Hair and Beauty Sector: Government Policy

Richard Holden Excerpts

Wednesday 23rd April 2025 Westminster Hall

[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.

[Mr Richard Holden (Basildon and Billericay) (Con)]

I thank my hon. Friend for securing this incredibly important debate. Just up the road from her in Essex, in Basildon and Billericay, well-groomed men and women are facing the same issues. I thought this was a poignant moment to intervene, because it is precisely part-time workers, many of them women, who are affected, often in female-run businesses. Does my hon. Friend agree that the combination of all these things—the increase in national insurance, the issues around business rates relief on the high street—is really hitting? But there is also concern about some of the legislation coming forward in the so-called Employment Rights Bill, which local businesses tell me is an unemployment Bill and which, rather than protecting workers, is causing more problems, because businesses just do not want people on their payrolls.

[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.