State of the Industry: How the energy crisis is really affecting hair and beauty

by | Oct 25, 2022

In September, we worked with the NHBF to help gather insights from you into the effects of rising energy costs on salons. Read more about the findings and recommendations below…

There’s no denying it, the energy crisis is disproportionately affecting hair and beauty salons. The service sector is a high energy user, especially in relation to maintaining important hygiene  and safety standards.

Ensuring there are clean towels, robes, hot water, continual airflow through air conditioning systems, comes at significant outlay to business owners regardless of season and cannot be optional.

In response, the British Beauty Council and the National Hair and Beauty Federation collaborated on an updated State of the Industry surveyThe findings, which have been collated from 670 responses, show the harsh realities of the impact of the energy crisis on our industry.

The survey revealed that 77% of hair & beauty businesses are paying more for energy than they were six months ago. Debt levels are rising and almost three-quarters of businesses are either partially or completely reliant on Government support.

Recruitment is an on-going challenge for beauty businesses with intentions dropping by 15% since July this year. Over the same three month period, 25% of businesses have cut back on apprentices with only 9% likely to take on apprentices in the next three months.

The State of the Industry report showed that, due to all of these factors, confidence in future business has dipped. Almost half of respondents (49%) said they are confident of their survival and 46% admitted that they are not sure whether they will survive over the next six months.

What are the recommendations from the State of the Industry report?

The British Beauty Council will continue to support the key recommendations from the report. Particularly, the continued support through the Energy Price Guarantee scheme post the initial six-month period.

We are calling for:

  • Continued support through the Energy Price Guarantee scheme: as a financially ‘vulnerable’ sector, further support will be needed beyond the initial six-month period to shield these energy intensive businesses from crippling energy bills. In addition to emergency grant support, energy companies should also be encouraged to offer a range of flexible payment plans so that businesses are supported to pay off bills over a longer period of time.
  • Reintroduction of 100% business rates relief: Businesses need crucial help with fixed overheads, to maintain cashflow and keep them in business as energy and business costs rise. Building on the 50% discount, we would like to see 100% relief re-introduced as soon as possible, for the remainder of the financial year 2022-23 and beyond.
  • Targeted apprenticeship incentives for small and micro employers: The sector is desperate to provide meaningful jobs to more young people, but in a sector made up predominantly of small and micro businesses, affordability is challenging in the current climate. We call on funding to be made available through offering apprenticeship incentives between £1,000-3,000 per employee. This would particularly to help fund the gap between the apprentice wage and the national minimum wage for older apprentices aged 19+.
  • Restraint on increases to the National Minimum Wage and National Living Wage: We have called on the Low Pay Commission for restraint in their recommendations to the Government on further increases to the National Minimum Wage (NMW) and National Living Wage (NLW), given the current challenging economic environment.
  • A fairer tax system and a crackdown on tax evading businesses: We are calling for a fairer approach to the tax system which creates more of a level playing field between businesses with employees and businesses using self-employed individuals, a growing trend within the sector. We also call on the Government to lead a crackdown on informal businesses operating on a cash basis in the margins, not paying tax or VAT, which means they charge lower prices, undercutting and threatening the survival of responsible businesses and undermining pay legislation.

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