(10 years, 2 months ago)
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Baroness Kennedy of Cradley
To ask Her Majesty’s Government what steps they are taking to combat slavery in supply chains nationally and internationally.
Baroness Kennedy of Cradley (Lab)
Slavery is hidden here in our communities and exists in every country in the world. It is a growing part of our national and international economy. Walk Free’s global slavery index estimates that there were 29.8 million people enslaved worldwide with 4,500 people in modern slavery in the UK. Thanks to campaigners, NGOs, businesses, trade unions and journalists, the issue of slavery and supply chains is once again under the spotlight—and rightly so. Together they have uncovered some of the worst examples of slavery in supply chains.
Over the years, cheaper transport and communication costs have dramatically changed the way consumer goods are produced. Multinational corporations now have production plants around the world, allowing them to take advantage of cheaper labour and local markets. They outsource more and more stages of their production to different suppliers in different countries, which in turn employ subcontractors to manage demand and beat the competition. In this way, supply chains get very long and very complex. One multinational business can be interconnected to thousands of workplaces and millions of workers. The sad fact is that these complex supply chains can allow slavery to thrive.
Research commissioned by the Chartered Institute of Purchasing and Supply showed that more than one in 10 business leaders admitted that it is likely that modern slavery is playing a role in their supply chains. Research by Verité found that forced labour affected one in three workers in the production of electronic goods in Malaysia. Malaysia is a major global manufacturing hub for the electronics industry, supplying the world’s most recognisable brands. This means that nearly every device that we buy has a root in Malaysia and therefore a root in slavery—roots that the ILO estimates lead to worldwide profits of $150 billion every year.
Allowing a person’s human rights to be abused in the pursuit of profit should never happen. As multinational businesses enjoy the profits afforded to them from increased global production, so too must they accept responsibility for the working conditions of their global workforce. This has to be the deal. Consumers expect it to be the deal. Through this deal, multinational corporations have the power to make a real difference to the working lives of millions. They have the power to reform their business models so that they are less reliant on outsourcing and suppliers who subcontract. Many businesses now shorten their supply chains and build partnerships with suppliers they trust.
We know, thanks to the exposé by the Guardian into the Thai fishing industry, how dark things can be for workers at the bottom of a supply chain—involving kidnap, torture, and execution—and all to provide fish feed for the prawns on our supermarket shelves. Multinational corporations have the power stop this and improve the working conditions of those enslaved by exploitative suppliers. They have the power to insist on inspection regimes and can support local efforts to empower workers through collective bargaining and trade unions.
The horror stories that we hear are truly shocking: workers getting little or no wages; passports seized so that there is no escape; locked in flea-infested shelters, seven to a room; scared into compliance by beatings and vicious dogs; and then squashed into vans to spend days travelling from farm to farm. This is not a horror story from a far-flung country on the other side of the world, but the story of slavery from Kent. Thirty migrant workers held in debt bondage here in the UK—working on a farm supplying eggs to our supermarkets and fast-food restaurants.
Sadly, examples like this are not isolated incidents. Recent figures from the Salvation Army reported that, over the past year, victims of labour exploitation have overtaken the victims of sexual exploitation for the first time. Multinational corporations have the power to insist on decent wages and formal contracts for all workers here in the UK and across the world.
Of course, the exploitation of workers producing goods for major brands is not new. Since the 1990s, charities, the media and trade unions have been shouting loudly about the abuse suffered by workers. In response, many businesses have adopted voluntary codes and developed programmes to help deliver decent working conditions in their supply chains. Many have been members of the Ethical Trading Initiative since it began in 1998. When giving evidence to the pre-legislative scrutiny committee, of which I was a member, the British Retail Consortium said:
“Companies don’t want this in their supply chains. .... and retailers have been working really hard to try and root it out”.
Good businesses want to do the right thing. They understand that an enhanced reputation for fair working practices can attract investment and consumers. These voluntary initiatives are welcome and have had success. But they are not enough. Good businesses want the Government to legislate on supply chain transparency to level the playing field. Legislation would make sure that the good companies are not undercut by the bad.
