Boots and John Lewis announced more than 5,000 job losses on Thursday and a fresh round of store closures, as the coronavirus crisis continued to batter the UK high street and other sectors of the economy.
The latest wave of job cuts came as a £30bn plan by Rishi Sunak, chancellor, to avert a looming unemployment disaster was criticised by a leading think-tank for being poorly targeted.
Mr Sunak warned in his summer statement that “hardship lies ahead” as the government prepares to end its furlough scheme, which has protected 9m jobs, in October. But already the jobs toll is rising fast.
Job losses at John Lewis and Boots were accompanied by news that General Electric is to cut 369 jobs at its aircraft engine maintenance plant in south Wales, blaming the “unprecedented” impact of Covid-19.
Meanwhile, Burger King’s 530-site UK business said on Thursday that it could close up to 10 per cent of its restaurants, putting 1,600 jobs at risk.
The job losses at Boots and John Lewis are a sign that even long-established retailers held in high affection by customers are being ravaged by coronavirus and the continuing shift from in-store to online shopping.
Boots said the closure of 48 of its opticians stores and a “significant restructuring” of its head office and store teams would lead to more than 4,000 jobs being cut.
John Lewis revealed that it would close eight of its 50 department stores, including flagship outlets in Birmingham and Watford, in a move that puts 1,300 jobs at risk. The redundancies come on top of almost 40,000 job losses already announced by British retailers in the first half of the year, according to the Centre for Retail Research.
John Lewis’s decision to include the 136,000 sq ft store in Birmingham’s Grand Central development in its closure plans was criticised by West Midlands mayor Andy Street, a former managing director of the retailer.
John Lewis said in a statement that the store closures were intended “to secure the business’ long-term future and respond to customers’ shopping needs”.
Sebastian James, chief executive of Boots, said his company’s proposals were “decisive actions to accelerate its transformation plan . . . and ensure profitable long-term growth”.
The company had already been trimming a bloated estate of more than 2,000 stores. It still has a commanding position in pharmacy, but its market share in health, beauty and toiletries has been eroded by department stores, supermarkets and discounters.
The Institute for Fiscal Studies highlighted what it saw as poor targeting of Mr Sunak’s new job retention bonus, a £1,000 payment to employers for every furloughed worker they took back into employment and kept on their books until at least the end of January.
“A lot, probably a majority, of the job retention bonus money will go in respect of jobs that would have been — indeed already have been — returned from furlough anyway,” said the IFS director, Paul Johnson. The cost could be as high as £9bn.
The think-tank also criticised the targeted lower 5 per cent value added tax rate for food and accommodation, and tourism services for six months from next week, saying it would only work as a stimulus if businesses were operating safely and well below capacity.
If they were as full as they could be under the new social distancing guidelines it would be “a poorly targeted giveaway”, according to Helen Miller, IFS deputy director.
Additional reporting by Alice Hancock and Laura Hughes