Tesco set for £1bn national insurance bill over four years due to Budget

Chancellor Rachel Reeves introduced a plan to raise £25bn through increasing employer national insurance contributions (NICs), which is forecast to lead to job cuts and price hikes.

Tesco faces a £250m annual rise in NIC bills, equating to £1bn over four years, based on analysis by Morgan Stanley first reported by The Sunday Times.

Price rises from suppliers that are less able to cope with the new bill will mean much higher costs, with analysis forecasting that food inflation will exceed 2% next year, up from the current rate of 1.8%.

Fellow supermarkets Asda, Sainsbury’s and Morrisons also explained the rises they are facing, which is expected to be a combined £1.3bn over the current parliament.

Sainsbury’s chief executive Simon Roberts said the Budget would lead to higher food prices, while interim Asda boss Lord Rose said the Budget has “clobbered” business.

The Co-op also said the bill for employees would rise by “tens of millions of pounds per year”, and Waterstones managing director James Daunt told The Telegraph that “egregiously large” tax bills and business rates were to blame for the closure of stores in towns and city centres.

As well as the NIC increase, businesses are having to up the minimum wage by 6.7% to £12.21 an hour.

A spokesperson for the Treasury said: “More than half of employers will either see a cut or no change in their national insurance bills and to support the hospitality industry we’re permanently cutting business rates for every shop on the high street from 2026 alongside a 40% relief on business rates bills next year for thousands of premises.”