Since I tabled this debate, the Government have made a welcome announcement. They have changed their mind and decided to table an amendment on transparency in supply chains to the Modern Slavery Bill. Publishing the Bill without such a clause was a glaring omission, so this is a major step forward. As I said earlier, we need businesses to help in the fight against slavery.
Looking at the detail of the amendment published yesterday, I think that there are five areas that need further consideration. First, it is essential that minimum measures of disclosure are specified in the Bill. This is vital, because we need this clause to act as a catalyst for change, creating public pressure and competition between businesses so more are encouraged to act. Minimum measures that should be included are: the need to conduct risk assessments by product, industry and geography; the need to set out who has been involved in identifying the risks; the need to set out what actions have been taken to mitigate the risks; and the need to set out what has been the impact of those actions.
Without minimum measures in the Bill, comparisons between companies will be impossible for consumers to make. The level playing field desired by good businesses will be difficult to achieve, and the Government will not get the transparency or the world-leading legislation that they say they want. The statutory guidance would then underpin these minimum requirements. Can the Government say why they have chosen to take a minimalist approach to the detail in the amendment?
Secondly, many agree that the eradication of slavery in supply chains needs to be a corporate, and therefore a CEO, responsibility. The scrutiny committee also heard from Andrew Forrest, founder of the Walk Free Foundation and chairman of the Fortescue Metals Group. Throughout his company he has established a zero-tolerance attitude towards slavery in his supply chain of 3,000 suppliers. He said:
“The only reason that we found slavery in our supply chains was that it was mandated to be searched for by the chairman. … without that leadership from the top, it just would not have happened”.
Can the Government say why this critical level of accountability has not been included in the amendment?
Thirdly, the size of the business that will have to comply with the amendment is subject to a consultation. Can the Government say more about that? When will it start, how long will it last and who will it involve? Will it be completed in time to fully debate the threshold as the Bill passes through this House? Will national and local government be expected to take responsibility for auditing their own procurement practices and supply chains?
Fourthly, can the Government say how they expect this legislation to be monitored and enforced? Once the duty to disclose is agreed, businesses will expect scrutiny of their reports. Again, to level the playing field among businesses, should the Secretary of State or the new Anti-Slavery Commissioner not produce their own objective annual analysis?
Finally, on support for businesses, we all recognise that it will take a few years for businesses to successfully map, audit and evaluate every tier of their supply chain. Can the Government say how they intend to help businesses comply with this new clause? For example, the demand for quality training for those working in procurement and auditing will increase. Businesses should, and will want to, work together to collect and share information about the suppliers they use. As suggested by Anti-Slavery International, corporations and suppliers should form genuine partnerships so that slavery is not pushed deeper underground.
When considering how the Government can help businesses to fight slavery, you have to look at the Gangmasters Licensing Authority, the GLA. Many welcome the great job done by the GLA. In the sectors for which it is responsible, it has been effective at raising standards and driving out poor performance. Given the context in which the GLA was established 10 years ago, limiting the sectors made sense, but 10 years later the limit on the GLA’s remit makes little sense. High-risk sectors—construction, cleaning, care, clothing, catering and hospitality—all fall outside the remit of the GLA.
There is a huge level of support for a full GLA review to extend its role and remit, and also to look at the fines and civil sanctions available to it. Do the Government agree that the GLA needs such a review? Will the Government look at ways to help the GLA develop alternative sources of funding? With new supply chain legislation, there must be scope for the possibility of a partnership between business and the GLA in terms of additional training, advice, and briefing.
In closing, I thank all noble Lords who have put their name down to speak in this debate today, in particular my noble friend Lord Rosser for speaking on behalf of the Opposition and, of course, the noble Lord, Lord Bates, for responding on behalf of the Government. We need businesses to help us eradicate slavery. By working together, business by business, supplier by supplier, country by country, we can drive slavery out of our future.
Baroness Hamwee (LD)
My Lords, I thank the noble Baroness for giving us the opportunity to debate this issue which she has described very vividly. I also thank the Library for its useful briefing.
