22 November 2017

Hair and beauty salons and barbershops will be hit hard by today’s announcement in the Budget that both the National Living Wage and National Minimum Wage rates will be rising sharply from April, the NHBF has warned.

National Living Wage rise

Chancellor Philip Hammond announced the National Living Wage for over-25s is to rise by 4.4% from £7.50 to £7.83 an hour from April 2018.

Equally concerning for salon and barbershop owners are the steep increases announced in National Minimum Wage rates, as recommended by the Low Pay Commission, including the biggest increase in youth rates for a decade.

The rate for 21- to 24-year-olds will rise by 4.7% to £7.38 an hour. For 18- to 20-year-olds it will be £5.90 an hour from April, up 5.4%, and for 16- to 17-year-olds, the wage will rise to £4.20 an hour, or an increase of 3.7%. The rate for apprentices will go up 5.7% to £3.70.

The NHBF's viewpoint

NHBF chief executive Hilary Hall said: “We are disappointed the government has seen fit to push ahead with such big minimum wage increases. Salons and barbershops are already under intense pressure – prices are rising, and consumer confidence appears to be slipping. These increases will cause real pain for many small business owners.

“Our only consolation is that the increase in the National Living Wage is less than we had feared, and is a sign the government was prepared to listen to our warnings on this at least.”

Hilary gave a cautious welcome to the government’s decision to consult on changing the VAT registration threshold from its current £85,000, although it will be held unchanged for the next two years.

“The NHBF has long argued that, for a very labour-intensive industry such as hair and beauty, a more flexible VAT system would be beneficial, and so the fact the government has said it plans to look at this is potentially positive,” Hilary said.

The announcement of changes to business rates was also potentially positive, Hilary said. This includes increasing the frequency of revaluations from five years to three, and bringing forward a plan to use the main CPI measure of inflation for calculating increases rather than the higher RPI measure, so potentially reducing bills in future.

“Anything that helps to bring certainty to how businesses can plan and budget for business rates is welcome,” Hilary said.

National Minimum Wage and National Living Wage rates from April 2018:

  • The National Living Wage will rise by 4.4% from £7.50 to £7.83
  • The National Minimum Wage for 21- to 24-year-olds will rise by 4.7%, from £7.05 to £7.38 per hour
  • The rate for 18- to 20-year-olds will go up 5.4%, from £5.60 to £5.90 per hour
  • The rate for 16- to 17-year-olds will go up 3.7%, from £4.05 to £4.20 per hour
  • The apprentice rate will go up by 5.7%, from £3.50 to £3.70 per hour