Hair and Beauty Sector: Government Policy

Sarah Gibson Excerpts

Wednesday 23rd April 2025 Westminster Hall

[Sarah Gibson (Chippenham) (LD)]

It is a pleasure to serve under your chairmanship, Ms McVey.

I thank the hon. Member for Hornchurch and Upminster (Julia Lopez) for securing the debate. She made an important point about the fact that small businesses in the hair sector have endured a perfect storm: the pandemic, soaring energy bills, red tape and unfair tax bills. Everyone present today has called for the Government to recognise this industry’s importance to our economy, our high streets and the communities that we represent. With that in mind, I will pick up on three points made by my colleagues today about employer national insurance contributions, forced self-employment and apprenticeships.

The hon. Members for Strangford (Jim Shannon) and for South Northamptonshire (Sarah Bool) pointed out that the hike in NICs has meant that many small businesses in the industry are just breaking even, never mind making a profit. That is why the Liberal Democrats oppose the Government’s increase to national insurance. We believe it to be an unfair tax on jobs. The Government will reiterate that the employment allowance helped the smallest businesses, but the British Hair Consortium estimates that the changes could add more than £40,000 to the payroll costs of a typical business of this type.

This week, a salon in Royal Wootton Bassett in my constituency told me of a trend across the sector of encouragement to become self-employed, as has been mentioned by many colleagues today—“rent a chair”, my constituent called it. That did not come as any surprise to me, nor will it to other Members. The increasing costs associated with employing staff, coupled with the complex and fairly impenetrable Employment Rights Bill coming down the line, mean that many small businesses such as salons are struggling to plan ahead. These are small businesses whose owners run them in the evenings, not during the day, when they are trying to run the salon. They need clarity from the Government about that Bill and what it will mean for them, and they need support to retain some of their staff. If they do not get that support the industry will see a huge increase in the number of people becoming “chair renters”. I hope that the Minister will address some of the issues of clarity in that Bill.

In addition to the challenge of retaining staff, small businesses find it almost impossible to afford to host apprentices in the current climate—that point was raised by the hon. Member for Hornchurch and Upminster. Hair salons and the beauty sector have long provided a route into meaningful careers for young people, particularly those from disadvantaged backgrounds, but the current apprenticeship levy is not working for them. The Liberal Democrats would like a more flexible skills and training levy that helps businesses invest in their teams.

On Friday I will support a careers fair in Wiltshire that will connect students with lots of small local businesses. I hope that the Minister’s response will enable me to reassure those budding apprentices about their futures. I congratulate the hon. Member for Hornchurch and Upminster for securing this important debate.

--- Later in debate ---

[Gareth Thomas]

I would have thought that the hon. Lady would welcome the measures we took in the Budget to protect the smallest businesses. We increased the employment allowance so that almost 1 million employers pay no national insurance contributions at all. More than half of employers will see no change or gain from that package, and that includes many hair and beauty businesses, as the vast majority of them are micro-sized.

[Sarah Gibson]

Does the Minister not agree that, at the same time, he reduced the threshold at which that measure steps in, such that any allowances mean that it is counterproductive to most small businesses? There is an increase in NICs once they pay it, and the fact that they pay it on a £5,000 rather than £10,000 employment means that lots of part-time workers are suddenly liable for employment contributions when they were not before.

[Gareth Thomas]

I will go back to the point I made earlier. We inherited a very difficult fiscal position, which, to be fair to them, the Liberal Democrats do accept. Unfortunately, the Liberal Democrats never like taking difficult decisions in my experience, although they are happy to support the benefits of those difficult decisions.

We sought to protect small businesses as much as we could in the Budget, in order to repair the finances of the country going forward. We are also creating a fairer business rates system that protects the high street, supports investment and is fit for the 21st century. We have committed to reforming business rates from 2026-27 with a permanently lower multiplier for retail, leisure and hospitality businesses, which will include hair and beauty salons.

I also understand that the sector is competing against unfair and illegitimate businesses, as many hon. Members drew attention to. His Majesty’s Revenue and Customs recognises that tax can be very complex, and we are working with the sector to help businesses to remain within the rules. However, there are those who are engaged in criminal activity, and we take that very seriously. As has been well chronicled across various media outlets, the National Crime Agency has been co-ordinating Operation Machinize, during which 265 premises were visited and officers secured freezing orders over bank accounts totalling more than £1 million. Other work in that space is ongoing. We will continue to support law enforcement partners to tackle high street crime more generally. Improved funding to help those partners go after gangs was also announced in the Budget.

Later this year, we will be publishing our small business strategy, which will set out the Government’s vision for small businesses. It will focus on boosting a range of support to businesses to create thriving high streets, make it easier to access finance, open up overseas and domestic markets, build business capabilities, and provide a strong business environment. All those are vital to the growth and resilience of the hair and beauty industry, and I will certainly continue to work with the sector as the strategy develops.

My hon. Friend the Member for Ribble Valley specifically asked me about the consultation run by the previous Government, and whether the Government are going to respond to it. We are due to respond as soon as possible. The Department of Health is leading on that issue, so I hope she will continue to watch this area and campaign on it going forward.

In conclusion, I know that the hair and beauty industry is incredibly important to every high street and every community in the UK, and I will continue to champion it in the House and across Government.