Human rights are not optional, so compliance with them should not be optional or voluntary either. In some—perhaps many—parts of the world, this may not seem to be the case. The more I think about this, the more obvious it is that economic factors and a lack of education—and obviously the two often go hand in hand—play a huge part in exploitation, forced labour and slavery.
Frederick Douglass, the African-American social reformer, who himself escaped slavery and became the leader of the abolitionist movement, achieved literacy despite the law prohibiting the teaching of slaves to read. He said:
“Knowledge makes a man unfit to be a slave”.
DfID may have a claim to be the lead department in this area, save that we cannot avoid the unpalatable facts of what happens in our own country. As the noble Baroness mentioned, there is a national and international list—and it is a much longer list than I will give. It includes cannabis farms, block paving, domestic servitude, agriculture and fishing, the sex trade and the manufacture of clothing, electronics and surgical instruments. I was startled to see that in a briefing from the BMA. Surely medical products must often be so specialised that there is considerable scope for assurance as to the conditions in which they are made as part of quality control. According to the BMA, elsewhere in the NHS and in care homes there is too much dependence on local—and I would also say immigrant—labour. We should not exploit it. Others will add more to the list.
When the Minister introduces the Bill we shall have the provisions to which the noble Baroness referred regarding transparency in supply chains, with the interesting possibility of a mandatory injunction on the application of the Secretary of State. I am sure that my noble friend will not claim that a duty on companies of a certain size to make a statement is more than a step, albeit a welcome one. He will be asked what the Government have in mind about size and turnover. Is the Minister able—perhaps then if not now—to tell the House what ideas flowed from the ministerial round table held in June and from the follow-up workshops?
It is essential to work with those to whom the new requirements will apply. I know that the British Retail Consortium is involved and I have seen evidence from it. TiSC requirements should not let us off the hook, rather as turning off the tap when brushing your teeth does not make it OK to have a two-foot deep bath during a water shortage. There is quite a read across from behaviour in respect of environmental issues. I wonder whether the “nudge unit”, or whatever that part of the Cabinet Office is called, is involved. If it is not, with regard to public awareness, behaviour and response, I think it should be.
We consumers have our consciences but we do not just need ammunition to challenge manufacturers and others; we need spoon-feeding. Fair trade brands are so helpful, as are easy-to-understand labels on domestic appliances. We may respond to ethical investment and be keen on ethical auditing, but we need information that is easy to follow. The media have a big role in disseminating information and in exposing bad practice and celebrating good practice.
Not everyone, however, can vote with their wallet or credit card and the undercutting of companies in whose business model reputation is important is an obvious problem. It seems not only that reputation is important over the counter, or over the virtual counter of the internet; every employer should want to be one for whom staff want to work for ethical reasons. That is also part of a business case.
In the context of sex trafficking, there used to be a lot of reference to reducing demand but that seems to be less the case recently, which I think is right. However, both demand and supply are relevant to a range of labour exploitation. The ILO’s forced labour definition covers all exploitative purposes of trafficking except organ removal. The ILO says that the annual profits per victim are highest in the developed economies, which I think gives us pause for thought, because for the perpetrators this is about money and getting at the money is very important. The Minister has been much involved recently with the Serious Crime Bill, as have many other noble Lords, which seeks to address this issue.
Transparency International says that the Bribery Act is also relevant. Many companies have supply chains, or are part of supply chains, in countries where there is a high risk of bribery. Therefore, we need “adequate procedures”—a technical term—to prevent bribery, including due diligence on suppliers and requiring suppliers themselves to have adequate procedures. I cannot help thinking how much advice and training will be required in this field. I also cannot help wondering—I am certainly not asking the Minister to respond to this tonight—whether this House is happy with its own procurement arrangements.
In material I was reading in preparation for today’s debate, the ILO used the apt phrase,
“profits generated on the backs of … victims”.
As well as seeking to tackle slavery and exploitation, we have a responsibility towards victims. That is a matter we need to address every day but, in terms of debate, perhaps it is a matter for another day.
