Woolworths is to lay off 27,000 staff by January 5 in the worst single jobs cull since the recession began in the summer.

The blow was accompanied by news of the biggest monthly leap in unemployment for 17 years.

The number of people out of work and claiming jobless benefits soared last month by 75,700, driving the total to 1,071,900.

The monthly increase in the headline “claimant count” was the biggest since early 1991, and the seventh worst since 1971, when records began.

The scale of the rise, the tenth successive monthly increase, stoked concern that unemployment will continue to soar unabated.

The increase in unemployment in October was also revised sharply upwards yesterday, to 51,800 from a previously reported increase of 36,500. That took the total rise since the start of the year to almost 265,000.

Ministers’ preferred gauge of unemployment, based on the Government’s Labour Force Survey, also showed unemployment up by 137,000 between August and October, to 1,864,000, or 6 per cent of the workforce.

Announcing yesterday’s drastic job cuts, Woolworths’ administrators gave notice that the last of the company’s 807 remaining stores would close soon after Christmas.

It had proved impossible to find a buyer for the business as a going concern, the administrators, Deloitte, said. While other retailers want to buy several hundred stores, staff will have to reapply for those jobs.

Neville Kahn, a Deloitte partner, said there were still continuing negotiations to buy the Woolworths outright. But analysts say there is now no chance of a white knight emerging.

Lord Mandelson, the Business Secretary, said last night that Woolworths’ fate provided a warning to other long-established high street names.

He said it was a “company that didn’t march forward with the times, didn’t change with the times in the way you need to in an increasingly competitive marketplace”.

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