A LEADING food company has sparked fury in the business world after asking its suppliers to give money if they want to remain on its books.
Premier Foods, which owns popular brands including Mr Kipling, Oxo and Bisto, has written to its suppliers asking for an “annual voluntary investment” to help fund its growth plans.
Firms that do not pay up risk being taken off its approved 1,000-strong supplier list.
The company said it had been “delighted” with the positive response from many small companies, but the Institute of Directors said it was “deeply disturbed” by the disclosure.
Simon Walker, director-general, said: “The news that Premier Foods could be forcing its suppliers into controversial pay-to-stay arrangements is deeply disturbing.
“At a time when public faith in business is painfully low, such unacceptable behaviour puts a bullet in the chamber for those who think the heavy hand of regulation is the only way to change the culture of corporate Britain.
“Both the government and the Labour Party are right to be concerned. But those of us who believe in the benefits of market forces should be equally furious that a few bad apples risk spoiling the whole barrel.
“Holding small businesses and suppliers at gunpoint is a sure way to catch the attention of policy-makers and regulators. Premier need to consider their arrangements closely.
“We encourage them to think of the long-term damage they could be doing to their suppliers, their brands, and business in general.”
A Premier Foods spokesman said: “We launched our ‘invest for growth’ programme in July last year as part of a broader initiative to reduce complexity, in support of plans to help turn around the business.
“This included a commitment to halve the number of our suppliers and develop more strategic partnerships focused on mutual growth.
“As part of the programme, our suppliers are asked to make an annual voluntary investment to help fund our growth plans. In return, our suppliers benefit from opportunities to secure a larger slice of our current business. They also stand to gain as our business grows.”
A Department for Business, Innovation and Skills spokesman said: “We are concerned by recent reports, and are consulting to assess the evidence so we can establish what more we can do.”
Shadow small business minister Toby Perkins said Labour wanted to protect suppliers from “exploitative” arrangements.
He added: “This issue of businesses charging suppliers to be on their supplier list, or changing the payment terms so that suppliers are being paid very late, is a growing problem.”