Inside Parliament: The Truth About the Salon Industry Crisis – July 2025 Inquiry Review
On Tuesday 1 July 2025, the Business & Trade Committee in Parliament turned its spotlight onto Small Business Strategy and held the opening stages of their inquiry into what the state of small business is in the UK and the salon industry had the table for a large part of the first session. Representatives from the hair, beauty and barbering sectors came together to give evidence about the current state of the industry, the pressures being faced, and the urgent changes needed to help it survive, and thrive in the challenging climate that we are currently working in.
The panel included: Victoria Brownlie MBE, Chief Policy & Sustainability Officer at the British Beauty Council; Toby Dicker, CEO of the Salon Employers Association; Caroline Larissey, Chief Executive of the National Hair and Beauty Federation (NHBF); and Gareth Penn, Registrar of the Hair and Barber Council. Together, they painted a picture of an industry under unprecedented pressure and what Caroline Larissey described as “a perfect storm.”
The Weight of a Sector on a Knife Edge
Opening the discussion, Caroline Larissey explained that salons and small businesses across the UK are feeling the sharp end of compounding economic and legislative pressures. Drawing on the NHBF’s regular post-COVID industry surveys, she shared that 77% of hair and beauty businesses are having to raise their prices, nearly half are planning to reduce hours or staff, and a staggering 26% are considering downsizing or leaving the industry altogether.
For an industry that has survived wars, recessions, and a global pandemic, Larissey clearly stated, “We’ve never seen it so tight as it is at the moment.”
The cumulative effect of the pandemic, increased business rates, utility costs, minimum wage increases, and the loss of post-pandemic reliefs has left many salons with no breathing space. The British Beauty Council publishes annual economic reviews, and Victoria Brownlie explained that while the wider beauty industry (including retail) contributed over £30.4 billion to the UK economy last year, service-based businesses, such as salons and barbers, are struggling to remain viable.
Comment - It is important to note that the service side of the beauty industry is not the main contributor to this headline figure . We should also consider the impact that the significant sums being spent in store and online on home care/DIY products may also be having a negative impact on the service providing businesses. Clients turning to more affordable solutions and alternatives does not boost the high street, home based or mobile based salon businesses.
Brownlie confirmed that the 2025 Spring Budget alone is estimated to have created an additional £400 million burden on the sector, leading to a projected 2–3% drop in employment across the next year.
A Broken System: Tax Inequality and Faux Self-Employment and Its Impact on the Salon Industry
One of the most urgent issues raised was the growing use of disguised employment, where workers are labelled as “self-employed” but operate under conditions identical or too similar to employed roles. Gareth Penn warned that this practice is widespread and unregulated, and creates an unfair playing field where legitimate employers struggle to compete with businesses avoiding VAT and employer responsibilities.
Toby Dicker gave a powerful example: in towns across the country, a salon employing five people and doing everything “by the book” might pay £105,000 in tax, while a neighbouring salon renting out chairs to five “self-employed” workers on the same turnover could pay as little as £47,000. “You wouldn’t know the difference standing outside them,” he said, “but one is 123% more expensive to run.”
It was recognised that not all self employed professionals are disguised employees and this model should be recognised and celebrated as a great quality of our industry to be aspirational and to achieve more for themselves and their families.
The impact is far-reaching. Employment rights may be undermined, apprenticeship opportunities are lost, and many employment model businesses feel as if they are being punished. Meanwhile as the pressure grows more of these business turn to the self-employed model in a battle of survival - feeding the problem which in turn will lead to a future experience gap as our new to industry workers reduce and those that do join do not have the benefit of a hierarchy of support and continued learning.
Apprenticeship Numbers in Free Fall
Another key concern raised was the collapse of apprenticeships. In 2016, there were 16,000 hair and beauty apprentices. By 2023, that number had dropped to 6,000, and the British Hair Consortium now warns that we may have zero new apprentices by 2027.
Toby Dicker explained that employers simply can’t afford to take on apprentices anymore. Increased wages and NIC contributions, combined with a lack of funding or support, mean that apprentices are often the first cost cut when margins are tight. He cited one large employer who has reduced their apprenticeship cohort from 150 to just 50 in six months.
Caroline Larissey added that careers advice in schools rarely promotes the industry, and that young people are still not encouraged to consider hair and beauty as a respected vocational path. Even when they do begin apprenticeships, completion rates have plummeted, with 82% of apprentices not finishing their courses, according to Brownlie.
