Letters were sent to retailers following an evidence session with Christine Tacon, the groceries code adjudicator © 2018 by Christine Tacon
Letters were sent to retailers following an evidence session with Christine Tacon, the groceries code adjudicator © 2018 by Christine Tacon

MPs demand answers from retailers on Prompt Payment Code

Six grocery retailers including Morrisons, Aldi and Lidl, have been contacted by the Business, Energy and Industrial Strategy (BEIS) Committee to establish why they have not signed the Prompt Payment Code (PPC).

Rachel Reeves, chair of the committee, sent letters to the heads of each of the companies to question why they had not become signatories of the PPC, a voluntary code which sets standards for payment practices for suppliers.

Other retailers contacted by Reeves included Iceland, Ocado and B&M. Currently only half of the 12 regulated grocery retailers in the UK – Asda, Co-op, Marks & Spencer, Sainsbury's, Tesco and Waitrose – are listed as signatories.

In the letters, Reeves said: “Only six of the 12 regulated retailers under the Groceries Supply Code of Practice are signatories to the Prompt Payment Code, and I am writing to ask you why [the retailer] is not one of those signatories?”

The letters were sent following an evidence hearing held by the BEIS Committee with Christine Tacon, the groceries code adjudicator (GCA), which highlighted that while improvements had been made, there are still concerns around late payments and poor payment practices.  

When probed if more could be done to improve payment practices, Tacon said: “You can regulate. At the moment, you are not regulating; you are asking people to report. The Prompt Payment Code has nothing to do with me, but I am aware of it, and there is a duty to report.”

MPs argued while the role of the GCA is “to address the power imbalance between the big supermarkets/retailers and the smaller suppliers”, there is cause for concern regarding the difference between suppliers being treated properly and suppliers being treated in accordance with the code.

Reeves said: “When agreeing that contract in the first place, it is not an agreement between equals. You may be able to enforce the contract that is agreed between the two, but it is about what has happened before that to ensure, in the first place, that it is a fair and reasonable contract, which works for both the retailer and supplier.”

The committee called on Tacon to examine how the power relationship works for small suppliers and to consider how suppliers to large retailers could better be protected.

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