Food giant sparks outrage over 'pay to stay' demands

The company behind popular food brands including Mr Kipling and Bisto has sparked outrage after it emerged it was asking suppliers to hand over an annual cash sum – or risk being struck off its ‘approved’ list.

Brand giant Premier Foods has written to suppliers to inform them of its plans for expansion, warning them that part of the growth programme included halving the number of suppliers on its current 1,000-strong list.

The government and opposition leaders have expressed concern over the ‘pay to stay’ revelations, along with the Institute of Directors, which said it was “deeply disturbed” by the reports.

Director general Simon Walker accused the company of “unacceptable” behaviour which risked undermining public confidence in the business market – and risked encouraging interference by Parliament.

The Department for Business, Innovation and Skills said it was aware of the “growing problem” of supplier list payments, and said it was consulting on whether major companies – such as Premier Foods – should report publicly on such arrangements.

And Labour’s shadow small business minister Toby Perkins criticised such “exploitative” arrangements.

But a spokesman for Premier Foods said they had been “delighted” by the response from their suppliers, in particular from small firms, since launching the programme in July last year.