Illegal Operators, Modern Slavery, and the Call for a Register
Perhaps the most disturbing evidence came when the discussion turned to illegitimate businesses operating as fronts for organised crime. Gareth Penn explained that without a mandatory register for hairdressers or barbers, anyone can set up shop with no checks or oversight. This has created a fertile environment for money laundering, people trafficking, and even modern slavery, particularly in barbering. Victoria Brownlie added that modern slavery and organised crime had been operating within the nail sector for a significant length of time and to date little had been done to remedy this situation.
Penn stated that although enforcement agencies occasionally raid illegal operations, “none have been shut down and stayed shut.” Caroline Larissey echoed that Environmental Health Officers “don’t have the teeth” to take action, even when unsafe or criminal activity is evident.
The Chair of the Committee asked why these types of operations are not reported and Brownlie explained that the majority of their work with the Home Office has focused on modern slavery, particularly in barbershops and nail bars. While there is a whistleblowing process, it's informal and inconsistent. She noted that, “It’s mainly around a whistleblowing facility... we encourage members to report information to local authorities or police.” However, she highlighted the issue of lack of continuity within government departments stating, “A team from the Home Office will engage, do a little bit of work, then change. When they return 18 months later, the work starts again. You hear nothing in between.”
This inconsistency leads to disillusionment among salon owners and professionals, who often see no results from reporting.
Penn confirmed that very few, if any, of these businesses are ever shut down permanently, even after being reported. He advised, “People are arrested one day and released. Someone else is back in that premises the next day.” He added that efforts are not joined up across the country, with enforcement often handled in isolated projects that end when funding runs out.
As professionals we have all received clients in our businesses who have been or continue to use venues that are run by organised criminals using modern slavery, money laundering as their modus operandi. This has been going on in plain sight for all of my 20+ years in the industry within the nail sector and Jo/Joanna Public are generally unaware that they are supporting organised crime. They see a more 'affordable' solution to their treatment requirements and take that opportunity.
Misleading Growth and Data Flaws
While official data shows a rise in new business registrations in the sector, the panel were united in saying this is misleading. According to Dicker, the apparent “growth” is actually the result of salon closures being followed by multiple micro-businesses springing up under the radar. “This is not growth,” he warned. “It’s businesses splintering to survive.”
Caroline Larissey on the subject of misleading growth advised, that although there may be many aesthetics clinics and some beauty salons that are doing really well this is due to a peak in these services currently. She pointed out that this is not repeated across the industry and that hair and barbering are not experiencing growth currently.
Victoria Brownlie added that outdated Standard Industrial Classification (SIC) codes lump beauty services in with laundrettes and funeral directors. This means that accurate data and analysis around the Personal Care Sector is nearly impossible. This lack of visibility continues to hinder support and investment in the sector.
What Needs to Change?
Each representative was asked to give their “one ask” for improving the outlook for small businesses in the sector:
Toby Dicker: “Level the tax playing field.”
Caroline Larissey: “Reform VAT, and properly support education and apprenticeships.”
Gareth Penn: “Make registration mandatory for those who wish to trade.”
Victoria Brownlie: “Restore business rates relief and offer better incentives for green energy measures.”
All agreed on one major theme: the need for joined-up thinking across government departments. As Dicker put it: “Get us all in a room for a day and we’ll solve it. Education, HMRC, DBT, Treasury need to stop working in silos.”
Comment - Why This Matters for All of Us
Behind every statistic in that Committee room is a real salon owner, a stylist, a therapist, a solo pro. This inquiry brought the reality of our sector into the heart of Parliament, at a time when we need visibility and to be heard.
The hair and beauty industry isn’t just about services we offer, the mental health support we subtly provide, it’s about community, confidence, and opportunity. With 81% of the workforce being women, and 86% of businesses female-owned, this sector is also one of the UK’s most inclusive and accessible career paths. We need to continue to welcome new entrants to the industry so we don't end up with a resource gap or complete drop off. The shortage in apprentices and professionals with solid foundational education may long term result in a hole in the transfer of knowledge and experience that is not recoverable.
We can’t afford to let short-term policy or patchy enforcement reduce our opportunities to survive and thrive.
In the last few years there has been a consistently increasing move to division in the industry whether it is medic/non-medic, employer model/self employed model, one brand vs another brand.
We have become tribal when what we need is positivie community. We have become isolated when we need to collaborate. We have disconnected from each other when we need to connect.
What this inquiry hearing showed us is that the industry isn’t asking for handouts, it’s asking for fairness, it's asking to be recognised for the mental health support and wellbeing services we quietly provide alongside our vocational services to our clients and communities. And it’s time that message is heard loud and clear.
Sue Davies
Editorial Director
To watch the Small Business Strategy Inquiry click here
If you want to know more about the trade bodies representing you please follow the links
National Hair & Beauty Federation (NHBF)
British Beauty Council
Hair & Barber Council
Salon Employers Association
