Princess Yachts plans to cut about 260 jobs

Chief executive Will Green said the past year had been "the most challenging commercial conditions in the company's history"

Plymouth-based Princess Yachts has told employees hundreds of jobs will go as the firm blamed market conditions and the government's Budget.

In a letter from chief executive Will Green to employees, seen by the BBC, he said the firm's hourly paid workforce would be cut by about 260 roles.

Mr Green said the last year had been "the most challenging commercial conditions in the company's history". He said the Budget had "severely impacted" its recovery plan and that efficiencies would underpin a "more robust business" long-term.

The Treasury said its commitment to business was "resolute" and it cited measures that included capping corporation tax at 25%.

'Further adjustments'

In the letter, Mr Green said the Budget had "targeted businesses to generate additional tax revenues".

"To remain on track and achieve our plan, we must make some further adjustments to our business which, despite our efforts to avoid it, unfortunately means making some redundancies," he said.

Those affected were told to expect a letter notifying them and providing more details on the process ahead.

The letter said a consultation would start with about 500 employees who were potentially affected.

Princess Yachts said it had made "significant progress" in improving efficiencies

Luke Pollard, Labour MP for Plymouth Sutton and Devonport, said the cuts were "awful news for all those affected".

"Princess Yachts are one of Plymouth’s most important businesses and ensuring they can continue to operate sustainably is vital," he said.

"I've spoken to Princess and know that they’re taking steps to support those who are losing their jobs but the timing just before Christmas makes this news even harder."

'More sustainable future'

The main areas included feeder factories, development, fitout, outside crew, quality and other operational support, the letter said.

It added: "We need to continue to make the business stronger and more agile and these regrettable actions, together with the good work that is happening throughout the business, will underpin a more sustainable future."

In a statement on Wednesday, Princess Yachts said it had made "significant progress" in improving operational efficiencies in challenging marketing conditions.

It said a strong order book meant it had weathered much of the market downturn - but that a review of business operations had "highlighted opportunities to further strengthen resilience".

This would involve "streamlining" processes to "build a more flexible operation arounds its most experienced and skilled people".

'Highest quality yachts'

It said this would require making some roles redundant, impacting less than 10% of the workforce, with a period consultation under way.

Mr Green said making any decisions that directly affected people's jobs was "always difficult" but that the firm had a responsibility to all staff to ensure a "strong business".

"I am confident that these adjustments, together with the progress we have made on our turnaround plans this year, will underpin a much more robust business long-term and allow us to concentrate on what we do best – building the highest quality yachts in the market," he added.

A Treasury spokesperson said: “In October we delivered a once in parliament budget to wipe the slate clean and deliver change by investing to repair the NHS and rebuild Britain; all while ensuring working people don’t face higher taxes in their payslips.

"Our commitment to business is resolute - we have capped corporation tax at 25%, confirmed full permanent expensing, and are tackling planning and trade barriers to unlock growth."