Supermarkets warn of ‘inevitable’ job cuts and price rises after National Insurance hike
UK retailers have warned Chancellor Rachel Reeves that her decision to increase employers’ National Insurance contributions in the Budget will lead to “inevitable” job cuts and price rises.
In a letter to Reeves, more than 70 companies including Tesco, Sainsbury’s, Asda and Morrisons said that the National Insurance hike, combined with a rise in the national minimum wage, and new packaging levies could see the retail industry’s costs surge by up to £7bn a year, The Times reported.
Other supermarket signatories of the letter, which was organised by the British Retail Consortium (BRC), include Aldi, Lidl, Ocado and M&S, alongside retailers such as Amazon, Boots, Currys, B&Q, Burberry, JD Sports, and Holland & Barrett.
Changes introduced by Reeves in her first Budget last month mean that from April 2025, employers’ National Insurance contributions will rise from 13.8% to 15% on a worker’s earnings above £175 a week.
Subscribe to Grocery Gazette for free
Sign up here to get the latest grocery and food news each morning
In the letter, the retailers said: “For any retailer, large or small, it will not be possible to absorb such significant cost increases over such a short timescale.
“The effect will be to increase inflation, slow pay growth, cause shop closures and reduce jobs, especially at the entry level.
“This will impact high streets and customers right across the country. We are already starting to take difficult decisions in our businesses and this will be true across the whole industry and our supply chain.”
They added: “We appreciate government’s focus on improving the fiscal situation and investing in public services; we also recognise the role businesses have in supporting this. But, the sheer scale of new costs and the speed with which they occur create a cumulative burden that will make job losses inevitable, and higher prices a certainty.”
Earlier this month, Sainsbury’s CEO Simon Roberts warned that the £140m extra piled onto its bill will lead to “some difficult decisions” as there “just isn’t the capacity to absorb all of this”, while Asda chairman Lord Stuart Rose said the National Insurance increase, which will cost the retailer around £100m, was “not an easy swallow”.
The BRC is now looking to meet with Reeves “to work together on a solution”.
A spokesman for the Treasury told The Times: “With our public services crumbling and an inherited £22bn fiscal black hole from the previous government, we had to make difficult choices to fix the foundations of the country and restore desperately needed economic stability to allow businesses to thrive.
“By doing this, more than half of employers will either see a cut or no change in their national insurance bills, there will be £22.6bn more for the NHS and workers’ payslips will be protected from higher tax. This government is committed to delivering economic growth by boosting investment and rebuilding Britain.”
3 Comments. Leave new
Tesco can’t make any more cuts ,already cut to the bare bone.Have been making cuts since 2015
Perhaps it is the hierarchy tax bill they are worried about. Most retailworkers work part time. When pay for CEOs and Directors is extortianate compared to their.minimum wage workers who are using foodbanks.
I am glad I am retired from Tesco. The best years were the 35 (1980-2015) years I worked for Tesco. Expect the Board of Directors of Tesco will use the National Insurance increase as an excuse to cut the Colleague discount. When they should be cutting Ken Murphy’s as CEO, director’s and executives pay