I quoted Frederick Douglass’ words:
“Knowledge makes a man unfit to be a slave”.
He also said:
“No man can put a chain about the ankle of his fellow man without at last finding the other end fastened about his own neck”.
Baroness Cox (CB)
My Lords, I also congratulate the noble Baroness, Lady Kennedy, on initiating this very timely debate at this critical juncture when the Government are introducing path-breaking legislation to take forward William Wilberforce’s endeavours to eradicate the barbaric phenomenon of slavery which still affects millions of men, women and children in our world today.
Forced labour and slavery are flourishing in our global supply chains of raw materials and manufactured goods. Fuelled by an insatiable desire for cheap goods and produce, it is all too probable that the clothes we wear, the phones in our pockets and the food on our plates may well have been tainted by slave labour at some point on their way to us. Every day, millions of victims of modern-day slavery are forced to work in appalling conditions for derisory or no pay. Their suffering is too often hidden at the bottom of long, complex international supply chains. These supply chains allow some big companies to abdicate responsibility and ignore the suffering that lies behind the manufacture of many products which we buy at such low prices. The majority are in the private sector, particularly in manufacture, construction and agriculture.
Excellent research by a number of NGOs, encouraged by newspapers, has recently shed light upon this utterly unacceptable phenomenon, demonstrating the routine use of forced labour in the supply chains of some of the biggest British high street stores and supermarkets. The real impact of the failure to tackle slavery in these supply chains can be understood only when we listen to the voices of the victims of that forced labour. Testimonies collected by Anti-Slavery International in southern India, published in its excellent report, Slavery on the High Street, give a few examples.
Anti-Slavery International uncovered the routine use of prison-like forced labour in the south Indian garment industry, which is a major exporter to retailers and brands on the British high street. Those interviewed worked at factories and cotton mills. Most workers are unmarried girls and women from poor, lower-caste families. Many are from rural villages with few job prospects. Around 60% have a Dalit background. Most are between 14 and 18 years old. Girls were forced to work 12 to 16-hour shifts, seven days a week, unable to take a break. Forced overtime is a regular abuse and overtime wages are rarely paid.
Pavani, aged 18, said:
“I would get shouted at if I refused to work an extra four hours. I was only allowed to go outside once every six months because security wouldn’t let us out”.
Workers are often cheated out of their wages, fired on trumped-up charges, or become ill and are unable to complete their contract.
Selvi explained:
“I became very ill and struggled to breathe. Doctors found cotton in my lung and told me that I had developed TB. The management did not give me any money for treatment and refused to pay me for a year and a half’s work”.
My final example—although there are many more—is that of Mukkammal, who tried to take her daughter back from the mill. She explained:
“My daughter told me that she was suffering with fever and vomiting. I met with the manager and asked him to let my daughter leave because she was so unwell. The management refused, saying that there was a shortage of workers so she couldn’t go”.
A week later her daughter was dead, at 20 years old.
Legislation that will ensure scrutiny of the exploitation and working conditions of those at the very bottom of the supply chain is crucial and is to be much welcomed. Therefore, I join with other noble Lords in welcoming the announcement by the Home Office that a measure to address slavery in the supply chain will be included in the Modern Slavery Bill.
The transparency in supply chains element of the Modern Slavery Bill differs from most legislation in that it can invite business to engage safely with the issue. It should be the norm that business is able to look for the problem without fear of reprisal. If we are to eradicate slavery successfully, it will take the collaborative efforts of NGOs, the general population, statutory authorities, business and government. Now there is an opportunity to achieve this, but it must be the Government who take the lead in creating that level playing field, and they must legislate smartly.
For maximum impact, the Bill needs a broad scope. Transparency in supply chains should apply to any business doing business in the UK, regardless of where that business is registered. This gives it global reach. It should also apply to businesses supplying both goods and services. Unquoted and quoted companies, public and private, should be exposed equally to risks of slavery in their supply chains.
