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Hello, Benchwarmers, and welcome again to The Bench Report. You're listening to Amy and Ivan.

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Hello, everyone.

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So discussions in Parliament recently show there's a really complex and pretty crucial situation developing in the UK's hair and beauty industry.

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This discussion stems from a parliamentary debate where members of Parliament from all over the UK were voicing some serious concerns.

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Concerns about how current government policies are really hitting these businesses hard. We heard from quite a few representatives.

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And this genuinely matters to you listening, even if you don't own a salon yourself.

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Think about you've probably used these services. Or you know someone working in the sector.

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Or you just value your local high street. These places are often, you know, the heart of it. They create jobs, offer training.

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And we've got some figures later that really drive home just how important they are.

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So let's get into the core issue that kept surfacing in the debate.

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The financial pressure. It seems immense right now.

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The main argument is that these businesses, mostly small, often run by women, are just getting squeezed from multiple directions.

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Julia Lopez, she's the MP for Horn Church in Upminster. She spoke about tax demands crushing the small owners who were just trying to operate legitimately.

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She gives some really concrete examples from her own constituency, too.

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Yeah, she mentioned Wyndham Hare and Horn Church. Apparently they managed to pull through the COVID debt.

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But now they're barely making a wage and VAT was singled out as a huge factor there.

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Then there was coal house cuts in Upminster. Their business rate went from nothing, zero, up to 2,000 pounds. And even bigger for the Vanilla Room, also in Hornchurch, their rates went from 7,500 pounds up to over 18,000 pounds.

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Wow, that's a massive increase.

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Huge. And another one, Utopia Beauty Salon. They're struggling with much higher employer national insurance contributions, NICs.

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Which forced them to let staff go, I gather.

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Yes. And on top of that rising supplier costs, utility bills tripling. It paints a pretty bleak picture for these individual businesses.

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It shows how all these different pressures are kind of converging, doesn't it? Utilities, supplies, taxes. It's creating a perfect storm for them.

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And a really big part of that storm seems to be VAT, value-added tax.

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The debate really highlighted this, how salons registered for VAT, the ones employing staff, are at a disadvantage.

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Compared to who exactly?

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Compared to, say, mobile hairdressers, people working from home, or salons that structure themselves using only self-employed workers.

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Why is that? What's the core issue of VAT?

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Well, Toby from the Salon Employers Association explained it quite well. He said salons trade in skill in service, not primarily in goods. So they can't reclaim VAT on their single biggest cost, which is wages, paying their staff. The system isn't really set up for that kind of service business.

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Ah, I see. So businesses selling products can claim back VAT on the goods they buy, but salons can't claim it back on the salaries they pay.

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Exactly. It puts them on an uneven footing, almost like being taxed for employing people.

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Which seems counterproductive. And the potential consequences sound quite alarming.

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Julia Lopez flagged a forecast from the British Air Consortium. They predict a potential 93 percent drop in direct employment in this sector by 2030. 93

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percent. That's staggering. If VAT reform doesn't happen.

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It really is. That figure isn't just about a few salons closing. It suggests a potential collapse of a major employment source, especially for women.

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With massive knock on effects for local economies, training. It definitely adds urgency to to that VAT discussion.

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Absolutely. And closely linked to the cost pressures is another major worry that came up, apprenticeships.

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Right. The fear is that because it's becoming so expensive to hire apprentices.

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Fewer opportunities are being created for young people wanting to learn the trade.

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Alberto Costa, Julia Lopez, again, they both stress this point. And again, the specific examples really hit home.

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We heard stories of apprentices just being let go.

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Coal house cuts the one with the rates increased. They apparently can't afford to train apprentices anymore.

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Wyndham Hare reduced their number from four down to just one.

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And Carrie, from the vanilla room in the salon with a huge rates hike, she said they're getting calls from apprentices laid off elsewhere. They've even had to cut learning hours themselves.

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It really puts flesh on the bones of the problem. And Carrie's question, quoted by Julia Lopez.

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How much does the government think salons make? It cuts right to it, doesn't it? This gap between the rising costs and the actual maybe perceived profitability?

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Making apprenticeships feel increasingly unaffordable. Sarah Bull mentioned another stark prediction.

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From the British Hair Consortium again.

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Yes, potentially zero new apprenticeships starts by 2027. Zero.

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That would fundamentally damage the future pipeline of skills for the entire industry. Where would the next generation of stylists and therapists come from?

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It poses a serious question about the long-term health and quality of the sector.

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So beyond the finances and the training issues, the debate also touched on sort of the wider ripple effects if salons start to disappear.

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The broader economic and social consequences.

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What kind of things were mentioned there?

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Well, the obvious one is empty units on the high street if salons close.

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Which isn't great for the look and feel of a town center.

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No. And Julia Lopez raised the concern that these empty units might then be filled by, let's say... less desirable businesses. She mentioned worries about dodgy nail bars, vape shops, maybe barber shops not following the rules.

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Hmm. And it's more than just the shop fronts, isn't it?

