Tesco boss accuses business rates system of ‘killing’ retailers

The chief executive of Tesco, Dave Lewis, has harshly criticised the UK’s business rates system, saying it has become “a rising tax on investment” in a speech today.

Lewis said that increasing business rates have come as retailers are squeezed by online competitors, and called for an online sales levy. He brushed off criticism that this would be a tax on the future, saying “business rates are killing the present”.

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Speaking to the British Chambers of Commerce (BCC) annual conference today, Lewis said: "We need to rethink our business rates system.” He added: “As 20 per cent of sales have gone online, business rates have stayed and increased on a declining sales base.”

The Tesco boss argued that “a two per cent [online] tax levy would raise £1.5bn” and that it would mean that “the burden of tax can follow the online sales”.

Lewis, who took over the grocery retail giant in 2014 just before it was rocked by an accounting scandal that saw it have to pay out a £129m fine to regulators, criticised government policy in other areas, including apprenticeships and the industrial strategy.

“The policy framework for apprenticeships is broken”, he told the businesspeople gathered at the annual conference of the BCC, which represents 53 accredited chambers of commerce across the country.

“There's simply not enough flexibility and it's too open to abuse. Tesco can only use 20 per cent of the money we pay in and cannot use the rest to train for the new skills we need, so in effect it's an 80 per cent tax on training,” he said.

“Tesco wants to take on more apprenticeships, but we're barred from doing that cost effectively, and I know that many businesses are frustrated in a similar way,” he said.

Lewis also said: “Retail has no place in the industrial strategy. It's treated differently from other so-called traditional industries.”

He asked: “Why wouldn't we shepherd and help retail add economic value along that way in the same way that we do steel and cars?”

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Earlier on in his speech, Lewis had said that 61,000 retail jobs were lost between March and September alone and said that for many Christmas was “the worst in a decade”.

In a speech light on Brexit, Lewis sought to sell Tesco’s role in society, saying that it paid £1.2bn in tax.