BEAUTY BACKED TRUST NEWS
What the new Government means for the Beauty Industry
July 5, 2024

The Labour Party has clinched victory in the 2024 UK election, propelling Sir Keir Starmer into 10 Downing Street. In his inaugural speech as Prime Minister, Starmer pledged to "rebuild the infrastructure of opportunity, brick by brick" in a "government of service." As the leader of the winning party, Starmer will soon start appointing his cabinet, with Rachel Reeves expected to be chosen as Chancellor of the Exchequer, with a budget announcement predicted in the autumn.

Labour’s plans for economic growth include specific support for small businesses, commenting that “small firms, entrepreneurs, and the self-employed face unique challenges,” and calling them: “The lifeblood of communities and high streets across the country.” This result could see significant change for the beauty industry, with the Labour Party offering some noteworthy pledges for small and medium businesses in the UK.

Key Pledges

- Cap corporation tax at the current level of 25 percent for the entire parliament.
- Retain a permanent full expensing system for capital investment and the annual investment allowance for small businesses.
- Reform the British Business Bank, including a stronger mandate to support growth in the regions and nations, making it easier for small and medium-sized enterprises to access capital.
- Publish a roadmap for business taxation for the next parliament, allowing businesses to plan investments with confidence.
- Create a new publicly-owned company, Great British Energy and ensure tougher regulation on existing energy companies.
- Introduce a Growth and Skills Levy, replacing the current Apprenticeships Levy.

Industry Response

The industry has responded to the change, with beauty associations calling on the new government to work with the beauty and hair sector. Caroline Larissey, chief executive at the National Hair and Beauty Federation, said:

“Congratulations to Keir Starmer and the Labour party. We look forward to working with the new Government to advance the interests of the beauty and hair sector. We have been heartened during the election campaign to hear Labour underlining the important role of hair and beauty for healthy high streets, the economy, and communities. We were also pleased to hear their considerations around VAT reform, and we look forward to providing input on the proposed roadmap for business taxation. As the new Government develops its proposed industrial strategy, it’s important that this improves the business environment in which our sector operates, enhances the many towns, cities, high streets, and communities where they are based, and has talent development at its heart. People are central to the future of the hair and beauty sector, and we look forward to working with the government to ensure the proposed Growth and Skills levy supports, rather than hinders, apprenticeships for small and micro businesses, helping them bring on the talent of the future.”

The British Beauty Council has compiled feedback from those working in, and buying from, the industry to identify specific areas that could most significantly benefit the beauty sector.

Tax and Spend

- Tax reform including a reassessment of VAT policy, specifically focusing on tapering the current VAT threshold cliff-edge.
- A wholesale review of the business rates system to create a more level playing field between high-street stores and e-commerce platforms.
- An increase in the Employment Allowance for SMEs to reward businesses that grow their workforce.
- The introduction of an internationally competitive, tax-free shopping scheme for international visitors.
- Tax-deductible business training in new areas such as AI and sustainability.
- A commitment to review the classification of SPF30+ to an ‘essential’ rather than a ‘cosmetic’ item.

Trade and Regulation

- Targeted investment incentives that prioritize business reshoring and increase UK manufacturing and innovation, particularly in relation to sustainability.
- A closer and more positive working relationship with the EU in respect of trade and export policy.
- A commitment to maintain a sector-specific, risk-based approach to any regulatory reform relating to UK Cosmetics Regulation to ensure long-term stability.
- A commitment to proceed with licensing regulation as secondary regulation under the Health and Care Act 2022 in the aesthetics sector.
- Addressing the barriers that have resulted in an £852m drop in sales to Europe since the Brexit vote.

Education and Growth

- An updated skills and apprenticeship education system managed under the remit of the Department for Business and Trade to ensure qualifications are fit-for-purpose for UK business.
- Greater flexibility regarding the use of Apprenticeship Levy funds to build on and develop skills in areas needed by both large and small businesses.
- The reintroduction of Child Benefit for families of under-18s who undertake apprenticeships.
- A focus on resources to ensure improved access to funding for typically disadvantaged groups such as women and ethnic minorities and greater representation at all levels of business and enterprise.

ESG (Environmental, Social, and Governance)

- Support and incentives for companies to implement carbon-reducing, circular, nature-positive, and environmentally sustainable business practices.
- An implementation strategy for Extended Producer Responsibility regulation that works with the industry to ensure a common-sense approach to execution, e.g., utilizing digital labeling.

Victoria Brownlie MBE, chief policy and sustainability officer of the council, said: "We are continuing to work cross-party to advocate on behalf of the industry. We are maintaining and building new relationships with policymakers to push for action in areas where the sector will benefit most."

For more information, refer to the original article by Erin Leybourne for Professional Beauty here

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