As businesses on UK high streets continue to suffer from closures forced upon them by Covid-19, The Leaders Council hears from the campaign group that wants the five per cent VAT cut in the hospitality industry extended to the personal care sector.
On July 8, 2020, the UK government announced that it would introduce a temporary reduced rate of VAT for certain supplies of hospitality, hotel and holiday accommodation, and admissions to certain attractions. The cut from the standard rate of 20 per cent came into effect from July 15, 2020 and has since been extended to March 31 this year.
The changes were introduced as an urgent response to support businesses stricken by Covid-19 enforced closures and social distancing measures. Yet, since the VAT cut was introduced, the personal care sector - comprised of thousands of hairdressers, barbers, beauticians all over the country - have been lobbying and petitioning government for the VAT cut to be extended to cover their businesses.
Business leaders in the personal care sector have long argued that their struggles have been equally severe to those faced by hospitality companies, with some arguing that their plight is even greater since they are not able to provide something akin to take-out services to guarantee some form of income.
The lobbying of government is being carried out by a new sub-committee of the British Beauty Council, under the #ChopTheVAT campaign banner. One of the foremost groups involved in the campaign is the Salon Owners United Group, headed up by Collette Osborne. Osborne owns and directs her own chain of businesses, The Hairven Salon Group based in Nottingham.
The Salon Owners United Group represents the thousands of hairdressers, barbers and beauticians across the UK who have felt the force of business interruption since March. As well as campaigning for the VAT reduction to be applied to their sector, the group also feels that the government has not fully understood nor taken seriously the difficulties the industry is facing.
Speaking to The Leaders Council, Osborne said: “We have been collectively and individually campaigning directly to government on the need for a VAT reduction, but our needs have not been fully heard or fully understood by ministers. In fact, many of us feel they have been effectively ignored.
“The reason we are campaigning is because all salon owners across the UK need a collective and united effort to amplify our voice if we are to have any hope of getting the support that we need.”
The #ChopTheVAT campaign has encouraged salon owners to campaign directly with their local MPs in order to take the issue to Parliament. A sister campaign, Save Our Salons, has been launched with its own website instructing salon owners step-by-step on how to get in touch with their local MP to address the issue.
Osborne continued: “We believe we are the most taxed industry by percentage on the high street, with around one-third of every £1 coming through our tills ending up being paid in tax. So, our first mission is to acquire emergency help for salons and get government approval to reduce VAT to five per cent as the hospitality sector currently enjoys.
“For every £100 of revenue, a reduction in VAT to five per cent would add £12 to salon takings – a vital lifesaver for any salon. This simple act, in our view, would have the most benefit for struggling businesses who are going to the wall. Their loss would not only result in employment opportunities and livelihoods being lost but would also jeopardise around 20,000 apprenticeships in our industry.
“Our businesses desperately need this cut to help us survive, particularly when, even in spite of the Financial Conduct Authority’s successful legal case, insurers are still attempting to avoid paying our business interruption insurance to companies in our industry.”
A particularly disappointing aspect of the circumstances in Osborne’s view is that the lack of support for VAT registered businesses in the personal care sector is effectively penalising law-abiding business owners.
She explained: “Although we have 49,000 salons on the UK high street, only 12,468 of them are VAT registered. This is because many operate with models that are not currently captured by the VAT system and these businesses can get out of paying taxes such as VAT.
“As a result, what we are seeing is salon owners that are VAT registered and running their business by the book and employing people are most at risk of failure thanks to the inequality and lack of regulation in our sector. Should the industry survive this pandemic, it is this which must be a priority to address in the post-Covid world.”
The campaign is certainly one that is gathering momentum. A petition for a fiscal stimulus package with 141,000 signatures was submitted in August 2020, while 489 salon owners to date have written to their local MPs. Furthermore, a general public petition has garnered over 27,000 signatures, a figure which continues to rise. However, all of these efforts are yet to yield a breakthrough.
Osborne added: “We are doing so much to put pressure on government and thus far we have been greeted with nothing. I would urge the PM and other ministers to reach out to us, people who actually work in the industry, so that they can understand exactly the type of support we need. Without it, businesses will ultimately fail and that would be a great shame.”
Hear our extended interview with Collette Osborne on The Leaders Council podcast below.