What Does The Autumn Statement Mean For Barbers?

On Wednesday 22 November, Chancellor Jeremy Hunt announced the Autumn Statement in the House of Commons. The announcement included an increase in the National Living Wage and reductions in National Insurance contributions for the self-employed. But what does the Autumn Statement mean for barbers?

In November the NHBF wrote to the chancellor calling on the Government to take urgent action in six key areas:

  1. Renewed support on business rates
  2. Targeted energy support through the winter
  3. Minimising additional burdens on business
  4. Developing the next generation of talent
  5. Urgent review of VAT threshold
  6. Promoting sector tax compliance

We have outlined the chancellor’s key points below:

  • Main rate of National Insurance cut from 12% to 10% from 6 January, affecting 27 million people
  • Class 2 National Insurance – paid by self-employed people earning more than £12,570 – abolished from April
  • Class 4 National Insurance for self employed – paid on profits between £12,570 and £50,270 – cut from 9% to 8% from April
  • Legal minimum wage – known officially as the National Living Wage – to increase from £10.42 to £11.44 an hour from April
  • New rate to apply to 21 and 22-year-old workers for the first time, rather than just those 23 and overThe apprentice rate goes up from £5.28 to £6.40 an hour
  • The apprentice rate applies to people aged under 19, or people over 19 in the first year of their apprenticeship. Employers will foot the bill (although the government itself is a major employer)
  • Inflation is expected to fall to 2.8% by the end of 2024 according to the spending watchdog, down from 11.1% last year when Hunt and Rishi Sunak took office
  • The spending watchdog now expects inflation to stay “higher for longer” and that it will not drop to the Bank of England’s target of 2% until mid-2025. This is a year later than it expected in March
  • There will be a business rates discount for hospitality retail and leisure worth £4.3bn

The Industry’s Response

We reveal the hairdressing industry’s response as it happens…

Caroline Larissey, Chief Executive of the NHBF said: “We’re delighted that the Chancellor has responded to our calls for a continuation of the 75% Retail business rates discount. Along with cuts to National Insurance, this will give very welcome relief to businesses struggling to cover overheads. Sector recovery has been slow and steady since the spring, and many businesses are still battling to clear Covid debts.

“With £50m allocated to apprenticeships in key growth sectors, we look forward to hearing more about how the hair and beauty sector will be supported. Employer incentives to support education and training, particularly apprenticeships, are desperately needed to ensure the future talent pipeline to our vibrant, creative and innovative sector. Given rising wage costs in the spring, sector employers – mostly small and micro businesses – won’t be rushing to take on new staff without additional support.”

Clive Collins from HOB Salons commented on the apprentice rate: “Hairdressing salons will not be able to afford to employ apprentices at this rate. With increased costs such as rents, minimum and living wage, pensions, stock and utilities not to mention 20% VAT, our profit margins are getting squeezed to death and we cannot keep passing on the increase in costs to our clients. We value all our team members but as a service industry, rising costs are crippling many businesses and the constant increase in costs needs to be considered for businesses to survive and thrive.”