Tesco boss Dave Lewis today blasted “unsustainable” business rates on the retail sector and called for urgent government reform.
The chief executive of the supermarket chain told the CBI annual conference that high business rates, combined with the National Living Wage and other policy changes such as the apprenticeship levy, needed to be addressed, or “I fear that it’s communities all over Britain that will suffer”.
“Over last five years property values have fallen, profits are down but business rates are up. Quietly but dramatically,” he said.
“Business rates have hit £8bn for retail. That’s over a quarter of the bill and significantly more than any other sector. That’s an enormous pressure. Shops have closed. Businesses lost. Jobs sacrificed.
“Our own business rates bill has increased by well over 35 per cent in the last 5 years. It’s the biggest tax we pay and it is now three times OECD average. For every £1 we pay in corporation tax large UK retailers pay £2.31 in rates. It’s unsustainable and needs urgent reform.”
Dave called for a re-assessment of how business rates are calculated, including the regularity of reviews and moving from RPI to CPI inflation.
The boss warned that the National Living Wage – the new, higher hourly minimum wage – could come at the expense of benefits packages and said that “collecting taxes through mechanisms like the apprenticeship levy…wipes out the equivalent of our whole training budget”.
Dave, who repeatedly referred to himself as a “new boy” to retail with a “fresh” take on the sector, eschewed suggestions that the supermarket’s turnaround was not working, despite admitting that “the profitability of Tesco in the second half of last year was zero in the UK”.
Tesco, like the rest of the big four, has been struggling to maintain market share and profitability in the face of strong competition from budget discount chains Aldi and Lidl.