British Hair Consortium Publishes Survey Results Following October Budget Announcement

The survey included responses from 1,686 industry employers representing over 21,000 workers 

by MADDI | INFORM

Following the October 2024 Budget announcement, the British Hair Consortium (BHC) has released survey results, summarising the initial reaction from the industry and highlighting significant concerns for the UK hairdressing sector.  

The survey showed that 42 per cent of respondents say they are considering closing their businesses within the next year. 98 per cent of salon owners are exploring self-employment models for their staff, with many feeling that switching away from the direct employment (PAYE) system may be necessary for survival. This shift away from traditional employment could have implications for the industry and workers alike, as noted by Hellen Ward from the BHC: “Many workers relinquish their employment rights in exchange for promises of more money in their pocket. Furthermore, many of these unscrupulous business owners use this model as a vehicle to avoid VAT by splitting income at worker level.” 

Apprenticeships, which play a crucial role in developing the next generation of hairdressing talent, could also be at risk. 95 per cent of salon owners who currently employ apprentices say they will reduce their intake, end apprenticeships or decide not to take on any more trainees. BHC’s Collette Osborne commented on the complex legal challenges salon owners face in determining legitimate employment models, noting that “the truth is that our industry has no clear understanding of guidelines on what a legitimate and legal business model is. Salon owners who fall foul of the law only find this out when they are hit with fines that often are so high, the business has to close anyway and, in many cases, end in bankruptcy.” 

Image by Christopher Bill

BHC representatives warn that such a shift could impact not only the livelihood of salon workers but also have broader economic consequences. A loss of PAYE contributions, reductions in VAT and a decline in apprentice numbers threaten to destabilise the sector and diminish government revenue from the hairdressing industry. Office for National Statistics data supports these concerns, showing a decline of 45,000 employees, or 37 per cent of the workforce, in the hairdressing sector since 2018. 

The survey revealed that 94 per cent of respondents are either extremely concerned for the future or believe a generation of apprentices will be lost, and 98 per cent of respondents do not believe the hair sector is valued by the government.  

Amid this uncertainty, Toby Dicker from the BHC emphasises the importance of unity in the industry to navigate the challenges ahead: “There’s never been a greater need for the industry to join together to ensure that everyone is trading under the correct terms. If you want to be properly represented then join one of the six business organisations that are most representative of our industry.” 

The BHC continues to advocate for sector reforms, underscoring the urgency for clear guidelines and support to sustain the future of British hairdressing. 

How To Combat Rising Costs Following National Budget Cuts

With years of industry insight, Edward James shares strategies to help salons adapt and thrive amid economic changes

by CAITLYN | INFORM

As a highly respected figure in the hairdressing industry with over 25 years of experience, Edward James has built a name for himself not only as a top stylist but as a champion of sustainable and client-centred salon practices. Known for his luxury Edward James Salon & Spa locations across South London, Edward has won numerous awards, garnered a loyal clientele, and fostered an elite team that embodies his values of quality and community. 

Edward is well-positioned to critique these policies, having grown his business from a one-person operation to an award-winning network of salons employing over 100 people. He has dedicated his career to creating not only beautiful spaces but also stable employment for his team and a haven for clients. His insights into the impact of budget cuts extend beyond personal grievance; they reflect a deep understanding of the broader economic and community repercussions. “These aren’t just numbers – they’re people’s livelihoods, career opportunities, and local jobs that contribute to the economy,” he says. 

“”With high streets increasingly dominated by service-oriented businesses like salons, Edward believes the budget’s approach is out of touch with modern economic realities. Salons face substantial overheads, with 60 per cent of their operating costs typically going toward staffing, an unavoidable expense in a hands-on, client-focused industry. As Edward points out: “Salons require a significant workforce to provide personal services, meaning we’re facing substantial overheads on staffing alone.” 

Reflecting on his personal sacrifices, Edward shares: “I’ve dedicated 14 years of relentless work to this business, which challenges Keir Starmer’s perception of what a ‘working person’ entails. Business owners frequently work harder than anyone within the company, carrying significant responsibility. During the pandemic, our salons were forced to close for a total of 245 days, resulting in considerable team losses. Selling my home was essential to keep the business afloat, prevent closures, and avoid redundancies. My belief in our team’s resilience drove this decision, as I trusted we’d recover.”

