Supermarket shoppers will soon find ‘every little hurts'

Is chancellor Rachel Reeves’s decision to hike employers’ national insurance contributions (NICs) about to hit us all – and right in the supermarket baskets?

- JAMES MOORE

According to analysis by investment bank Morgan Stanley, Tesco, the big dog of the UK’s grocery sector, expects to face a £1bn national insurance tax bill over the next four years. The cost of the increases facing Sainsbury’s, Asda and Morrisons adds up to a combined £1.3bn.

And guess who’ll probably end up paying for it all?

Employer NICs are the ultimate stealth tax: from next April, company contributions will increase from 13.8 per cent on wages over £9,100 to 15 per cent, a rise expected to net £23.8bn next year and £25.7bn by 2029-30. The largest revenue-raising measure in the Budget, it will be paid by almost a million businesses – who will mostly pass the pain straight on to their customers.

Reeves chose this as the principal way to close the £22bn black hole in the public finances that she identified because the tax rise won’t immediately appear in the payslips of “working people”. But feel it supermarket shoppers will.

Of course, the supermarkets could try to mitigate the impact. One way would be to lower their input costs by squeezing their suppliers; farmers, and the like. That will inevitably prove controversial, especially with farmers already up in arms over the “tractor tax” which makes agricultural land subject to inheritance tax for the first time. The supermarkets’ suppliers are facing cost pressures, too. So we can probably scratch that.