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Definitely. The point was made that these salons often act as real community hubs.

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People build relationships there. You chat with your stylist, your therapist. You share things.

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There was an example of Wyndham Hair really supporting clients during COVID. And Utopia Salon has a 97-year-old client who apparently sees her visits as a lifeline It shows that social role they play.

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There was also a slightly darker concern raised, wasn't there, about shady operations?

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Yes. Sir Julian Lewis brought this up. The proliferation of certain types of barbershops, for instance, and potential links to illegal activities. There was mention of police operations in Manchester looking into this.

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So keeping legitimate, well-run salons afloat is also important for the general health and safety of the high street, it seems.

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It supports the narrative that these aren't just businesses. They're part of the social fabric. Their decline could have consequences far beyond the purely economic.

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Music

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The debate also inevitably zoomed in on specific government policies.

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Yes, how those policies are contributing to the current pressures.

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Several MPs highlighted the withdrawal of business rates relief. That cushion is gone now.

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And the increase in employer national insurance contributions, the NICs, those two came up repeatedly.

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It seemed quite cross-party, too, the concern about these specific changes. Julia Lopez, Richard Holden, Carol Nye-Dinage. Quite a few voiced worries.

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They pointed to the increased financial burden these are placing squarely on these businesses.

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And the argument was made that the NIC's hike disproportionately affects businesses employing lower paid workers or lots of part-time staff.

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Which, as we've heard, is very characteristic of the hair and beauty sector.

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There were also some jitters expressed about the upcoming employment rights bill.

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Yes, concerns that it might make businesses already feeling squeezed even more hesitant to take on new staff.

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Julia Lopez brought in an example from Outside Hair and Beauty. She mentioned cost increases for child care providers, also hit by NICs, and minimum wage rises.

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Showing it's perhaps part of a broader pattern affecting small, labor-intensive businesses. It does raise questions about whether current policies are truly aligned with supporting small business growth.

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The feedback from this sector certainly suggests a potential mismatch, or at least unintended consequences.

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And we need to touch on the demographic aspect here, which is really striking.

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The fact that this is a predominantly female workforce.

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Over 80% of the workforce, yes. And 86 percent of the business owners are women. many working part time to.

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Julia Lopez made an interesting observation about this.

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She said many female business owners are contacting their MPs for the very first time because of these pressures.

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That suggests a level of worry, maybe even desperation. That's really quite unusual and cuts through perhaps previous reluctance to engage politically.

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It definitely highlights a potential gendered impact of these economic policies that maybe wasn't fully anticipated.

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OK, so faced with all these challenges, what did the MPs and the businesses they represent actually ask for. What were the proposed solutions?

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The asks seemed quite practical, quite specific.

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Like what?

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Well, VAT reform was top of the list, specifically pushing for a reduced V8 tree for labor intensive services like hairdressing.

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Which addressed that unfairness we talked about earlier.

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Exactly. Also, bringing back some form of business rates relief and a more fundamental overhaul of the business rate system altogether.

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Which many sectors have been calling for, to be fair.

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True. And reviving better financial incentives for taking on apprentices. plus a call to revisit some measures from the October budget.

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Did anyone put a number on the VAT reduction?

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Catechol suggested cutting it to 10% for these services.

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Were there other ideas floating around?

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Sarah Boole mentioned one. A mandatory register for all hairdressing professionals.

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Why would that help?

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The idea is to tackle VAT avoidance and also disguised employment.

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Ah, where people are technically self-employed but function like employees, maybe to avoid taxes or regulations?

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Precisely. A register could help level the playing field for those operating fully above board and paying all their dues, including employer enegas.

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Make things fair, basically. What was the government's response in the debate? Did the minister acknowledge the problems?

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Yes. The minister, Gareth Thomas, did acknowledge So some recognition and a promise

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of more discussion, at least.

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That seemed to be the takeaway from the government side.

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Okay, let's try and pull this together then. It's clear the UK's hair and beauty sector is really up against it.

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Definitely. We've heard about rising costs across the board, tax burdens that feel unfair, particularly that VAT issue.

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A real threat to apprenticeships and the future skills pipeline.

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And these wider potential consequences, empty high streets, loss of community hubs, possibly even facilitating less legitimate businesses.

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It all paints a picture of a sector under considerable strain.

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Which leads us to a final thought, really, for you to ponder.

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What does the potential struggle, even decline, of this sector one we see every day on our high streets tell us?

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What does it say about how we're supporting small businesses in general, about support for female entrepreneurs given the sector's makeup?

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And what does it mean for the vitality, the lifeblood of our local communities?

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It really makes you consider how interconnected everything is, the local salon, the national economy, social well-being.

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Definitely something to think about. Maybe reflect on your own local heritage. Consider

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how these bigger issues might be affecting them right there in your neighborhood. Maybe look into what local business groups are doing or just share your thoughts online.

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Food for thought indeed.

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As always, check out the show notes for more details on today's topic. Find us on social media at Ventureport UK. Take care.