Toby Perkins MP, Labour’s Shadow Business Minister, has today written to BIS minister Matt Hancock to ask whether, in light of reports today on Premier Foods charging firms for the right to become or remain suppliers, the Government will now be backing Labour’s plans to outlaw this practice and ensure fairness for suppliers.

The letter comes just weeks after the Government failed to back Labour’s amendment to the Small Business Bill which would have implemented this.

The full text of letter is below:

Rt Hon Matthew Hancock MP
Minister of State for Business and Enterprise
1 Victoria Street
London SW1H 0ET

Friday 5 December 2014

Dear Minister,

I’m sure you will share my deep concern at the revelations on Premier Foods, first broadcast on BBC Newsnight yesterday, that the firm’s suppliers are being made to pay to retain their contracts.

This egregious and unfair practice flies in the face of fair and competitive markets, and is a particularly worrying development given the growing problem we’ve seen during this Parliament of late payment to suppliers.

As you will be aware Labour recently tabled an amendment to the Small Business, Enterprise and Employment Bill which would have outlawed this practice, prohibiting a company from requiring a supplier company to make a payment in order to join a company’s list of suppliers.

Sadly, the government was not minded at the time to support this amendment during the Bill’s progress through the House of Commons, alongside the amendments we tabled to tackle the related issue of late payment to suppliers.

However, I note that in response to Newsnight’s story, Vince Cable has described this practice as ‘wrong’ and that the government is now examining the issue again in light of the news reports on this practice.

Therefore, I would be grateful if you could clarify whether the government now plans to accept Labour’s amendment to the Small Business Bill, which is currently being scrutinised in the House of Lords?

And secondly, what action will you be taking immediately to the practice of charging suppliers more broadly, including to find out how widespread this has become in the British economy?

This weekend we will be celebrating the contribution that small firms make to our economy and society on Small Business Saturday. I urge you to act quickly to protect small suppliers and put a stop to this unfair practice by backing Labour’s plan and amending the Small Business Bill accordingly.

I look forward to receiving your reply.

Yours sincerely,

Toby Perkins MP
Shadow Minister for Small Business