The UK hairdressing industry faces an uncertain future, with two out of five salons at risk of closure due to the rise in employment costs announced in last month’s budget.
Industry leaders, including Carla Whelan, chief executive of the Regis and Supercuts salon group, have expressed concern about the “disastrous” impact of increased employers’ national insurance contributions, which could see many older salons go out of business.
The budget’s tax measures, which include a 1.2 per cent increase in employers’ national insurance contributions to 15% and a reduction in the income threshold for employers from £9,100 to £5,000, are expected to raise £25 billion. However, a survey by the British Hair Consortium revealed that 40% of salon owners are now considering closing in the next year, with the majority citing unaffordable employment costs.
“Employment costs have created unsustainable profits and lost salons, where staff make up about 50% of costs,” Whelan said. Toby Dicker, who owns five salons, noted that the changes would cost his business an extra £122,000, pushing other salon owners to look at the self-service model as a last-ditch effort to cut costs.
Andrew Collinge, chairman of Collinge & Co and a fourth-generation hairdresser, has written to Business Secretary Jonathan Reynolds to outline the impact of the changes. “We believe in contributing by paying taxes, but this budget seems to be looking at employment the wrong way,” he said, echoing sentiments across the industry.
Outside of hair salons, other sectors face similar challenges. Supermarkets such as Tesco and Sainsbury’s have warned they may raise prices to reduce tax burdens, while the Night Time Industries Association reported that four out of ten nightclubs are at risk of closure. UK Hospitality, which represents the tourism sector, has warned that the measures could lead to widespread closures and job losses, particularly in small businesses.
Corporate redundancies are already on the rise, with 1,022 UK businesses filing for closure in the week ending November 8 – a 64% increase on the previous year. As many industries face rising employment costs, calls for government intervention are growing, with many urging the Chancellor to reconsider policies that could impact on Britain’s small businesses and employment levels.