Sir Terry Leahy, the former Tesco boss, has called for business rates to be reformed and “probably scrapped” and said the system “has not worked for years”.

Leahy said that in a “modern digital economy” where consumers shop online the business rates system was outmoded.

He told BBC Breakfast that it should be replaced with a tax that was “low, broad-based, spread across the economy as a whole and not just for the owners of the buildings”.

In the interview he also said that the minimum wage was “good” for society.

Leahy said: “I think that the risk with the minimum wage is that you do not move it forward too quickly. Really, employers and the markets should set good wages for people.

“Good businesses reward their people and pay them well. If you move it too quickly, too artificially, you start to compress wage levels and start to distort the labour market and you can actually lose jobs.”

Leahy, who is credited with transforming Tesco into a global giant while he was boss between 1997 and 2011, is now chairman of value retailer B&M.

Leahy said those supermarkets that best undertand customers’ future needs will be the “winners”.

“All you can do is try and serve ordinary customers - put something out there that is useful to them in their busy lives,” he said.

“They will come and shop with you and if you do it well, you will grow. And then who knows what the future brings.”

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