Manor Bakeries is shutting two factories as part of plans to slash operating costs and reduce overcapacity.

Sites at Eastleigh, near Southampton, and Moreton, Merseyside, which produce Mr Kipling and Cadbury’s cakes, are due to close by December 2005. Manor Bakeries’ parent company RHM insisted volumes would not be reduced by the closures because other sites would absorb production.

Half of the Moreton site’s production is to be transferred to existing facilities in Carlton, Yorkshire. The move is part of investment in Manor Bakeries’ factories in Carlton and Stoke, creating 350 jobs. The restructuring will lead to a net loss of 330 jobs.

RHM said it planned to pump £45m into Manor Bakeries in the next three years. It is understood that about a third of that cash will finance brand marketing.

Ian McMahon, chief executive of RHM, said: “The actions we are announcing are in line with our strategy of investing in key brands.”