Pay on Time campaign attracts 20 more FTSE 100 companies

Debbie Abrahams, MP for Oldham East and Saddleworth

A campaign urging FTSE top 100 companies to sign up to the Prompt Payment Code (PPC) has gathered the signatures of 20 more companies, but 55 others have still not agreed to it.

Launched by Debbie Abrahams, MP for Oldham East and Saddleworth, after hearing late payments by a large, well-known company were harming a constituent’s business, the Pay on Time campaign now has 45 companies on board.

Mrs Abrahams slammed those who have either not responded to the second round of letters sent out or refused to join the scheme though, brandishing it ‘repulsive and unacceptable’.

“The bosses of these huge multi-national companies seem to care nothing about Small and Medium Enterprises (SMEs) struggling to survive because they can’t get paid for the work they have done,” she said.

“It’s repulsive and unacceptable business practice.

“Failing to pay their suppliers on time or putting up payment terms when they feel like it, just because they can, is unacceptable - it reflects a selfish ‘I’m alright Jack’ attitude.”

She added: “There are direct parallels in these attitudes and behaviours to the culture associated with unethical tax avoidance and bonuses for poor performance.”

The Be Fair - Pay on Time scheme was created in partnership with the Institute of Credit Management (ICM); the Federation of Small Businesses (FSB) and the Forum of Private Business (FPB).

The 20 companies now in the process of signing up include Standard Life, Vodafone, Burberry and Kingfisher, and Mrs Abrahams paid tribute to those on board.

She said: “We should give credit to the twenty global companies who have agreed to sign up to the Prompt Payment Code as they are leading by example and committing to help SMEs across the UK.

“All are stating publically what they consider to be acceptable business practice; that they agree with prompt payments right along their supply chain and not lengthening their terms of payment to suppliers just because it suits them.

“It shows they recognise how their actions affect the thousands of hardworking SMEs across the UK and that they are ready to be held accountable for their actions.”

Figures show SMEs are currently owed a record £36.4 billion in late payments, and Shadow Business Secretary Chuka Umunna believes this is inexcusable.

“Late payment is a huge and growing problem so it's fantastic that twenty more FTSE 100 companies are now signed up and we want even more to follow their lead,” he said.

“There is no excuse for not doing so, or for failing to pay on time which has led to too many small firms going under.”

Phil Orford, Chief Executive at the Forum of Private Business, also supported this view.
He said: “Late payment kills business and hampers growth. It’s as simple as that.

“The more influential a company, the more the onus is for them to sign up and lead the way for others to follow.

“FTSE 100 companies who refuse to sign up to the Code’s ethical standards charter really need to ask of themselves why not.”

Companies who have refused to sign up include mining corporation Rio Tinto, temporary power generation leaders Aggreko, engineers Meggitt and GKN plc and supermarket giants Sainsbury's.

Mrs Abrahams expressed particular concern about the latter, who have signed up to a government-backed supply-chain finance code placing further burdens on SMEs but have refused the Prompt Payment Code.

“I am particularly appalled by Sainsbury’s who have backed the government’s supply-chain finance scheme but refused the Be Fair – Pay on Time campaigners’ request for them to sign up to the PPC,” Mrs Abrahams said.

“Their refusal coincided with them lengthening their suppliers’ payment terms by 150% to 75 days; a move that was exposed by the Forum of Private Business.

“Sainsbury’s defence that they aren’t as bad as some other large supermarkets is no defence at all. What a pathetic race to the bottom.

“They’re in effect saying ‘it’s OK for us to do this because there are other supermarket retailers just as bad as we are’ and this comes at the same time as they announce a huge six monthly profit and have confirmed they will not support a living wage for their staff.

“This is a profit won at the expense and suffering of their smaller suppliers and low wages for their staff.

“We are telling SMEs and entrepreneurs that they are the backbone of the economy and they’ll get us out of this recession but we don’t treat them fairly in reality.”