Just A Bit Off The Back And Sides Please

Last month’s Budget has led to leaders in the hairdressing industry warning that two fifths of hair salons are at risk of closure over the “devastating” increased cost of employment.
 
Carla Whelan, chief executive of the Regis and Supercuts group of salons, said the increase in employer national insurance contributions “will see salons which have been around for many years close” as the £25 billion tax rise undermined profitability. “This creates an impossible profit and loss for individual hair salons where labour is circa 50 per cent of the cost,” said Whelan, whose group is the largest “owned”, or non-franchise salon group, in the UK.

Rachel Reeves, the Chancellor, decided to increase employer’s National Insurance contributions to 15%, a 1.2% increase, from April 2025. She also chose to reduce the level at which employers start paying NI on salaries from £9,100 per year to £5,000.

Two in five respondents to a survey carried out by the British Hair Consortium said that they were considering closing their businesses in the next 12 months.

Toby Dicker, founder of the Salon Employers’ Association, who also owns five salons and employs 65 staff, said that he estimates the changes in the Budget will cost his business an additional £122,000. It is thought that salons will move to a self-employed “disguised employment” model to try and avoid the additional costs.

This comes after the Living Wage was also increased, affecting employers further in the sector. The minimum wage has also increased by 6.7%, and Britain’s biggest companies, including BT, Serco and Sainsbury’s, have warned that prices may have to increase in order to offset the increased costs. Tesco claims they face a £1bn increase in National Insurance across this parliament.

The hospitality sector is also likely to struggle, as well as care homes. Four in ten late-night venues are facing closure, according to the Night Time Industries Association. Care home bosses claim the increased costs could put some homes at risk of closure and reduce capacity when demand is growing.