‘We created the Northern Quarter – now we’re being squeezed from every angle’

Like many across the country, Nicky’s salon is struggling to survive

Nicky Oliver started his career as a hairdresser at the age of 14.

A ‘founding member’ of the Northern Quarter, his salon on Oldham Street first opened to the public 37 years ago. “We’re the only surviving business in the Northern Quarter that was here all those years ago,” he proudly tells the Manchester Evening News.

But like many hairdressers across the country, Nicky’s salon is struggling to survive.

“It’s been very gradual over the last 10 years,” Nicky explains. “We’ve been getting squeezed more and more from every angle.”

“We are very much at risk of having to change the business model.

“We could actually shut down. We could close.”

As a labour-intensive business, the cost of employing 23 staff and four apprentices already accounts for more than half of his turnover.

That’s set to increase to two-thirds when employers’ national insurance contributions go up next month, along with a rise in the minimum wage.

Increases to the apprenticeship wage have also meant that Nicky, who has trained thousands of hairdressers during his 50-year career, cannot afford to train as many youngsters as he used to.

And he is not alone. A report commissioned by the British Hair Consortium predicts that by 2027, there won’t be any new hairdressing apprentices if the current trends continue.

The study by CBI Economics also forecasts that employment in the sector is set to fall by 93 per cent as more hairdressers become self-employed – a move which more and more salons are making so that they can avoid paying VAT by staying below the threshold.

According to Tony Winder, the ‘rent-a-chair’ model of hairdressing didn’t exist when he opened his salon in Rawtensall 56 years ago.

However, after VAT was introduced in 1973, some hairdressers starting going down the ‘disguised employment’ route to save money.

“As costs have gone up,” he explains, “salon owners say it’s too expensive to employ staff, I might as well make them self-employed.”

That’s not a route that Tony, who is now 78 and retired as of last year, ever went down because ‘you lose control of your business’.

Nicky, 64, agrees. “You can’t control your staff, the hours they work,” he says. “You could end up with no one in.”

“We’ve been trading for 37 years. We can’t sack all our staff and make them self employed.

“For businesses who actually care about staff and training, it just doesn’t work.”

Nevertheless, according to the CBI Economics report, 63 per cent of salon workers are currently self-employed – and this is forecast to rise to 88 per cent by 2030 if last year’s budget announcements, including the national insurance increases, are taken into account.

The British Hair Consortium is now calling for the government to introduce a ‘split-rate’ model of VAT with a reduced 10 per cent rate for labour-based services, like hairdressing, while lowering the threshold at which businesses are required to register and pay the tax.

The industry body argues that this would bring more hairdressers into the VAT regime and help the government collect more in tax.

Nicky is now having to increase his prices incrementally – but he says even a 25 per cent hike would not be enough to turn a profit.

He is hoping that the government will do something. However, as a lifelong Labour supporter, he is feeling disillusioned.

The small business owner has accused the party of failing to take ‘meaningful action’ to support the industry and their workers.

“We understand the country’s in a mess,” he tells the M.E.N., “but they’re destroying the hairdressing industry so hairdressers have to go down the route of disguised employment.”

“I’m ashamed that I’ve been a Labour Party supporter all my life,” he adds. “I’m embarrassed by them.”

The Labour Party has been contacted for comment.

An HM Treasury spokesperson said: “We delivered a once-in-a-Parliament budget to wipe the slate clean, now we are focused on going further and faster to kickstart economic growth.

“We’re also levelling the playing field for high street businesses, including hairdressers, by permanently cutting business rates and removing the £110,000 cap for over 280,000 retail, hospitality and leisure business properties, while also capping corporation tax for the duration of parliament.”

Salon owners and employers are planning a day of action in central London on March 17 where they will call for reforms to VAT.