The UK’s largest supermarket chains are expected to encounter a substantial rise in costs due to changes in National Insurance contributions.
- A two-percentage point increase in employer National Insurance is projected, impacting major retailers like Tesco, Sainsbury’s, Asda, and Morrisons.
- Tesco alone may see an additional £75 million added to its expenses, as reported by Sky News.
- M&S CEO Stuart Machin has expressed concerns, suggesting the tax increase as a short-term solution with broader economic consequences.
- Shopworkers union Usdaw welcomes wage increases as part of addressing the cost-of-living crisis.
The impending changes in National Insurance contributions are set to significantly affect the UK’s leading supermarkets, with a potential £200 million increase in associated costs. Sky News has reported that this financial burden will stem from a two-percentage point rise in employer National Insurance contributions, which will directly impact large retailers like Tesco, Sainsbury’s, Asda, and Morrisons.
Tesco, as the biggest employer among them, might face an additional £75 million in costs, highlighting the substantial financial implications of this policy change on the sector.
Meanwhile, criticism has been voiced by industry figures such as M&S CEO Stuart Machin. Machin has accused the government of opting for what he termed the ‘easy way out’ by raising taxes. He emphasised that while such measures might offer temporary relief to public finances, they complicate broader economic recovery and negatively affect both customers and employees still grappling with the cost of living.
The supermarket sector also needs to prepare for a surge in wage expenses. Chancellor Rachel Reeves’ announcement of a 6.7% increase in the minimum wage and a 6% rise in the National Living Wage, from £11.44 to £12.21 per hour starting April 2025, will drive this financial pressure. The minimum wage for those aged 18-20 is also set to increase by £1.40 per hour to £10.
The shopworkers union Usdaw has responded positively to these wage adjustments. According to Usdaw’s general secretary, Paddy Lillis, these changes are seen as a much-needed step forward after an extended cost-of-living crisis under the previous government. The union views Labour’s new mandate for the Low Pay Commission as a move toward realising a statutory real living wage and hopes for a pathway to achieving £15 per hour.
The increased National Insurance contributions and wage reforms present significant challenges and opportunities for the UK’s leading supermarkets.
