Yesterday afternoon, I walked to Hair EQ up in Notting Hill Gate, where Tareq has tamed the mane for many years, for a blow-dry before an event at the National Gallery then another thing ie the launch of the Friends of Afghan Women Network (FAWN) in the House of Commons, co-launched by a fizzy former editor of the Evening Standard, Sarah Sands.
OK, the subject of today’s column may seem trivial compared to the treasures housed in our great galleries in Trafalgar Square, and the total erasure of Afghan women since the Taliban takeover — but bear with me.
“Hair is everything,” as Fleabag so succinctly put it. Anya Hindmarch’s bestseller is called “First Wash your Hair.” I was once chatting to the man who did Dasha Zhukova’s hair when she was married to Roman Abramovich. “If her hair wasn’t right, nothing was right,” Gary told me, and he’d often be flown to Paris, or Moscow, or Rome, just to give her a blow-dry.
Trivial, maybe, but important. Every woman I have spoken to, or shown the headline in The Times this week — “two in five hair salons at risk of closure after budget tax rise” — has thrown up their hands in horror.
Salons and other businesses don’t think they can survive because the Budget lumbered employers with a 1.2 percentage point increase in national insurance contributions, to 15 per cent. Rachel Reeves also lowered the salary threshold at which employee NICs becomes payable from £9,100 to £5,000. She also raised the minimum wage.
So much about the Budget does seem unfair
Since then, a growing list of afflicted sectors from farming to hospices has made howling sounds, from Britain’s biggest companies to the boïtes of the night-time economy, and the latest to vent in despair are crimpers and snippers.
Toby Dicker, the owner of five salons with 65 employed staff, was almost sobbing but immaculately-coiffed as he told Sky that the changes in the budget would cost his business £122,000 – ie his entire annual salary. Dicker is the founder of the Salon Employers Association and he also went on LBC News with the message that salons with staff on PAYE were “being penalised for doing the right thing” while gig-economy businesses with workers on zero-hours contracts “weren’t being touched.”
So much about the Budget does seem unfair, or “pernicious” as one local councillor put it to me. With the IHT changes, most farmers will be passing on debt liabilities to their heirs, and all to generate a measly £510m, a drop in the ocean when compared with, say, spending on the NHS for a week.
There was no need to impose VAT on private school fees this coming January, either, rather than wait till the start of the new school year in September. Nor a crying need to specifically exclude freelancers, the self-employed on IR35, and those who employ nannies or gardeners from claiming the allowed reduction of up to £5,000 against their higher NICs liability.
It all seems so pointed: an Exocet against the rural economy, middle-class parents, pensioners, the small businesses that employ a lot of part-timers as well as other relatively low-paid workers, sectors like retail and hospitality and beauty. “It was brilliant,” crowed one Tory grandee to me. “It totally rebuilt the Tory base in one day!”
So might I put in my little plea here for small businesses, especially hair salons.
For beauty salons, and other labour-intensive outfits, this Budget creates an impossible profit and loss calculus as labour is circa 50 per cent of their costs. But taxing labour and employment more won’t work.
The Treasury will lose out as businesses force millions onto a self-employed model to avoid the higher taxes; the high street will lose out as small businesses close; the client will lose out as hair salons mothball or raise their prices (as Hair EQ has already warned me) to cover their additional costs.
In the post-Budget aftershocks, businesses are already begging the Chancellor to introduce a reduced NICs rate to apply between £5,000 and the old threshold of £9,100, just as farmers will be lobbying her when they come, rus in urbe next week, to raise the threshold above which farming folk pay inheritance tax to a far more practical level.
An incredible 69 per cent of small businesses, according to YouGov, said the Budget would not be good for them. I end with this thought.
Of course the money has to come from somewhere. But what was the earthly point of the Tories spending £400bn supporting the economy and getting this country through Covid only for Labour to force the country’s long-suffering wealth-creating, life-supporting employers out of business now it’s over?
You tell me.
Rachel Johnson is a London Standard contributing editor
