Half of regulated UK supermarkets not keen on signing payment code

A politician in the UK is questioning why major UK supermarkets are not signing up for the Prompt Payment Code.

MP Rachel Reeves, chairman of the Business, Energy and Industrial Strategy (BEIS) Committee, said companies should sign on to the code. But only half of the 12 supermarket retailers in the UK have signed on the code.

Asda, Co-op, Marks and Spencer's, Sainsbury’s, Tesco and Waitrose have all signed up, while Aldi, Lidl, Iceland, Morrisons, Ocado and B&M have not.

The Prompt Payment Code is a voluntary code that expects signatories to pay their invoices within 60 days, and that they pay 95% of their invoices within the period.

Although there are supermarkets that have not signed up for the code, payments seem to have improved from the major industry players to their suppliers.

In a recent oral testimony to the Business, Energy and Industrial Strategy Committee, Christine Tacon, the Groceries Code Adjudicator, reported that the number of incidences from suppliers saying delayed payments from supermarkets is an issue has gone down to 19% from 35% five years ago.

The Groceries Code Adjudicator was created in 2013 and is supposed to ensure the 12 regulated supermarkets comply with the Groceries Supply Code of Practice and treat their direct suppliers lawfully and fairly.

Tacon asked the suppliers to score how compliant their retailer is with the code, and they replied that the worst score was 84% and there were two who scored 97%. This is an improvement compared to five years ago when the worst score was 58% and the best was 90%. Only two retailers were worse than the best retailers five years ago.

Aldi, although not a signatory of the Prompt Payment Code, is considered the best performing retailer in terms of complying with the Groceries Suppliers Code of Practice for the sixth consecutive year. Tesco came second, followed by Waitrose and Sainsbury’s. The survey by Tacon also showed that 97% of suppliers say Aldi generally pays them on time.

Tacon gathered data for the survey from over 1,500 responses from suppliers. Tacon notes that she can get supermarkets to comply with the groceries code because she has the power to fine errant supermarkets with up to 1% of their revenue. For example, Tesco's fine would be about £500 million on a yearly revenue of more than £50 billion.