Liz Twist (Blaydon and Consett) (Lab)

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I beg to move,

That leave be given to bring in a Bill to provide for a Code of Practice to be followed by retailers of fashion clothing, footwear and accessories in their relationships with their suppliers; to set up an Adjudicator with the role of enforcing that Code of Practice and encouraging compliance with it; and for connected purposes.

The UK fashion and textile sector contributes £62 billion to our economy and supports 1.3 million jobs. From historic textile mills in Yorkshire and Lancashire to garment manufacturing in Leicester, London and the west midlands, domestic production provides skilled regional employment and industrial capability.

The majority of fashion retailers want to trade ethically, and certainly the public encourage them to do that, supporting fair wages and good conditions. However, the global garment market is heavily buyer-driven. Where a minority of companies engage in abusive practices, responsible businesses risk being undercut and small suppliers lack bargaining leverage. Without a level playing field, bad practice distorts fair competition and stops small businesses operating successfully.

We saw how completely the garment market can fail during the covid-19 pandemic. When retail stores closed in 2020, major brands selling in the UK cancelled billions of pounds-worth of confirmed orders overnight, withheld payments for garments already stitched and demanded steep discounts on shipped goods. That crisis laid bare the fundamental flaw in global garment supply chains: when unexpected costs hit, buyers dump commercial risks on to factory owners and workers, with zero accountability.

These practices have been documented for decades by organisations including the International Labour Organisation, Human Rights Watch, the Business and Human Rights Resource Centre and the Vietnam labour institute, and recent research from the Universities of Aberdeen, Nottingham and Leicester, the Tata Institute and Transform Trade shows that unfair buying habits remain routine commercial tactics across the UK, Bangladesh and India. These unfair practices, which include cancelled orders, forced price cuts, refusal to pay for goods in production and delayed invoices, caused job losses, poverty wages and unsafe working conditions for the workforce, the majority of whom are women.

In historic hubs such as Leicester, heavy buyer pressure has driven the number of clothing businesses down from 1,500 in 2017 to roughly 95 today. Behind those figures are real factory owners facing impossible terms. One UK manufacturer produced 1,000 garment samples over a single season, costing hundreds of pounds each, only for the buyer to order just 140 styles. Another suffered a sudden cancellation of 80,000 finished garments and 100,000 metres of fabric that was already paid for. Small UK factories pay up to £4,000 a year for mandatory compliance audits, only for 42% to receive zero orders after passing them.

Overseas suppliers face the exact same tactics. In India, when a factory had an order almost complete, an auditor flagged slightly insufficient lighting in one corner of the workshop, which the buying agent seized on to force down the contract price. Elsewhere, UK retailers have held shipments at destination ports to force steep retroactive discounts, ignoring daily emails from factory managers asking how to pay their staff. Buyers can drop orders at short notice or force price cuts, making low-paid workers absorb the blow through reduced hours, unpaid overtime or lay-offs.

Women make up 61% of the core garment workforce in the UK and 60% in Bangladesh. Crucially, international suppliers fall outside the jurisdiction of UK labour enforcement bodies, and relationships are governed by unilateral buyer manuals filled with automatic fines. Of 1,000 factories surveyed in Bangladesh, not one took legal action against a buyer; some 80% feared blacklisting. Few factory owners, whether in Leicester, India or Bangladesh, can afford to sue multimillion-pound brands.

This Labour Government have taken positive steps to raise standards across our economy. The Government’s review into responsible business conduct demonstrates a clear commitment to supply chain integrity. The creation of the Fair Work Agency will strengthen domestic labour enforcement, and the 60-day payment cap in the Commercial Payments Bill is a major step forward for business cash flow. We should celebrate those achievements, but to complete the picture and protect ethical businesses, we must go further where standards fall lower. Enforcing labour laws against factory owners cannot address financial pressures when a retailer forces a supplier to sell below production cost. Transparency reporting does not stop daily commercial abuses such as forced discounts or sudden cancellations. Capping payment terms at 60 days helps UK payment schedules, but it does not reach international supply chains or protect against cancelled contracts. Advising small suppliers to pursue litigation fails to recognise commercial reality, as no small business can afford to sue the buyer that it depends on for survival.

We need to regulate buyer behaviour directly through a statutory garment trading adjudicator across the UK market, bringing domestic and foreign retailers selling in the UK into scope. That creates fair competition, enabling small businesses to compete successfully. We already have a proven model in the Groceries Code Adjudicator; code breaches fell from 79% in 2014 to 33% in 2024, while food retailers remained profitable and paid food suppliers up to three months faster than clothing retailers pay garment suppliers. Furthermore, the European Union is proposing similar unfair trading practice regulations for the textile sector.

Ahead of establishing the adjudicator, a mandatory supply chain code of practice is needed to define clear rules of fair dealing. First, therefore, the garment trading adjudicator would enforce a mandatory supply chain code of practice, including a legally binding principle of fair dealing, giving suppliers certainty over orders, fair payment timelines and protection from sudden contract changes. Secondly, it would protect suppliers by allowing factory owners, trade unions and third parties to submit evidence through confidential and anonymous reporting channels, supported by a multilingual system so that global suppliers can report in their own languages.

Thirdly, the adjudicator would be empowered to initiate proactive market investigations based on intelligence without requiring an individual, formal public complaint that could expose a single supplier to commercial retaliation. Fourthly, it would have the power to impose financial penalties on abusive retailers who breach the code and require retailers to reimburse suppliers for what they are owed. Finally, the regulator would be funded entirely through a statutory levy on large fashion retailers, placing zero cost on the British taxpayer.

This proposal has been made by the Environmental Audit Committee in the past and has cross-party parliamentary support. By supporting this Bill, we can build on this Government’s impressive work—from the creation of the Fair Work Agency to the new Office for Responsible Business Conduct—and complete the regulatory picture. Establishing a garment trading adjudicator would create a level playing field, in which responsible businesses were protected from unfair competition, small suppliers could invest with confidence, and British retail could stand tall as a global benchmark for ethical trading. I urge the House to support this Bill and grant leave for it to be brought in.

Question put and agreed to.

Ordered,

That Liz Twist, Cat Smith, Ms Stella Creasy, David Mundell, Martin Rhodes, Rachael Maskell, Jeff Smith, Maya Ellis, Bell Ribeiro-Addy, Mary Glindon, Wera Hobhouse and Navendu Mishra present the Bill.

Liz Twist accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 5 March 2027, and to be printed (Bill 172).