What is the most pernicious influence in Britain? In the past, you might have answered the banking industry, phone-hacking journalists or MPs who fiddled their expenses. But look closely at British society over the last two decades – at such varied developments as the decline of town centres, the increasing wealth divide, binge drinking, obesity and the problems with the environment and British agriculture – and you may find the word supermarkets springs to your lips.

It seems absurd to think of large grocery and hardware shops as the cause, or the facilitator, of so many avoidable ills, but barely a week goes by when the actions of supermarkets are not held responsible for some kind of harm, whether it's to overweight teenagers, the pub trade or the farming industry. The evidence of a malign trend, or at least a kind of ruthless Victorian opportunism, is nowhere more obvious than in the area of pay.

Last week, Tesco was forced to offer payment to those they had taken on for work experience. Now, this was certainly no crime because the government encouraged Tesco and many others to join the scheme.

But place this in the context of the recent Fair Pay Network report, which in January briefly inconvenienced Tesco and the other members of the Big Four – Sainsbury's, Asda and Morrisons – and you see they all benefit from paying hourly rates that are well below a living wage, which means the taxpayer is forced to make up the rest in tax credits. Because the government is desperate to keep people in work, it is prepared to overlook the profits these companies are making. In the last financial year, Tesco made £3.8bn, Asda £803m, Sainsbury's £827m and Morrisons £874m.

Cheap – even free – labour and big profits mean handsome rewards at the top.

Recent figures put Sainsbury's chief executive, Justin King, on £3.2m and Tesco's Philip Clarke on £6.9m. The fact is that the wealthiest companies in the land are being subsidised by the taxpayer and workers are being kept in poverty.

This is why a formal investigation into the power of an industry that employs nearly one million people is long overdue. Supermarkets are rarely challenged, least of all on the myth that they create jobs. Last year, the Daily Mail exposed such boasts by Sainsbury's and Tesco as lies. Figures from their own annual reports reveal that the number of full-time jobs offered by Tesco and Sainsbury's has actually fallen over the past two years, the paper said. The net effect of killing off smaller shops has actually resulted in a fall in employment, according to the Association of Convenience Stores.

Nothing matters more to the Big Four than market share; driving bookshops, pubs and grocery shops into oblivion is their business. A handful of Gradgrind retailers is on a mission to make every little market town bow to their power and the standards of grim conformity. They promise jobs and pay peanuts, and just when every business in town is on its knees, or has gone bust, they replace people with automatic checkout machines that ask for your Nectar card.

The lovely town of Hay-on-Wye, on the English-Welsh border, would be advised to consider very carefully plans by Powys council to sell a school to a developer who wants to build a supermarket on the site and a new school elsewhere.

At present, Hay is a delight to visit; apart from hosting the world's greatest literature festival, its streets are filled with variety, animation and a sense of community. The business of shopping in Hay, whether for books, antiques or groceries, is a pleasure, but this plan will kill the town. Campaigners estimate that a supermarket would reduce trade for local shops by between 20% and 75%. Traders in Hay's open-air market will be snuffed out and the town will fill with To Let signs, charity and gift shops.

The attractions of the plan are obvious to a hard-pressed council and those who believe they will have access to cheaper food. But it's fool's gold and Hay will be worse off if this scheme goes ahead. Those fighting the plan should perhaps organise a trip to Stow-on-the-Wold in the Cotswolds, where a relatively new Tesco supermarket sits on the edge of town, draining what was once Stow's vitality into its dismal aisles of over-packaged goods and sugary treats.

These days, the public needs to be able to shop where they can find the best deals, but low-cost highly processed foods, loaded with sugar, salt and fat, are what supermarkets sell best and these are contributing to a huge increase in diabetes, hypertension, cardiovascular disease and non-alcoholic fatty liver disease. The Danish health authorities are so concerned about the effects of sugar they are considering taxing it, but in Britain the supermarkets push products drenched in fructose and sucrose without qualm.

Apart from selling value packs of loo paper, just about every aspect of the supermarket business has the potential to be corrosive to a community. For example, cheap alcohol deals in supermarkets (soon to be outlawed) caused an epidemic of binge drinking and closed thousands of pubs where drinking was better regulated.

Supermarkets now account for about 20% of all book sales in Britain, following the suicidal decision by publishers to cut cover prices for supermarkets in order to gain market share. Bookshops, already pressed by Amazon and ebooks, are becoming a pleasure of the past, but the important story is that publishers now find they have to pay the supermarkets to become "preferred suppliers", as well as obey the supermarkets' philistine strictures about the sort of books they should publish. Result – conformity and a narrowing of the culture.

But it is the supermarkets' oppressive behaviour with British farmers that makes you wonder at the complacency of our legislators. According to the Competition Commission report in 2000, the buying power of the supermarkets means "that the burden of cost increases in the supply chain has fallen disproportionately heavily on small suppliers". Farmers are going out of business in what the National Farmers Union says is "a climate of fear".

The supermarkets protest that savings are passed on to the consumer. Nonsense. Look at their profits. Look at their claims about employment. This is a racket to screw suppliers down and boost the profits, shareholder dividends and remuneration of a few fast-talking hucksters at the top.

Across the political divide, there is awareness that supermarkets are abusing their power. Now we need action – a Leveson inquiry for supermarkets that looks at the total impact on jobs, suppliers, the nation's diet, the environment, diversity and planning. This should be followed by the creation of a tough regulator and legislation compelling supermarkets to meet the standards of a fairer, healthier, sustainable, more modern and enlightened society.