The UK hair salon industry faces an uncertain future, with two in five salons at risk of closure due to rising labor costs outlined in last month’s Budget.
Industry leaders, including Carla Whelan, CEO of salon group Regis and Supercuts, have raised concerns about the “devastating” impact of higher employer national insurance contributions, which could push many long-standing salons into unsustainable losses.
The Budget’s tax measures, which include an increase in employers’ national insurance contributions by 1.2 percentage points to 15% and a reduction in the income threshold for employers from £9,100 to £5,000, are expected to raise £25 billion. However, the British Hair Consortium’s research found that 40% of salon owners are now considering closing their business next year, with most citing unaffordable labor costs.
“The cost of employment has created an impossible profit and loss scenario for individual hair salons, where labor accounts for around 50% of costs,” Whelan said. Toby Dicker, owner of five salons, noted that these changes would cost his business a further £122,000, pushing some salon owners towards a standalone model as a last-ditch effort to reduce costs.
Andrew Collinge, chairman of Collinge & Co and a fourth-generation hairdresser, has written to Business Secretary Jonathan Reynolds to outline the impact of these changes. “We believe in contributing by paying taxes, but this budget appears to be unfairly targeting employment,” he said, echoing a sentiment felt across the sector.
In addition to hair salons, other sectors are also facing similar challenges. Supermarkets including Tesco and Sainsbury’s have warned they could increase prices to offset the tax burden, while the Night Time Industries Association reported that four in 10 night shops are at risk of closing. UK Hospitality, which represents the hospitality sector, warned that these measures could lead to widespread closures and job losses, especially for small businesses.
Business insolvencies have already soared, with 1,022 UK businesses filing for closure in the week ending November 8 – a 64% increase on the previous year. As more industries grapple with the rising cost of employment, calls for government intervention are growing louder. Many are urging the Chancellor to reconsider policies that could impact Britain’s small businesses and employment.