Tesco to close stores early after Reeves tax raid

Telegraph

5 days ago

Tesco is to close some stores an hour earlier after being struck by a £235m rise in staff costs from Rachel Reeves's tax raid.
Britain's biggest supermarket is understood to be trialling shorter opening hours at Express stores, shutting some at 10pm rather than 11pm. Tesco is also expected to have fewer staff running those stores when they are open.
Workers have been told the trial is taking place in some of Tesco's less profitable stores, which have been dubbed 'Express Lite' shops internally.
A spokesman said the changes were designed to 'make things simpler for our colleagues and to ensure that we are running these shops in the most efficient way'. They said the trial was taking place in a small number of stores.
The change comes after Ken Murphy, Tesco's chief executive, said that the supermarket was racing to offset a wave of extra costs following the Chancellor's tax raid, which took effect from April.
That month, the grocer said it was facing a steep rise in its staffing bill, including a £235m increase in National Insurance contributions in the latest financial year.
Under the changes, which came into force in the spring, employers pay a tax equivalent to 15pc of their workers' pay packets, up from 13.8pc previously. The threshold at which the tax kicks in has also fallen from earnings of £9,100 a year to £5,000.
As well as the National Insurance changes, the minimum wage also rose by 6.7pc in April. Altogether, retailers are facing £7bn of extra costs following Ms Reeves's Budget, according to the British Retail Consortium.
Mr Murphy in April said that Tesco would strip out about £500m of costs in the coming financial year to offset the Budget hit.
He urged Ms Reeves to avoid increasing retailers' costs further, saying: 'All we're saying as an industry is, don't make it too hard for us to keep delivering great value.'
This weekend, union leaders voiced concerns over the changes to 'Express Lite' stores, saying they risked creating problems for staff.
'Risks of low staffing'
Daniel Adams, Usdaw national officer, said the union 'has not agreed this change and we will be monitoring the trials closely to assess the impact on our members'.
He added: 'The union has repeatedly raised issues with the business around the risks of low staffing and retain significant concerns around how this trial will work.
'While we have been assured by the company that they do not anticipate any redundancies from this process, we are aware it may involve staff transferring to other stores. That in itself can cause problems with travel, caring commitments and shift patterns.'
Tesco is understood to be speaking to affected staff and is taking into account individual circumstances if they need to transfer to another store.
A spokesman said: 'These changes aren't visible to our customers, who will continue to receive the same great service they expect, and there are no changes to the range of products we sell.'
Other businesses are also shutting earlier in a bid to counter the increase in staff costs. In April, The Telegraph revealed that pubs were calling last orders earlier, closing up at 9pm rather than 11pm.
The attempts to make stores run more efficiently also come amid mounting pressure from rival Asda, which this year kicked off a price war to try to win back shoppers.
Last week, Allan Leighton, the Asda chairman, said the supermarket had opened up a gap with Tesco on prices. He said the store would continue to cut prices on some items, while raising prices of other goods more slowly.
Tesco warned in April that its profits would fall as much as 14pc this year as it prepares to invest £400m in price cuts.