The British hairdressing industry faces a severe crisis as approximately 40% of hair salons are at risk of closure following the devastating increased employment costs announced in last month’s budget. The alarming situation stems from the Chancellor’s decision to raise employer national insurance contributions by 1.2 percentage points to 15% from April.
Carla Whelan, chief executive of the Regis and Supercuts group, has issued a stark warning about the £25 billion tax rise’s impact on salon profitability. With labour costs typically representing around 50% of operating expenses, many established salons face an “impossible profit and loss” situation.
The British Hair Consortium’s recent survey reveals that two-fifths of respondents are contemplating business closure within the next 12 months. The majority of salon owners indicated they might switch to a self-employed model to navigate the increased costs, despite potential legal implications.
Toby Dicker, owner of five salons employing 65 staff, calculates an additional £122,000 in costs for his business due to the budget changes. As founder of the Salon Employers Association, Dicker highlights that “disguised employment” is already widespread in the industry, with the new measures likely to exacerbate this practice.
The impact extends beyond the hair and beauty sector. Major corporations including Sainsbury’s, BT, and Serco have signalled potential price increases to offset the higher tax burden. Tesco faces a projected £1 billion rise in national insurance contributions across this parliament, according to Morgan Stanley research.
The broader implications for British business are significant, with company insolvencies surging 64% year-on-year, as revealed in recent Bloomberg analysis. The Night Time Industries Association reports similar concerns, with four in ten late-night venues facing potential closure, highlighting the widespread impact of these fiscal changes across multiple sectors.
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