Why hair and beauty salons could start disappearing from the high street: Toby Dicker

That’s over 5,500 businesses and 44,000 jobs - many of them occupying spaces on our struggling high streets, helping to drive millions of customers into our cities, town centres and villages each week. Not only that, it is driving a wave of hairdressers to switch to illegal disguised employment models.

Ahead of the Spring Budget, we’re calling for this cut in VAT to align with other labour intensive service-based businesses, like hospitality.

Along with support from Pauline Latham MP and numerous celebrity hairdressers including Leeds-based Robert Eaton, a multi-award-winning stylist and twice winner of Hairdresser of the Year, we’re campaigning for the reduction to support the sector from devastation - because no matter how successful you are, everyone is being affected by costs.

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The alarming figures are right in front of our eyes - in 2022 the ONS said there were 11,170 VAT registered hair and beauty businesses - the majority of those occupying our high streets. Fast forward to today however, and the landscape looks very different.

In fact, new ONS data shows that the number of businesses in our sector turning over more than £100,000 (and therefore definitively VAT registered) has dropped by a whopping 17 per cent in the last year alone.

Employment has shrunk by 34,000 people (28 per cent) too, as people switch to disguised employment models where they avoid paying VAT and ERNI, or disappear into cash in hand, home working jobs.

The situation is dire and the government and HMRC are forcing honest businesses to go bust. Salons add all value through labour and we estimate that our business model is hit up to six times harder than other retail outlets because nearly all our costs are labour (we have more people working in salons versus other retailers) so any employment related costs hits us much harder.Additionally, since 1999 Employers National Insurance (the tax companies pay on top of salaries to employ people) has increased by 38 per cent and again this hits us much harder, and VAT has increased from 15 per cent in 2010 by a third to 20 per cent.

The government simply cannot expect an industry that is hit so punitively by labour costs and taxes and VAT to keep absorbing the costs. We are an industry on the verge of breaking and the minimum wage increases due to kick in from April, will send us over the edge.

An Early Day Motion kicked off last week - started by SNP MPs who share our concerns about the sector - calling for a reduction.

It’s a start, but without widespread government intervention, the rising costs, declining customer spending, and an ongoing recruitment crisis, salons like Robert’s and thousands of others – many of which are well established family businesses - will struggle to stay open.

Toby Dicker is co-founder of the Salon Employers Association.