This report marks a significant shift in recognising that the beauty industry, which contributes £30.4 billion to the UK economy, is not a marginal sector but a central pillar of national growth.
The House of Commons Business and Trade Committee, a cross-party group of MPs tasked with scrutinising the policy, spending, and administration of the Department for Business and Trade in Westminster, has today published a comprehensive roadmap for the future of UK small businesses. It echoes many of the urgent calls for reform championed by the British Beauty Council, says Victoria Brownlie MBE, the Council’s Chief Policy and Sustainability Officer.
The British Beauty Council played a pivotal role in shaping this report. Following our formal submission and oral evidence session in July 2025, the Committee’s findings directly reflect the data and real-world concerns that were presented regarding the unique pressures facing the sector.
From the distortionary impact of the VAT threshold to the “perfect storm” of rising energy and labour costs, the voice of the beauty industry was heard at the highest levels of government. The Council’s evidence was cited in the Committee’s final report, referencing the cumulative burden on the sector as “devastating”.
And while the Government is not legally compelled to adopt the recommendations, it is required to issue a formal response to the Committee within two months, and the report serves as a powerful blueprint for legislative change during this Parliament.
The report identifies ten critical challenges, many of which are central to the British Beauty Council’s mission, including:
- Business rates: The report labels business rates as “the most urgent failures in the system” characterising the current system “broken”. It recommends more ambitious options for reform such as a turnover-based local tax, an Online Sales Tax, and reliefs for occupiers of properties that have previously been empty. The Council has highlighted the significant impact the most recent changes will have on the beauty sector, agreeing with the Committee’s view that “for many businesses, the best-case outcome is standing still. For others, it is closure.”
- VAT reform: The Committee explicitly highlighted the impact of the UK’s high VAT threshold on the hair and beauty sector as “distortionary” and disincentivising employment. They have followed the Council’s recommendations that the Government present options to restructure VAT to optimise growth.
- Labour costs and bogus self-employment: Acknowledging our evidence on the cumulative impact of NIC increases and the National Living Wage, the Committee called for SME Impact Assessments for all future policies. Crucially, it recommended an immediate investigation into bogus self-employment to level the playing field for legitimate salon employers.
- Energy relief: With 90% of hair professionals reporting that energy costs are eroding margins, the Committee has urged the Government to introduce specific relief schemes for SMEs currently excluded from heavy-industry support. This is an issue the Council has raised for a number of years, identifying that costs have increased by an average of 148%, with some even exceeding 200% and 300% despite the majority of businesses implementing multiple energy efficiency measures.
- Accuracy of industry data: The Committee concluded that the Government will not be able to deliver change for businesses unless it is able to accurately track and monitor business activity. The Council has lobbied for updates to the current Standard Industrial Classification (SIC) codes used to identify and define sub-sectors of economic activity. Under these classifications, hair and beauty are represented as one industry and identified as the same type of service as launderettes or funeral homes. In our evidence, we stressed that such misrepresentation fails to represent size, scale and true impact of business activity within the sector. As a result, the Committee recommended the Government work with the ONS as part of its SIC code review to ensure that the various types of business in the hair and beauty sector are adequately represented by this framework.
The Council welcomes the Committee’s report as an accurate depiction of the real challenges that SMEs are facing, particularly on our high streets and are grateful to have been given the opportunity to provide evidence to support their recommendations. We will now use these findings to press the Government for support in the areas we identified which we hope will inform their formal response to the Committee’s recommendations.
Download the full report here.
