How Chancellor Rishi Sunak’s Winter Economy Plan will affect beauty businesses

Chancellor Rishi Sunak announced his Winter Economy Plan in the House of Commons today (September 24) which aims to protect jobs through the difficult winter months of Covid-19. We explain what his announcement means for beauty salons, spas, and mobile and home-based therapists working in the UK.

“The resurgence of the virus [Covid-19] and the measures we need to take in response poses a threat to this fragile economic recovery… but our primary goal remains unchanged – to support people’s jobs, but the way we achieve that must evolve,” said Sunak.

New Job Support Scheme to launch in November

Job scheme

A new scheme has been announced to support the wages of people in work, giving employers who face depressed winter demand the option of keeping people in jobs on shorter hours rather than making them redundant. 

The six-month Job Support Scheme will come into effect from November 1 and will support viable jobs – so employees must be working at least a third of their normal hours and be paid for that work as normal by their employer. 

The Government, together with employers, will increase those people’s wages covering two thirds of the pay they have lost by reducing their working hours. The employee will keep their job and anyone who as of yesterday is employed is eligible. 

The scheme will run until April 2021 and all small-to-medium-sized businesses are eligible to apply, but larger businesses can only do this when their turnover has fallen. Businesses who have not previously used the current furlough scheme (the Coronavirus Job Retention Scheme), which ends in October, are eligible to apply for the scheme. 

Also, employers retaining furloughed staff on shorter hours can claim both the Jobs Support Scheme and the Jobs Retention Bonus, and this, the Government says, significantly increases the incentives to bring back previously furloughed employees. 

For those mobile and home-based therapists, it’s important to note that the Self-Employed Income Support Scheme is being extended on “similar terms” to the existing job support scheme, although these are less generous than the previous payments.

A first taxable, grant at the start of November will cover 20% of average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, with a limit of £1,875 in total. The second grant will cover a three-month period from the start of February 2021 until the end of April 2021, but details are yet to be announced.

Other important measures announced in Sunak’s Winter Economy Plan:

Industry reactions:

Hilary Hall, NHBF chief executive, said: “We've been working very hard to get through to the Government that businesses are facing a cliff edge with the furlough scheme coming to an end in October and many businesses still trading well below normal levels. We had been pushing for the furlough scheme and self-employment income support schemes to be extended for sectors such as ours hardest hit by the pandemic. With employers still being asked to foot wage bills despite poor trading, the Job Support Scheme does not go far enough to save jobs for or to save businesses." 

She added: “We fail to understand why the hair and beauty sector has not benefited in the same way as hospitality and leisure from VAT being cut to 5% and until the end of March 2021. A VAT reduction to 5% would provide a much-needed boost for the sector, particularly as there are few costs from which salons and barbershops can claim VAT back.”

What do you make of the Chancellor’s Winter Economy Plan? Comment below. 

For the latest news and information on reopening your beauty business following the coronavirus lockdown, check out our full Coronavirus Resource Guide for salons and spas.