Sainsbury’s to cut 3,000 jobs and close cafes after warning of Reeves’ budget blow

Big four supermarket Sainsbury’s will cut 3,000 jobs in the UK as it faces a looming surge in costs including higher taxes and wage bills following Chancellor Rachel Reeves’s Budget.

The company said it will cut one in five senior manager jobs, as the company also undergoes a three-year £1bn cost-cutting push.

The job losses come two months after the supermarket said Ms Reeves’s recent Budget would cost it £140m including higher wages and higher employers’ national insurance payments.

Simon Roberts, Sainsbury’s Chief Executive, said: “We are facing into a particularly challenging cost environment which means we have had to make tough choices about where we can afford to invest and where we need to do things differently to make our business more efficient and effective.

“The decisions we are announcing today are essential to ensure we continue to drive forward our momentum but have also meant some difficult choices impacting our dedicated colleagues in a number of parts of our business. We’ll be doing everything we can to support anyone impacted by today’s announcements.”

Earlier in January, he warned that the “speed of the national insurance change that’s coming at the industry is clearly unprecedented and will bring inflationary pressures”.

“The size and scale of costs coming at the industry, particularly through insurance, is a real concern. We’re going to do everything we can to mitigate the impact, but there’s no doubt that there’s a lot of inflation building in the system”, Mr Roberts added.

It’s understood the cut in senior management roles is partly linked to the recent increase in company national insurance contributions.

The company’s remaining 61 cafes will close, as will its patisserie, hot food and pizza counters, it said.

Customers have been using its cafes less while instead favouring food halls with more choice.

Asked how the government would respond to suggestions that lay offs at the supermarket were influenced by the budget, the prime minister’s official spokesman said: “Growing the economy, backing businesses, putting more money in people’s pockets are obviously the priority.

“It is only by growing the economy we can fund our public services and raise living standards.

“But as we said at the budget, difficult decisions were needed to restore economic stability, and put the public finances back on to a stable footing following the £22bn black hole, and that was a precursor to driving economic growth.”

Weeks ago, Sainsbury’s hailed its “biggest ever” Christmas trading period. It said profits for the year would be up to £1.06bn and it have staff a 5 per cent pay rise.

But the second-biggest supermarket chain, behind Tesco, faces a higher tax bill following the Budget.

It comes after retailers issued a stark warning to chancellor, saying they must cut costs or raise prices to manage the impacts of the Budget.

The British Retail Consortium said last week that 67 per cent of the 52 finance bosses it surveyed said they would raise prices in response to increases in employers’ National Insurance Contributions from April.

Just over half said they would be reducing their paid number of hours and overtime, while 46 percent said they will have to reduce staffing numbers in stores and 31 per cent said the increased costs would lead to further automation.

Businesses in general, and retailers in particular, claim they will be hard hit by the tax increase which aims to raise £20bn for the Treasury. Retailers often employ more staff than most companies, at relatively lower wages and often on tight margins.

This means the decision by Ms Reeves to lower the threshold at which the tax is paid from £9,100 to £5,000 hits them particularly hard, they say.

Rachel Reeves has defended her decision to raise taxes at the Budget, insisting her plan provided the stability needed to secure growth and fix the nation’s services.

Sainsbury’s, which employs 148,000 people, cut 1,500 jobs in February last year as it cut staff at its bakeries, a call centre in Cheshire and some distribution centres.