Edward says, “Collective advocacy is crucial. Salons often get grouped with the broader ‘beauty sector,’ which is experiencing growth. Unfortunately, this masks the challenges salons face. Retail beauty operates with a smaller workforce, so employment taxes have less impact, and many products are sold online, avoiding the substantial burden of business rates. Hair salons, however, remain high-cost, high-commitment ventures that require fairer treatment to survive.”

In the meantime, he has stepped up to support other salon owners facing similar financial strains, offering his advice and strategies to help them remain resilient. His key recommendations include: 

• Review Costs Regularly: Take a thorough look at monthly expenses to identify any non-essential costs that can be cut. Negotiate with suppliers to lower costs wherever possible, and reassess each expense line item. 

• Optimise Operating Hours: Analyse customer traffic data to focus on high-demand periods. Consider reducing hours on quieter days to save on both energy and labour costs. 

• Streamline Staff Schedules: Use scheduling software or data analysis to align staff levels with client demand, maximising productivity and avoiding unnecessary labour costs. 

• Consider Self-Employment Models: If suitable for your salon, explore moving stylists to a self-employed model. This approach can relieve some of the tax burden associated with National Insurance increases, while also providing stylists with greater flexibility. 
• Join Support Organisations: Connect with industry groups such as the Federation of Small Businesses (FSB) and the Salon Employers Association (SEA). These groups provide valuable resources, a supportive community, and a collective voice for advocating industry-friendly policies. 

Edward’s advice offers a lifeline for salon owners determined to face these turbulent times with resilience and adaptability. For an industry that’s always been about creativity, connection and making clients feel extraordinary, these changes hit close to the bone. But with leaders like Edward, the hairdressing community is reminded of the power of unity and shared solutions. Together, with a focus on smarter strategies and mutual support, the industry can stand strong, protecting not just jobs but the heartbeat of the high street. 

Hairdressing Employers In Firing Line From The Biggest-Ever Tax Raid Budget

As widely expected, the new Labour Chancellor has lifted employers’ National Insurance Contributions, but the drop in the threshold at which businesses start paying it is pretty startling – from £9,100 to £5,000.

by CATHERINE | INFORM

Today (30 October 2024), in Labour’s first Autumn Statement in 14 years, the Chancellor Rachel Reeves announced a Budget that will raise taxes by £40bn.  

The biggest hitter was an increase of 1.2 per cent in employers’ National Insurance Contributions, which means the rate will rise to 15 per cent in April 2025. At the same time the government will also reduce the secondary threshold from £9,100 to £5,000, in a move that will raise £25bn a year by the end of the forecast period. Before the Budget, employers were liable for a rate of 13.8 per cent of workers’ earnings above £175 a week. 

However, Reeves also announced that the employment allowance will rise from £5,000 to £10,500. 

She said: “This means 865,000 employers won’t pay any National Insurance at all next year and over one million will pay the same or less than they did previously. 

“This will allow a small business to employ the equivalent of four full-time workers on the National Living Wage without paying any National Insurance on their wages.” 

Reeves used the Budget to reiterate yesterday’s announcement that minimum wages will rise in April 2025 as follows: 

• The minimum wage for over 21s, known officially as the National Living Wage, will rise by 6.7 per cent, from £11.44 to £12.21 from April 2025. For someone working full time, or a 37.5-hour week, that equates to £23,873.60 a year, up from £22,368.06. 

• For 18- to 20-year-olds, the minimum wage will rise from £8.60 to £10. This means someone on a 37.5-hour week will earn £19,552 a year, up from £16,815.  

• Apprentices will get the biggest pay bump, from £6.40 to £7.55 an hour. That means their annual wage will go up to £14,762 from £12,513 currently. 

According to The Treasury, the hike in the minimum wage for under-21s – the largest on record – marked the first step towards a single rate for all adults. 

