Retailers usually confine their political comments to tax and regulations. But could Sir Terry’s foray into education be the start of a new career? By Alex Black

When Ed Balls set up the National Council for Educational Excellence (NCEE) in July 2007, the Secretary of State for Children, Schools and Families (DCSF) would not have expected Sir Terry Leahy – arguably its most high-profile member – to describe school standards as “woeful”.

But his outspoken comments in a speech at Tuesday’s IGD convention in London suggest the Tesco boss – previously the most politic and pragmatic of business leaders – had decided it was time to take the gloves off. “Despite all the money that has been spent, standards are still woefully low in too many schools,” Sir Terry told 750 of the industry’s senior leaders.

He continued: “As the largest employer in the country, we depend on high standards in our schools, [but] employers like us are often left to pick up the pieces.”

The comments were all the more embarrassing to the government because the NCEE is chaired by the Prime Minister himself, with Sir Terry also advising Gordon Brown on business issues as one of a select group of business leaders.

Until now, the Tesco boss has steadfastly maintained an apolitical position typical of business leaders in general, and grocery in particular. Though Tesco donated £62,419 to Labour between 2003 and 2008 (see box), its contributions have been seen as a pragmatic attempt to curry favour with the government of the day, while comments in public have been limited to business matters such as tax, interest rates and regulation.

Speaking before Sir Terry at the convention, Unilever chief executive Paul Polman followed this  well-worn path, demanding the next government create a climate for business to prosper and compete. “Any tax regime should not suppress consumer spending, entrepreneurship or the ability to compete for international trade,” he said, steering clear of overtly attacking the current government.

Like Polman, Terry also had suggestions on business policies. Today’s recession, he said, would be easier to tackle if businesses were not burdened with more tax and regulation. “Both spell higher costs, less investment and fewer new jobs,” he said, adding that this in turn would spell less revenue for the Treasury to pay back the debt. 

Westminster could best help by not distracting retailers from their core task of delivering for the customer, he added. “Government, like business, needs to be focused on innovation and making things more simple in the way public services are delivered.”

But, having rolled out these generic platitudes, what Sir Terry said next took him into new territory.

Leahy on education
“One thing government could do is to simplify the structure of our education system,” he said. “There are too many agencies and bodies, often issuing reams of instructions to teachers, who then get distracted from the task at hand: teaching children.”

He was not saying retail was like education, he conceded, but he made clear his feelings that something needed to be done by those in power.
And the audience, not to mention the press pack furiously writing on notepads or laptops, was impressed. One delegate immediately fired off an email to The Grocer saying: “Sir Terry has said something controversial for once!” 

A senior executive at a rival chain added: “Why shouldn’t he speak his mind on issues like education? Good on him. Hopefully someone in government will sit up and listen.”

Indeed, the move was even seen by one former senior retail executive as the moment when Tesco effectively abandoned New Labour. “It was every bit as dramatic as the moment when The Sun dropped its support for Labour at the Brighton conference.”

The source even speculated that Sir Terry was auditioning for a new role in the next government. “There hasn’t been a retail peer for some time. It would be quite a coup for the Tories.”

Though Sir Terry’s exit from Tesco is likely to be at least two years off, when he is 55 and the latest set of share options mature, he would still be relatively young. 

“I wonder if Sir Terry might go in as a trade and industry czar. The DCSF is currently a super-ministry, including skills. I wonder if skills under the Tories might come back under the wing of a business-oriented department. I’m sure Sir Terry would like to see education being more geared towards business, bringing back the Modern Apprentice Schemes, which the Labour government scrapped. 

Also at the IGD convention, Asda chief operating officer Andy Clarke appeared to join Sir Terry in attacking the government’s track record on skills and education. Clarke said the UK had spawned a generation that struggled to master the skills needed to become effective employees. 

As part of Clarke’s presentation, Asda filmed a group of unemployed and disaffected, yet articulate, teenagers bemoaning their lack of opportunities for work. People with work experience were constantly pushing them to the back of the queue, they complained, which made it impossible to get on the career ladder.

Clarke used the speech to announce a new initiative akin to an apprentice scheme to get young people into work. It will be launched in early 2010 and will allow employees to work part-time while in education while creating more opportunities for the 10,000 or so 16 to 24-year-olds the chain hires on a seasonal basis to make their positions permanent. 

Like Sir Terry, Clarke made no bones about this being a scheme to benefit the retailer as well as young people. “This scheme will provide an introduction to work, new skills and a sense of purpose,” he said, “and it will also promote loyalty, hopefully encouraging these people to stay with us and work their way up through the business.”

Openly hostile
That supermarket bosses feel empowered to speak out, in such an openly hostile way, about the government’s record on education – coming as it does towards the end of the current five-year term of the Labour government – inevitably smacks of opportunism. “Sir Terry can afford to be critical, because he is not only powerful and respected, but because the next few months are effectively a holding pattern for the new administration,” said the former retail executive. 

But a Tesco spokesman dismissed speculation that Sir Terry was getting all political. “We have been surprised at the level of coverage Sir Terry’s comments have received because they aren’t particularly new. He made very much the same point in 2007.

“Tesco remains apolitical. We work with the government of the day on the things that matter to our customers and a business, be it skills, health or the economy.”