Top Nottinghamshire salon owner warns she'll have to close if urgent action not taken for industry

A Nottinghamshire business owner has highlighted the ‘urgency’ of VAT reduction for the hair and beauty industry to prevent the loss of jobs and retail outlets. Collette Osborne owns two hair salons in Gedling and Beeston and has been in the industry for 12 years, following her mother’s cancer battle in 2011.

She is now calling for the government to implement a VAT reduction to 10 per cent in the upcoming Spring Budget due on March 6. Collette, whose Hairven salons employ 42 people and seven apprentices, said: “If we keep going like this, we will not have future hairdressers.

“We’ll have future people who have gone on a virtual lesson, a podcast about how to colour hair, without any health and safety training or any insurance. But we just can’t afford to take on any new apprentices.

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“I should have taken on seven of them this year, but I just can’t. We’re desperate for this VAT reduction and we’re desperate to try to bring the next generation of apprentice hairstylists on. We’re struggling massively.”

Collette’s determination comes as a new poll of 600 UK hairdressing and beauty salons conducted by the Salon Employers Association, led by Toby Dicker, revealed that over half of VAT-paying businesses are ‘seriously considering’ closing their doors. This is due to financial pressures because of ‘a tax system that is forcing many to move into the grey area of avoiding / evading tax’.

Collette explained how within 350 yards of her Gedling salon, hers is the only employer. This is because many salons now operate a rent-a-chair model, falling below the VAT threshold.

The ‘disguised employment’ system is devastating for VAT-paying businesses, says Collette, with the fact that the beauty industry is not regulated and ‘everyone can open a salon and inject your face in their kitchen’ adding to the problem. Collette, whose background is in accounting, business, law, and finance, explained: “I’ve got two choices – to join the disguised model and convert all my employees to self-employed, which I can’t legally do, to avoid tax, or to close my business.

“Disguised employment in our industry, because there’s no checks and balances and you don’t have to be an employer in a commercial premise, is allowing and facilitating organised crime gangs. Some people are doing this out of sheer desperation and I understand that – this isn’t about them.

“A lot of them are doing it because they just think everybody else does it. HMRC is doing nothing, because although the legislation is there, it’s not enforced, so people think they may as well join this model.”

Collette launched a petition calling for the VAT reduction five months ago, however, it has not been receiving much support due to ‘disrupting’ the disguised employment model. She has also spoken to the Prime Minister, who was ‘alarmed and shocked’ to find out about the state of the industry.

Collette said: “I told the Prime Minister that if he doesn’t come true to his promises, I will chain myself to the Downing Street gate because before I have to lose my business, my livelihood, and make 42 people redundant, I’ll have to do that.” Toby’s research for the Salon Employers Association revealed that in 2018, there were 122,000 employees in the hair and beauty sector.

However, by 2022, this had dropped by 34,000, to 88,000. He warns that the current climate is currently putting a further 44,000 jobs at risk, with a ripple effect on the wider economy and communities.

Collette’s worries regarding the sector’s inability to take on new apprentices is also backed by Toby’s research. VAT-paying salons are the only ones offering opportunities for young people, with only six or seven salons being in this position across the county, says Collette.

Toby Dicker

The research revealed that 96 per cent of salons would not take on any more apprentices, with over 40 per cent saying they planned to make immediate reductions. Toby explained: “The statistics we got are overwhelmingly sad, really, and they are really strong for an industry that never has a voice.

“By the time we’ve paid all our taxes, labour, rent rates, and everything else, there’s nothing left. So the only way to go is to start cutting people and the first people you cut are the ones that aren’t bringing in revenue – that’s the new generation.

“Because of the disguised employment model being on the increase, legitimate employers feel like they’re being penalised for doing the right thing. We’re now in an emergency situation and the only solution is for VAT to be reduced by an amount that will allow businesses to survive and train the next generation.

“Our campaign is not against self employment and I can understand why people do it at the end of the day. But people avoiding tax means that there’s less that goes into Treasury, and so less going into our local services, forcing businesses out.”

Toby added: “If high street salons go, millions and millions of people who come into high streets every week will stop coming. With the national minimum wage increasing in April, which we fully support, that puts us under even more pressure.

“This national minimum wage increase was given by the government, but we, the employers, are the ones paying it. Between 2009 and 2022, hairdressing businesses grew by around 4 per cent, whereas inflation went up by 28 per cent, so there’s a big disparity.”

Broxtowe MP Darren Henry, PM Rishi Sunak, and Collette Osborne

Darren Henry, MP for Broxtowe, supports the campaign. He said: “Beauty salons are a hugely important part of our communities. Salons such as Hairven, are a brilliant local employer who also offer apprenticeships and are a vital staple in Beeston.

“I was proud last year to take the current Prime Minister to Hairven to show just that. I am fully supportive of their campaign to reduce VAT for beauty salons by 10 per cent and will continue to do what I can to support the industry.”