“It’s a particularly bad day for hairdressing and beauty businesses and the end of the road for apprentices and employment within our sector” – Toby Dicker of the Salon Employers’ Association.  

In more bad news for high street hairdressing businesses, the current 75 per cent discount to business rates – due to expire in April 2025 – will be replaced by a discount of 40 per cent, up to a maximum of £110,000. That means that many businesses will see their business rates nearly double.  

Among the other announcements were: an increase in Capital Gains Tax, a freeze on fuel duty next year and the introduction of VAT on private school fees from January 2025. 

In her opening remarks Reeves says the UK had voted for change, and that the Labour government has a mandate for a decade of “national renewal”. 

She pledged “more pounds in people’s pockets” and improved living standards. The only way to drive economic growth is to “invest, invest, invest”, she added. 

The government must “restore economic stability and turn the page on 14 years” of Conservative government, Reeves said. She says the Labour party has rebuilt the UK economy before and will “rebuild Britain once again”.  

“In the grand scheme of things we are a niche industry that the government simply doesn’t understand, and we have become collateral damage” – Louise Howard-Long, Architect Hair, Leeds 

However, hairdressing business owners and organisations reacted with dismay as Reeves set out her government’s taxation priorities, which come against a backdrop of higher debt following the pandemic, higher interest rates and inflation that has only recently returned to normal levels. 

“It’s a particularly bad day for hairdressing and beauty businesses and the end of the road for apprentices and employment within our sector,” said Toby Dicker of the Salon Employers’ Association.  

“After years of tireless campaigning with the Department for Business and HMRC and trying to show how tax policy directly affects apprentices, our industry, which is hit five times harder than retail by employment cost increases, has been broken.  

“We have no alternative but to lay off apprentices and move all our staff to self-employment to have any chance of survival.” 

(Toby has created an online calculator to help business owners understand the impact of the Budget. For access to the calculator, email admin@salonemployersassociation.co.uk) 

Said Louise Howard-Long, owner of Architect Hair in Leeds: “Of course, people deserve to be paid well. But in the grand scheme of things, we are a niche industry that the government simply doesn’t understand, and we have become collateral damage. I fear for the future of hairdressing. More and more people are being pushed into the grey economy and at some point, the government will wake up and realise they’re missing out on a lot of income that they used to get from our industry.” 

Sam Kendall, chief operating officer at salon booking, management and marketing system SalonIQ, also warned that today’s Budget might impact on hair businesses’ future hiring plans.  

She said: “Experts have rightly dubbed this an effective ‘tax on jobs’, raising fears that it will stifle hiring, slow wage growth and limit pension contributions. For salon and barbershop owners striving to build a strong team and provide fair pay, this could be a critical setback, many having to reduce their team sizes and let non income producing apprentices go. 

“In an environment where confidence is crucial for investment and growth, these changes risk sending small salon and barber businesses into a cycle of stagnation.  

“Salons often take the hit in these situations, however the cost of running a business is not sustainable as costs keep rising. Salons will have no choice but to increase their prices to absorb these costs and should aim for an increase on their services of 4 to 5 per cent. Whilst we remain positive, some will sadly have no option but to close their doors.”

Image by Christopher Bill

“Salons will have no choice but to increase their prices to absorb these costs and should aim for an increase on their services of 4 to 5 per cent” – Sam Kendall, COO, SalonIQ 

And while Caroline Larissey, chief executive of the National Hair & Beauty Federation, welcomed the rise in the Employment Allowance, she too voiced concern about the impact of the minimum wage increases. 

“With 16 per cent+ rises in the youth wage rates there was nothing on interim support for businesses training young people,” she said.  

“The only ‘youth guarantee’ for our sector will be that small and micro employers won’t be able to afford to take on apprentices.  

“While the Employment Allowance increase offers some breathing room, the dramatic rise in apprentice wages threatens to disrupt the traditional pathway into our sector. Without targeted intervention, we risk creating a skills gap that could take years to bridge. The government’s approach to retail business rates shows they’re listening, but more comprehensive support is needed to ensure the sustainability of apprenticeships in hair and beauty.”