Sainsbury’s is cutting more than 3,000 jobs and closing all its remaining cafés as it tackles rising costs following the October budget.

The supermarket group said the increase in employers’ national insurance contributions is expected to add £140 million to its costs from April.

Only last week it announced that its hourly paid workers would get a 5% pay rise worth more than £1,100 a year on average.

The award is to be “split into two separate increases to help manage a particularly tough cost-inflation environment”, the chain explained, and the rises are due to be implemented in March and August.

Even so, its chief executive Simon Roberts said it must manage costs and revenue across the group and adjust its workforce accordingly.

Chancellor Rachel Reeves announced in her Budget that employers’ national insurance contributions would rise 1.2 percentage points to 15% from April while the earnings threshold at which the tax kicks in would be reduced from £9,100 to £5,000.

Many retailers have said that the higher costs arising from the Budget will feed through into job losses and higher prices for customers. In a British Retail Consortium survey, more than half said that they would reduce the number of hours for their workers.

The finance chief of Associated British Foods, which owns fashion chain Primark, today warned that consumers were holding back from buying clothes partly because of increasing uncertainty over the security of their jobs.

The company blamed cautious consumers in its core UK market as it cut Primark’s sales forecast for 2025.

Sainsbury’s is one of the biggest private sector employers in the country with about 150,000 workers. it said it was “facing into a particularly challenging cost environment” following budget tax increases and had to make some “tough choices” to make the business more efficient.

The UK’s second-largest grocer will restructure its head office to cater for the “different needs of the Sainsbury’s and Argos businesses, while creating fewer, bigger roles with clearer accountabilities”.

The changes will bring down costs through an estimated 20% reduction in senior management roles over the next few months. The latest cuts come on top of an announcement last February to cut 1,500 jobs.

It said it had made the difficult decision to close its remaining 61 in-store cafés, subject to consultation. Most its shoppers do not use the cafés regularly. It will also close its less-popular patisserie, hot food and pizza counters.

Mr Roberts said: “The decisions we are announcing today are essential to ensure we continue to drive forward our momentum, but have also meant some difficult choices impacting our dedicated colleagues in a number of parts of our business. We’ll be doing everything we can to support anyone impacted by today’s announcements.”

He warned last week that he would “look very carefully” at future hiring decisions in response to budget-imposed wage pressures, despite the company having cheered its “biggest ever” Christmas.