The UK-based Forum of Private Business (FPB) has accused clothing retailer Matalan of squeezing its suppliers by imposing a 2% reduction on payments from next month.

Matalan entered into forum's 'Hall of Shame' today (19 August), with the FPB saying that plans to save money for retail parks, international franchises, store refurbishments and advertising were "at the expense of its suppliers".

Matalan confirmed in a statement that it had written to its suppliers asking for a 2% contribution, saying it was towards investment in growing its business.

According to the FPB, Matalan's buying director John Lyttle has promised suppliers that the benefit from the expansion would generate increased business for them too.

However, FPB chief executive Phil Orford said: "This is not the first time that Matalan has passed on costs to its suppliers and it represents a payment problem that is endemic across a number of industry sectors.

"The fact that this latest charge is being justified to fund initiatives like marketing and international expansion adds insult to injury for many smaller firms, which are struggling to control essential costs as the economic downturn continues."

Matalan said in a statement: "This move sits alongside a supplier based consolidation programme, and will help fund our expansion plans, the benefits of which we hope to share with our consolidated supplier base.

"This has not been introduced retrospectively and will be effective as of 1 September.

"Matalan's settlement terms with its suppliers remain unchanged."

However, the FPB went onto say that while suppliers are facing an average rise in costs of 18.5% on their products, they are realising an average price increase from retailers of just 5.8% according to figures from the British Home Enhancement Trade Association (BHETA).

"Some members are dealing with price increases of up to 100% on steel products, and anything between 8% and 50% on other types of products," said Pam Plant, a director of the BHETA.

"On average, raw material costs have gone up 11%, energy costs are up 6.5%, labour costs are up 4%, and logistics and distribution costs are up 5% across the board - and retailers still continue to ask for additional support, up, on average, by 2.6%."

The FPB wrote to the UK government and Matalan in 2006 to protest against a 2% payment cut set by Matalan, spurring suppliers to speak out too.