25 September 2006 | Rebecca Ellinor

Trade minister Margaret Hodge has written to Matalan requesting that the company explain why it imposed a mandatory 2 per cent reduction on orders for the second half of 2005.

The Forum of Private Business (FPB), which has been lobbying on behalf of suppliers, welcomed the move by Hodge, who is the minister responsible for small firms.

The FPB's chief executive Nick Goulding said: "I am glad the minister has taken an interest in this case and is pushing for a resolution."

The FPB, which represents around 25,000 small and medium-sized firms across the UK, sent documents to Hodge in July detailing Matalan's changes in payment terms and the responses from suppliers, asking her to intervene.

In a letter to the FPB, Hodge said: "It is my hope that by opening up a dialogue we can resolve this situation to everyone's satisfaction."

A Supply Management survey of 100 purchasers found 73 per cent were opposed to mandatory deductions being made from suppliers' invoices. Almost a quarter (24 per cent) said there were occasions when this was justified and 3 per cent said it was not relevant to their business.

SMsep2006