Furthermore, if we want the actions taken by companies as a result of the new requirement to make a genuine difference to working conditions, it is essential that minimum measures of disclosure are specified in the Bill. This will not only meet the Government’s aspirations for greater transparency but also provide a level playing field for businesses. Therefore, requiring big businesses to state publicly each year what action they have taken to eliminate slavery from their supply chains is a significant step forward. Indeed, it may well be the most crucial aspect of the Modern Slavery Bill. It is the aspect that begins to deal with some of the systemic issues, and that has global reach. As such, it is truly world-leading.
I warmly welcome and applaud Her Majesty’s Government’s acceptance of the principle of this; but the devil is in the detail. For example, it is essential that minimum measures of disclosure are specified in the Bill, particularly the requirement that such information be published in each company’s directors’ report, ensuring direct accountability of directors. Such reporting must be annual and progressive.
I ask the Minister if provisions for such requirements are to be included in the Bill. Such legislation will both ensure that businesses are operating ethically and that those that eliminate slavery from their supply chains are not disadvantaged, thus ensuring a level playing field between businesses. This is welcomed by many businesses. A business leader in UK manufacturing has said:
“We warmly welcome this legislation as it will level the playing field for us. We are free of slavery in our practices here in the UK and we want our global competitors to be, too”.
Another business leader in favour of the legislation and involved in the supply chain for 20 years recently said:
“It never occurred to me that this was an issue until I came across it in our supply chain and I realised it wasn’t going to be an isolated incident”.
With a threshold of £60 million, this legislation allows bigger companies to take the lead and design best practices, which smaller companies can replicate to scale. Jane Blacklock at SABMiller argued:
“Anything that is auditable will shoot up a board’s agenda, where before it might have been an afterthought”.
Production, supply chains, jobs and investments are spread across continents, but the challenge is how to control processes and impose minimum standards and regulations. Concern is not about the jobs that are done but the conditions. The Bill must have global reach; exploitation is found everywhere, including the United Kingdom.
Fraser Nelson in the Spectator wrote:
“One of the most shocking examples of forced labour occurred at a gang master supplier working for Noble Foods, a UK company with contracts for supplying eggs to companies such as Tesco, Sainsbury’s, Asda, McDonald’s and Marks and Spencer, and where the mistreatment of a large number of Lithuanians internally trafficked around the country was roundly condemned”.
The NGO Unseen worked with a man from Slovakia called Robert. He came legitimately to the United Kingdom to work on a farm. On arrival in the UK, the price of his coach ticket was raised from £40 to £4,000—a figure he could never repay, a figure he now owed to an illegal gangmaster. Robert was correctly paid the minimum wage by the farmer, but with no additional money and being in debt bondage he had no choice but to live in the horrific conditions provided by the gangmaster. He was forced to hand over his wages each week and accrued still more debt. His bank account was taken over and used for money laundering, and he was severely beaten when he attempted to complain.
This is happening in the UK now. The slave masters holding Robert were only two or three steps down the supply chain to UK supermarkets. How different it would have been for Robert and countless other victims of forced labour and slavery if the business could have announced that it had discovered forced labour in its supply and product chains, and, instead of denial, appropriate steps were taken for redress. This is what we should be working towards, and what I hope the Bill will help to achieve—an environment where businesses proactively join the fight against slavery without fear of becoming entangled in a high-publicity scandal of bad business.
In conclusion, instead of demonising a few and allowing the many to hide the reality, we need to move to a situation where businesses are encouraged to look proactively for modern slavery. Meaningful, effective transparency in supply chains legislation can deliver this.
The Lord Bishop of Derby
My Lords, I, too, thank the noble Baroness, Lady Kennedy, for securing this debate and for her excellent introduction that laid out the ground clearly. I want to make some remarks from my experience of working with victims, the police and other agencies within our national context. We have just heard from the noble Baroness, Lady Cox, about the sheer horror of the way in which human beings are being treated in our own country.
I begin by welcoming Karen Bradley’s recent announcement that there will be amendments to secure proper reporting and disclosure. The key will be the level of reporting and the size of the company. I also welcome the strong support from many leaders in our industries. On the Select Committee, the people who represented Primark and Tesco, for instance, were supportive of a framework to require proper reporting and accountability, which would help their business case and standing in the community.
