Tesco chief calls for Business Rates reform

Sir Terry Leahy, the former chief of Tesco, has rounded on the Government for failing to honour pledges to reform business rates. He warned that stores and retailers, already under financial pressure, risked being weighed down with new costs.

The retail veteran said the rising minimum wage and a levy to fund apprenticeships were 'understandable’ burdens, but should have been offset by action to cut the rates. ‘There needs to be a root and branch reform of the whole system,’ he urged. ‘We need a modern tax for a modern economy and it’s probably more than a decade overdue. ‘The digital economy is transforming how we all live and work and the tax system has to keep up with that.’

In his summer Budget, the Chancellor announced an increase in the minimum wage that will take pay for the over-25s to 9 pounds an hour by 2020. He has also announced plans for a new system of apprenticeships that are expected to cost an estimated 2 billion pounds.

The Chancellor will not tackle Business Rates until 2016

Retailers have been pressing the Government on its promise to reform business rates by the end of the year. But in his Autumn Statement last month, Chancellor George Osborne said it would not now happen until next year.

‘They’ll have to get a move on,’ added Leahy, who is now chairman of the fast-growing discount store B&M. He has also invested in a number of online businesses, including home furnisher Houseology.com. ‘You’ve just got to make sure that retailers, which are huge employers and make a huge contribution to the economy, get more out than they put in.

Retail gives many young people a start but there is a real risk of taking retail employment for granted,’ he said.

Last year the British Retail Consortium called Business Rates the biggest problem now facing retail high street. At the time, Helen Dickinson, the director general of the BRC, summoned 25 chief finance officers and tax experts from the biggest retailers to her offices in central London to debate how to tackle the issue.

Dickinson stated: "This is the biggest issue facing retailers on the high street. The issues are complex and far-reaching but without addressing this, nothing else can be achieved.

"There is widespread recognition that business rates have become overly onerous on retail. The more cost that is associated with opening on the high street, the less likely people are to open new stores."