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The Chancellor gave businesses no time to plan for her £25bn tax raid, the boss of Sainsbury’s has said, as supermarkets battle to keep a lid on price rises.
Simon Roberts, the chief executive of Britain’s second largest supermarket, said Rachel Reeves’s decision to increase employer National Insurance from April was “not something anyone expected – certainly, it wasn’t expected at the speed it was coming at”.
He said the fact that it was “so unexpected”, and its swift introduction, would have a “significant impact” on supermarkets.
The raid was not part of Labour’s manifesto, which included a pledge not to raise taxes on “working people” and said: “We will not increase National Insurance.”
The party subsequently argued that increasing employer contributions did not break this promise, because there was no rise in the rate paid by workers themselves.
Mr Roberts said businesses such as Sainsbury’s would typically lay out plans over 12-month horizons or longer, meaning there was little time to adapt.
He said: “There would have been a much greater benefit if those changes had been phased, with a clear period of time for businesses to plan.
“If there had been more preparation for that and planning for how that change came in, I think that would have made a very substantial difference.”
The comments come amid growing concern over the wave of higher costs that supermarkets face over the next year.
Sainsbury’s last November said the minimum wage increase and National Insurance changes would increase its costs by around £140m. It has also warned that its business rates bill is likely to go up this year after the Government delayed a review of the system until 2026.
Tesco has also warned of an impact from the changes, and on Thursday refused to rule out price rises for shoppers.
Boots said on Friday it was also facing “heightened cost pressures in 2025” after the Budget.
The warning came as it posted a 8.1pc jump in sales during the three months to December, boosted by strong demand for beauty products.
Its parent company Walgreens Boots Alliance said it was making “early progress” in wider turnaround efforts, where it is cutting $1bn (£820m) out of the business.
Alongside higher employer costs, retailers are also facing new net zero levies for packaging from next year, which is expected to cost the sector as much as £2bn.
Mr Roberts said: “We’ll be working very hard, as I know all of my industry peers are, to make the case that these decisions need to be phased over a period of time.”
On Friday, Sainsbury’s said it would be introducing pay increases for staff in two separate tranches this year, rather than one go, in an attempt to manage cost inflation.