The former chief executive of Tesco, Sir Terry Leahy has said Tesco allowed the trust of its customers to be "eroded", in his first detailed comments on the crisis that is engulfing the country’s biggest retailer.

Sir Terry told BBC Panorama: “People tried very hard to do the right thing – it clearly has not worked. In the end, that’s a failure of leadership, not a failure of the business, not a failure of the people who work hard every day in the business. When you’re the CEO, if it goes well, you get credit, if it doesn’t go well, you must take responsibility and Phil Clarke has taken that responsibility and paid the price with his job.”

The programme also found that cosmetics giant L'Oreal threatened legal action over a disputed payment of about £1 million demanded by Tesco.

Sir Terry was the man widely credited with building Tesco into one of the world's largest and most successful retailers, presiding over 14 years of growth in profits and sales.

He said Tesco has lost its reputation for low prices and losing that reputation was very damaging - Asda is now 6% cheaper.

"I think that some of that trust has been eroded, which has meant that people have shopped around."