Premier Foods ‘pay and stay’ practice is ‘blackmail’, claimed an Oldham MP ahead of Small Business Saturday.
The company – one of the UK’s biggest food producers – was found to be taking payments from suppliers to keep their contracts, a practice Oldham East MP Debbie Abrahams described as ‘bullying’.
In retaliation to this victimisation of small businesses by the big dogs, the MP for Oldham East and Saddleworth has started the Be Fair – Pay on Time campaign.
Be Fair – Pay on Time aims to address late payments to small businesses, the macroeconomic effects, the current tools being used to tackle this issue and additional measures that could be introduced.
Ms Abrahams said: “This is just another example of large companies using bullying tactics against small businesses by demanding money to finance their own existence.”
Pay and stay is a system whereby a large company demands a payment from its smaller suppliers, either as a one off or on an annual basis.
If the smaller supplier refuses to pay they risk losing their contract with the larger business.
Ms Abrahams said: “This tactic used by Premier Foods falls into the last category and is blatantly unfair. They are clearly financing their own business by using small companies as a credit line.
“How ironic that this story should come to light a day before Small Business Saturday.
“I have always said that issues around late payment are a leadership issue. It’s the chief executives and board members who set the tone of a company’s payment culture.”
The latest figures from the Federation of Small Businesses show Britain’s small businesses are owed £46billion in overdue payments.
Ms Abrahams campaigned for amendments to the Small Business, Enterprise and Employment Bill ensuring contracts could not be changed ad hoc between large companies and suppliers, but the changes were blocked by the Government.
“The Tories and Lib Dems had the chance to help small businesses but chose not to support my amendments to the Bill,” Ms Abrahams added. “What message does this send out to small businesses?”
Image courtesy of Debbie Abrahams via YouTube, with thanks.