Tesco Stores Face Earlier Closures as £235m Tax Hike Bites

Britain's largest supermarket chain, Tesco, has begun trialling reduced opening hours at a selection of its Express stores, a move understood to be a direct response to a £235 million surge in staff costs following recent changes to National Insurance contributions. Some "Express Lite" stores, as they are reportedly dubbed internally, will now close at 10 pm instead of 11 pm, in an effort to streamline operations and enhance efficiency.

The strategic shift comes in the wake of the Chancellor's latest Budget, which took effect in April. Employers are now shouldering a National Insurance burden equivalent to 15% of workers' pay packets, a notable increase from the previous 13.8%. Furthermore, the threshold at which this tax kicks in has been lowered from annual earnings of £9,100 to £5,000, significantly broadening its impact. This financial pressure is compounded by an April rise in the national minimum wage by 6.7%. The British Retail Consortium estimates that retailers are collectively facing an additional £7 billion in costs as a result of these budgetary changes.

Tesco's move is part of a broader cost-cutting strategy outlined by CEO Ken Murphy in April, who indicated the supermarket aims to strip out approximately £500 million in the coming financial year to mitigate the Budget's impact. Mr. Murphy has publicly urged Chancellor Rachel Reeves to avoid further increasing retailers' costs, emphasizing the industry's desire to continue delivering value to consumers.

A Tesco spokesman confirmed the changes, stating they are designed to "make things simpler for our colleagues and to ensure that we are running these shops in the most efficient way." While workers have been informed of the trial's limited scope, union leaders have voiced significant concerns.

Daniel Adams, Usdaw National Officer, stated that the union "has not agreed this change and we will be monitoring the trials closely to assess the impact on our members." He further highlighted that Usdaw has "repeatedly raised issues with the business around the risks of low staffing and retain significant concerns around how this trial will work." Tesco is reportedly in discussions with affected staff regarding potential transfers to other stores.

Tesco is not alone in adjusting its operations to counter rising staff expenditures. Other businesses, including pubs, have also begun closing earlier, with some calling last orders at 9 pm instead of 11 pm.

This efficiency drive at Tesco also unfolds amidst intensifying competition in the supermarket sector. Rival Asda recently initiated a price war to attract shoppers, with its chairman, Allan Leighton, claiming to have widened the price gap with Tesco. Tesco itself warned in April that its profits could fall by as much as 14% this year as it prepares to invest £400 million in price cuts to remain competitive. The "Express Lite" trial appears to be another facet of the supermarket giant's multifaceted approach to navigate a challenging economic landscape.