I want to make a number of points and then ask some questions of the Minister. Quite rightly, we see modern slavery as a moral issue and the horrific treatment of human beings by other human beings. However, it is, in terms of the proposed legislation, an economic issue. In our economy, businesses are under enormous pressure and there is a proper mantra to reduce the pressure of red tape. What that means in practice, of course, is that this country has one of the lowest levels of inspection in the labour market of any western country. Although I do not want to advocate upping red tape, having such an informal labour market that is desperate, for understandable reasons, to have maximum flexibility and efficiency means that, in all that flexibility and informality, slavery can easily be hidden because one does not have such regular and public ways of employing people. The continuing flourishing of gangmasters is an illustration of how people gathered, were taken on or not on the day, not cared for by the system of work, and just used as hands.
There is an economic issue about how we do our business in this country and how we balance the proper economic and efficient performance of companies with the treatment of human beings who provide the labour and create the wealth. That urgent debate is the background to what we are talking about.
As we have heard, modern slavery is built on the exploitation of vulnerable people. It is interesting how the people who are recruited in our country into the slavery industry are targeted because they are homeless, have mental health issues and are struggling in life. In Derby, we have recently had a case where two Slovakian traffickers have been imprisoned. They were bringing in Slovakian men, cramming them in a terraced house, confiscating their passports, sending them out to work—all the usual things. All these people being trafficked were extremely vulnerable; easily abused and oppressed by that kind of brutal regime. We have had recent cases with Latvian women and Indian women in Derby; in every case they were vulnerable people.
As well as the economic context, the broader point is the fact of vulnerable people. We live in a culture that is rightly concerned about safeguarding. We are concerned rightly about the safeguarding of children at the moment. We have to get up to speed with the safeguarding of vulnerable adults, many of whom are in exploited forced labour.
There has been some discussion—it came to the Select Committee—about the Companies Act, which requires companies to report in terms of human rights issues and their compliance with safeguarding the human rights of those whom they employ. However, there is some debate about how modern slavery is covered by this. Although the Government’s amendments might place in the Bill a good way of trying to get transparency, it may be worth their considering a clarification of the Companies Act, simply because many countries have companies legislation. Although they may be well behind us in terms of having a Modern Slavery Bill, it could be a model of how company law can be tweaked to make slavery a key part of what has to be reported on and accounted for in the operation of companies. If we want to be a world leader, we should not lose the potential of using the Companies Act ourselves as a model.
On the issue of scale, I entirely take the point of the noble Baroness, Lady Cox, that big companies can set an example that smaller companies can follow. In the national context, a high proportion of those enslaved are operating in an informal, murky economy. They are employed through agencies and other mediators. We have to try very hard when we propose legislation, besides requiring big companies to use their resources to set an example and show models for others, to tackle the difficult area of an informal economy that is hard to pin down. That may generate some protest from small and medium-sized enterprises. We have to debate with them robustly and graciously; not wanting to load red tape, but to balance economic efficiency and profitability with honouring God’s image in human beings who are being treated as mere hands in this terrible way.
Finally, perhaps I may raise a number of questions for the Minister. There is an opportunity for the public sector to take a lead. We have supply chains for things such as hospitals and prisons, and I think that the Government could set a high bar in terms of how we expect our own supply chains for hospitals and prisons to perform and be accountable. First, will the Minister comment on the possibility of due diligence in our supply chains in the public sector? Secondly, due diligence is well established in VAT procedures, showing how to gather information on figures for the performance of companies. Could those procedures be developed to pick up more information about business practices in terms of employment, wage bills, and the people who are subject to them? Thirdly, business crime forums use police resources to combat fraud in supply chains. Could we learn from them how to expand the notion of fraud in supply chains from the merely financial to the exploitation of human beings? All of these are models for trying to help businesses perform well by monitoring them and encouraging transparency, so could we build on some of them to help with regard to the human element in supply chains?
