the future that Labour promised—a generation of young people priced out of skilled trades because Westminster could not design a Budget with small businesses in mind? That is surely the very opposite of what this Government say they want, and it is utterly incompatible with their drive to get people off welfare. Because beauty salons are facing so many different costs, they are also cutting back on training, in a sector where customers demand that they are up on the latest technologies.

So what will happen? First, there will be job losses and price hikes. One of the challenges for many salons is that their customers face the same economic headwinds, so they are spending less and visiting less often. Then there is the ultimate risk of closures. Every time a salon closes, it leaves more than just an empty unit; it leaves a void in the community—a place of connection, conversation and confidence gone. Speaking to Wyndham Hair yesterday, I heard not only about the services it offers but the support it gave its long-standing clients through covid. Those are the kinds of businesses that these people run. Utopia has clients aged 10 to 97; the 97-year-old goes to the beauty salon because it is her place of sanctuary. When legitimate businesses vanish, they are replaced by shady operations that are often fronts for illegal or exploitative practices. The rest of the high street struggles, apprenticeship routes collapse and tax receipts fall—they will not rise.

[Sir Julian Lewis (New Forest East) (Con)]

I know it is not the main thrust of my hon. Friend’s argument, but does she share my concern at the detailed exposés at the end of March in the Evening Standard and The Sunday Times about the huge proliferation of barber shops, which could not possibly all be conducting legitimate trade? For example, the Evening Standard talked about 17 barbers in and around a two-mile stretch of Streatham High Road, and about 25 on a similarly sized section of Kingsland Road between Stoke Newington and Haggerston. That is clearly criminal activity on a major scale.

[Julia Lopez]

I thank my right hon. Friend for that important intervention. As I was preparing for the debate, I read about some of the police operations in Manchester, where they have been cracking down on this kind of activity. The frequency with which they found that these were fronts for illegal businesses—often with links to international crime gangs—is deeply worrying. That is one reason why I want to raise the profile of this issue. We cannot lose legitimate businesses from our high streets, because what fills the void is something that none of us wants in our communities.

What can be done? I know how this works: the Minister sits in the Department for Business and Trade, not His Majesty’s Treasury, so he cannot give any substantive answers on the fundamental mistakes being made on tax policy. However, like any Business Minister worth his salt, he will probably share my concerns and wonder how best to get the Treasury to change course. He might even find this debate quite helpful to his own lobbying, just as the Under-Secretary of State for Education, the hon. Member for Portsmouth South (Stephen Morgan), and his officials did when I gave him evidence about the crisis now engulfing the early years.

Here are some practical asks that my salons would like the Minister to make of the Chancellor: VAT reform, with a reduced rate for labour-intensive services; the restoration of business rates relief and the overhaul of the outdated business rates system, particularly for high street premises; the revival of apprenticeship incentives; and revisiting the measures in the October Budget. Look, the Government should use global market turmoil as an excuse to mask Labour’s mistakes if that is what it takes, but let us get a U-turn on these economy-shrinking tax takes. They are not working. Confidence and employment are down. Growth projections have been halved. The tax take is going to shrink, and that will translate into a smaller pot for public services. Members do not need to take my word for it; the International Monetary Fund said so just yesterday, confirming its view that the UK’s growth prospects have been cut because of domestic factors.

To conclude, this debate must serve as a reminder that Government do not create growth—businesses and people do. Those businesses are now often paying increased rent, utility bills, professional fees, VAT and covid debt interest and, since April, giant hikes in business rates and the cost of employing people. It is just too much. People work to incentives, and right now the incentive to start a business such as a hair and beauty salon, grow it, take on staff with full employment rights and train apprentices is simply not there.

The Government say they care about growth, communities and employee rights, but their actions—I hope by accident rather than design—are crippling the very people who grow things, give heart to communities and employ people. I say to the Minister: use this debate and take these real stories, these stark warnings and the sector’s clear-eyed solutions straight to the Treasury—before it is too late.