HAYES IN THE HOUSE: By MP John Hayes
The dominance of the major supermarkets has been at the expense of local shops and local economies, with an estimated 90% of the money spent in supermarket stores leaving their areas. Perhaps worst of all, these corporate giants have made many towns dull and anonymous through the high street dominance of their ubiquitous, ugly stores.
Primary producers of food – the farmers and growers, including many here in fertile South Holland - had little choice over recent decades but to become dependent on their relationship with the big four supermarkets; many suppliers faced the prospect of giving them the terms they demanded or giving up altogether. Reduced profits for the big four in recent years has only made things worse by putting even greater pressure on producers to lower their prices. The capricious callousness of these monolithic big stores is rural Britain’s dark secret – one kept hidden for fear of those brutal giants.
So, last week’s news that, following a 2 year investigation, Britain’s largest supermarket, Tesco, was found to have seriously breached the legal Code of Practice to protect groceries suppliers, though unsurprising, remains deeply shocking.
The supermarket ombudsman -the Groceries Code Adjudicator- established while I was a Minister in the Department for Business, has revealed that Tesco acted unreasonably when delaying payments to suppliers, often for lengthy periods of time. The investigation found that Tesco intentionally withheld payments owed to suppliers in order to boost their own profits, avoiding paying what they owed, in some cases for more than a year.
Tesco’s “unreasonable practise and behaviour towards suppliers” was found to be “widespread”, and must herald serious change at the firm. Indeed, the adjudicator has ordered them to mend their ways, as well as writing to the Competition and Markets Authority about their practices.
It’s worth noting, too, that Tesco is currently being investigated by the Serious Fraud Office regarding allegations of accounting wrongdoings and is facing potential legal action after overstating profits in 2014.
Businessmen know that commerce is often tough and sometimes harshly so, but good business depends on terms of trade built on trust; doing what you say you will and paying the agreed price.
The suppliers wronged by Tesco – farmers, growers and food firms - are the lifeblood of our rural economy, here in Lincolnshire and beyond; they deserve the chance to trade fairly. We should all welcome the fact that, after years of little meaningful redress, we are now taking on the supermarket bullies and putting right their wrongs. The great Benjamin Disraeli once remarked that “courage is fire and bullying is smoke”.
Having the courage, seeing through the smoke, to stand up to bullies is never easy, but always right.