Nicky Oliver, the founder of Nicky Oliver Hairdressing on Oldham Street, has warned that the hairdressing industry is in terminal decline due to a series of government policies. Once a business that 'started the Northern Quarter' in 1990, the salon has seen its workforce slashed from 30 stylists to just 12 in the last year. For the first time in 37 years, the company could not hire an apprentice due to costs.
Government policies blamed for decline
Oliver attributes the crisis to rising employers' national insurance contributions, increases in the minimum wage, and the 20% VAT rate imposed on hairdressing services with a turnover exceeding £90,000. 'The trade was one where anybody had the choice to become a millionaire,' he said. 'Now, people don't have that choice anymore. Hairdressing has had a bad rep in the past but everybody had an opportunity to push through barriers. Now it's very difficult to even consider that because of what state its at when it comes to employing people.'
Apprenticeship scheme closed
The financial pressures forced Oliver to close his apprenticeship scheme, which had previously trained apprentices for other salons. 'This year, we had 295 applications coming in around February. We phone around to other salons and only one salon wanted to take an apprentice off us,' he said. 'We had no choice but to close it. It's too expensive to run an apprenticeship scheme for other salons and we weren't even taking apprentices either!'
Rise of 'disguised employment'
To avoid the VAT threshold, many salons have turned to 'disguised employment', where stylists are classified as self-employed. Oliver says this creates an unfair playing field. 'They don't have national insurance, workers' rights or all the things that go into employing people. What this does is cause an unfair playing field on the high street,' he explained. 'They make out hairdressers are getting paid more by being self-employed, but a lot of the time they're working less than minimum wage because they're getting a percentage of what they do.'
Industry data shows alarming trends
A report by CBI Economics, commissioned by the British Hair Consortium, found that 63% of salon workers were self-employed in 2024 due to high employment taxes and VAT. The figure is expected to rise to 76% by 2030. Over the last ten years, employment in the industry has decreased by 69,400.
Call for VAT reform
The British Hair Consortium has called for a 'split-rate' model of VAT, with a reduced 10% rate for labour-based services like hairdressing, and a lower registration threshold. Oliver agrees: 'By getting rid of the threshold and then lowering the VAT would cut out all the disguised employment. The government would pull in more VAT and they'd be more happy. The issue here is government policy, that's the issue here.'
The HM Treasury has been approached for comment.
