Salon chain owner breaks down over National Insurance rise
The owner of a chain of salons broke down on Sky News on Thursday when talking through how some of the measures introduced in the Budget will affect small businesses like his.
Toby Dicker, who is managing director of Chapel Salons and founder of the Salon Employers Association, was holding back tears as he talked about a slew of promises that various government departments didn’t deliver in Wednesday’s fiscal statement.
“The initial reaction from our supporters to be honest is shellshock,” Dicker told Sky News presenter Kay Burley. “It is much, much, much worse than we ever thought it could be.”
The salon founder said that before the Budget he had forecast the worst case scenario for his business was a £75,000 hit, but the changes announced by the Chancellor will now lead to a £127,000 hit to Chapel Salons’ bottom line.
Dicker highlighted the government’s changes to national insurance contributions (NICs) as being especially harmful to his business, due to the salon industry’s heavy reliance on staff as a proportion of its cost base.
“Employers NIC affects beauty businesses five times more than it affects traditional retail,” he said. “If we have 60 per cent wage cost and someone else has 12 per cent wage costs, for the same given turnover, that’s five times as much.”
Employers NICs is the tax businesses pay on an employees’ wages. In Wednesday’s Budget, Rachel Reeves announced the government would hike those contributions by 1.2 per cent to 15 per cent from April, in a move the Office for Budget Responsibility has said would raise £25bn a year.
Dicker also outlined the length of the representations he and his industry had made. Holding back tears, the business owner said: “200 people from our industry wrote specifically a 17-page paper that went into the ministry. We’ve been speaking to HMRC for five years. We’ve been speaking to the DBT [department for business and trade] for five years and they’ve promised us things that they haven’t delivered on.
“And that’s forced most of our industry into the gig economy. The gig economy didn’t get touched by this Budget. You can be a delivery company turning over £1.5bn, making £120m in profit, and from my calculations, although I’m doing it on my own, you don’t pay a penny. What the Hell?”