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NHBF publishes damning report on the future for hair and beauty without government intervention

February 15, 2021

The National Hair & Beauty Federation (NHBF) today publishes, Hair, beauty and the pandemic: An industry at the sharp end.

The impact of coronavirus on business vulnerability and the potential for mitigating measures.

Commissioned from independent analysts Pragmatix Advisory by the NHBF, the report details the current situation for the industry, the strength of the sector prior to the pandemic and the urgent measures required to ensure that the majority of the industry survives, which long term will cost the Government very little.

Evidence shows:

  • With over 140 days of lockdown in 2020, hair and beauty has been one of the worst affected sectors.
  • On average, turnover fell by 45% compared to 2019. (p32)
  • Social distancing restrictions mean salon capacity is down to 70% of what it was, losing on average two hours of appointment time per stylist per day.  There are also reports of reduced customer demand. (p33-34)
  • Full-time employment in the sector is down 21% on 2019 (p35)
  • The average cash loss to a business in 2020 was £17,000, with those over the VAT threshold taking an even bigger hit.
  • 1 in 10 businesses did not return any income or dividend to their owners or managers in 2020
  • 60% of businesses entered 2021 with no cash reserves (up from 27% in 2019) (p42)
  • There are now many businesses in the sector which are acutely vulnerable to failure in the next 12 months (p49)
  • 2021 is expected to be just as tough as 2020
  • Without further support, most expect to survive 2-3 months (from January) if lockdown continues (p44)
  • The crisis has disproportionate impact on women and those in deprived communities. Hair & beauty business owners are 82% female with an 88% female workforce. There is a higher proportion of Personal Care businesses than any other sector in the most deprived areas of the UK. The closure of these businesses poses greatest risk to those in the local community who are most likely to be employed in these salons and barbershops.

However, the report also identifies:

  • Reducing VAT to 5% would add £16,000 to the average VAT registered business, closing the cash gap by one-third. (p66)
  • This would reduce to 6% the proportion of businesses not returning anything to their owners or managers (p68)
  • If 18% of the businesses which would have otherwise failed survive as a result of reducing VAT to 5%, then the policy pays for itself through the taxes they will pay (p70)

Richard Lambert, NHBF chief executive says,

“Whilst the future could be bleak for the personal care sector, intervention now and immediately following re-opening will have a life-changing positive effect.

There’s nothing coming in, but the overheads still have to be paid. When we are closed, we are closed.  We can’t diversify into takeaways and online sales.

The Personal Care sector is calling for a specific grant to support businesses through the immediate cashflow crisis, in line with similar funds that have been afforded to many other sectors, including the arts, hospitality and leisure, and the aeronautical industry, among others.”

He continues, “We also need support after re-opening to keep cash in these businesses so they can recover. The bigger businesses have been hit the hardest and are now the most vulnerable to failure.  A targeted VAT cut to 5% would allow them to re-build, invest in staff and apprentices, and once again be the heart of their high streets and communities.  We’ve shown this move will pay for itself, so it’s a cost-effective solution for the Government.

Right now, it feels like we are last in line for support, flippantly disregarded within Parliament and overlooked by Government, despite the billions of pounds we contribute to the economy each year.”

The NHBF, working together with the British Beauty Council (BBC), British Association of Beauty Therapists and Cosmetologists (BABTAC) and UK Spa Association, has been lobbying the Department for Business (BEIS), the Treasury and the Cabinet Office for an urgent Personal Care crisis fund and a reduction in VAT.

View the pdf HERE