The Chancellor, Rachel Reeves, delivered the Spring Statement this morning with focuses on defence, governmental efficiency and taxes

The Spring Statement gave an update on the current state of the UK economy and forecasted performance following the Autumn Budget.

Focusing on defence spending and housing, there were no additional fiscal measures announced by the Chancellor that directly affect the beauty industry. However, her commitment to not increasing taxes is important to note, alongside her commitment to only one fiscal announcement a year, intended to provide some stability for businesses. 

In response to the measures outlined, the Office for Budget Responsibility cut its growth forecast of 2% by half, whilst also forecasting that real household disposable incomes will increase by £500 this year.

In addition, the Chancellor announced a further crackdown on tax evasion, aiming to increase prosecutions of tax fraud by 20 per cent and take total revenue raised from reducing tax evasion to £7.5 billion.

The statement comes as measures announced in the Autumn Budget are set to come into force from 6 April. These include: 

• An increase in Employment Allowance from £5,000 to £10,500
• Employer National Insurance Contributions to increase to 15% with the point at which employers start paying NI falling from £9,100 pa to £5,000 pa
• National Minimum Wage to increase to £12.21 for over 21s, £10 for 18-20 year olds and £7.55 for apprentices
• Business Rate relief for high street hair & beauty professional services and retail reduced from 75% to 40%
• An increase in the rates of Capital Gains Tax on carried interest from 28% to 32% 

Since this announcement last year, the Council has been engaging with Government to identify how the UK can best achieve growth without placing disproportionate levels of burden on business.

We have raised concerns regarding the cumulative impact to the beauty and personal care industry of increased wage rates, apprenticeship costs, NICs, the halving of business rates relief, energy and utility hikes, as well as new regulatory compliance costs. 

‘Taxing Beauty‘, data commissioned by the Council following the October Budget forecasts a cost to the industry of more than £400 million from increases to staff costs alone, equivalent to almost 20,000 jobs. With business rates, energy and utility and regulatory compliance costs also factored in, the costs are likely to be significantly higher.  

The Council had called on the Government to work with industry on a dedicated high streets strategy to support to our vital high street businesses, ease disproportionate business costs that look set to impact jobs and growth. We are now working with Government in both of these areas, via a dedicated high streets strategy working group and through ongoing engagement with the Department for Business & Trade.