Leahy urges PM to do more to support struggling retailers

Sir Terry Leahy, the chief executive of Tesco, has called on the Government to make major changes to the way business rates are calculated to help retailers invest during the downturn.

In the short term, Mr Leahy urged the Government to cut the Uniform Business Rate multiplier for 2009/10, which would mean no increase in business rates for many companies during a recession. It should also postpone the 2010 revaluation of business property, which would otherwise be based on April 2008 property values, he said.

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However, in the longer term, Mr Leahy said: "Business rates themselves should be reviewed. They do not reflect the changing nature of the businesses today with the value of property no longer providing a reasonable indicator of profitability."

His comments will put further pressure on the Government to reduce the burden of taxes and red tape on companies as the UK hurtles towards a recession and follows Mr Leahy's call for the Bank of England to reduce interest rates last week.

In a further broadside against the Government, Mr Leahy, who was speaking at the British Council of Shopping Centres annual conference in Liverpool yesterday, said: "The way businesses are assessed should be reformed to ensure a fairer spread of tax liability across business sectors. A new system should reflect today's priorities for society.

"For example, there should be business rate relief for investment in deprived communities, energy efficiency measures and green technologies."

Mr Leahy also warned that UK retailers should not abandon their commitment to environment initiatives during the current downturn. He said: "Going green makes commercial sense – it means lower energy bills. And crucially, customers want to go green, but need help in making the change. So we need to ensure that green products are not luxury items, but can be bought by those on a tight budget. And we need to show that, by going green, consumers can save money."

Yesterday, TNS Worldpanel said that Tesco generated the lowest sales growth of the big four grocers during the 12 weeks to 4 November. Tesco's growth of 5.4 per cent was marginally behind Sainsbury's 6 per cent, but a long way behind Asda's 9 per cent and Morrisons' 9.4 per cent.

Discount supermarkets grew their overall share of the grocery market to a record 6.2 per cent.