As Premier Foods is criticised, should the state take action against “pay and stay” practices?
Toby Perkins is shadow business minister, says Yes.
If we are to build a strong economy which works fairly, we need businesses of all sizes to thrive. Unfair business practices threaten the recovery by undermining free and fair markets. Firms always have a right to negotiate for better prices, but the Premier Foods approach takes advantage of suppliers who are dependent on their relationship with the food giant. Suggesting that allowing someone to supply you is providing them with a service they should pay for is a perverse variation on established business practice. If allowed to go unchecked, it would give Premier an unfair competitive advantage over their rivals and could very quickly become the norm. It’s in the interests of our economy, major players and consumers that barriers to entry for innovative new suppliers are minimised. That’s why Labour proposed outlawing this and taking action on late payment. If ministers fail to act and stop this egregious practice, the next Labour government will.
Christian May is head of communications and campaigns at the IoD, says No.
While we shouldn’t take government intervention off the table, there are other groups better placed to put real and immediate pressure on firms in instances like this. The board and shareholders need to step in. Their remit is the long-term health of the company – allegations of anti-competitiveness are serious and require action from the top. Other groups also have a role to play – be it groups like the Institute of Directors (IoD), individual companies or unions. When one bad apple risks spoiling the entire barrel, there can’t be hesitation in pointing the finger at unacceptable behaviour. Despite understandable concerns, it’s encouraging that we’ve also seen Premier’s suppliers begin to raise objections. The prospect of government intervention isn’t going away. So it’s up to those of us who believe in the benefits of the free market to campaign on these issues, and demonstrate to politicians and the public that we can create jobs, wealth and growth in a responsible way.