I want to say how important it is to encourage businesses to develop better practices and a generous attitude. It may interest noble Lords to know that in Derbyshire a partnership has developed recently between the Gangmasters Licensing Authority and Derbyshire Constabulary to look at companies which might be susceptible to harbouring slavery in their supply chains because they use a lot of agency workers or whatever it may be, and to approach those companies proactively. They can explain how these practices operate and talk about how to combat them. Businesses have welcomed this initiative. If, as the noble Baroness, Lady Kennedy, has said, the GLA had its resourcing and remit expanded, I think it could have an important role to play not just in prevention by controlling criminals, but in proactively educating businesses so that they are able to read the signs within their operations and learn how best to respond positively.
I shall finish by reminding your Lordships that our country is rightly very concerned about safeguarding at the moment. This is part of the debate about safeguarding vulnerable adults and we need to step up to it urgently to ensure the highest standards.
Lord Young of Norwood Green (Lab)
My Lords, I congratulate my noble friend Lady Kennedy of Cradley on creating a precursor debate before we come to deal with the Modern Slavery Bill. The debate has been interesting and my noble friend’s opening contribution was very powerful. It covered the waterfront and the land masses as well. As I listened to her, I thought, “You could have left us something to cover”, but I say that in tribute to how comprehensive her coverage was. It just went to show the extent of the problem.
I declare a prior and continuing interest as, until recently, vice-chair of the Ethical Trading Initiative, an organisation that I have been involved with for many years. If I have learnt anything, it is about the sheer complexity of supply chains. They are not easy beasts to deal with. At the end of supply chains there are first-tier contractors, second-tier contractors and third-tier contractors. Companies will supply you with a set of books to suit whatever requirement you have, so businesses may have one, two or three sets of books. They know when you are coming and if there is any child labour, it will disappear. We should not underestimate the challenge that companies face in trying to root out some of these evil practices from their supply chains.
I congratulate the Government on their commitment to this issue and on making space in the legislative programme for the Modern Slavery Bill. I pay tribute to the work of Frank Field in the other place and to the commitment and involvement of the noble and learned Baroness, Lady Butler-Sloss, and my noble friend Lady Kennedy.
I want to focus on the business of transparency and disclosure requirements in supply chains. I do not much like the acronym TiSC. It might trip off the tongue but it is not very graceful. The noble Baroness, Lady Hamwee, talked about the sheer scale of slavery, as reflected in the ILO report. The number of people involved in it is absolutely staggering. About 21 million men, women and children are in forced labour. We know that we have not abolished slavery by any means. It is worldwide and unfortunately alive and flourishing in the UK as well. I do not want to reiterate what others have said, but global profits are estimated at $44 billion and $32 billion is generated by human trafficking. These are colossal figures. In 2014 humanity ought to be ashamed that these practices continue.
The forthcoming Bill is a welcome step in the right direction. As a number of noble Lords have said, we want a disclosure requirement for companies in the Bill. I do not apologise for repeating what my noble friend Lady Kennedy said in identifying this. There should be a clear commitment from the chief executive and chairman of a company. I know from experience that if you do not have that commitment at the top it is not going to work. What you tell buyers and suppliers is no good. They need to see that there is real commitment right at the top of companies.
Disclosure should include, as a minimum, how risks have been identified throughout the supply chain, who has been involved in the identification of such risks, what action has been taken once risks have been identified and the steps taken to address modern slavery, if it is identified. The minimum requirements should be specified in primary legislation.
My noble friend Lady Kennedy talked about a threshold of £60 million. The figure is taken from Californian legislation. Whether it is the right figure is probably open to debate. The right reverend Prelate the Bishop of Derby made the interesting point that a lot of smaller companies could be involved. A lot of them would be involved in the supply chains of bigger companies so a debate on who is going to be covered by this threshold is merited.
The disclosure should be published in a company’s annual report, on its website and provided in writing on request. Foreign companies operating in the UK are not required to produce an annual report, but they should provide a stand-alone modern slavery disclosure to the Department for Business, Innovation and Skills. Otherwise, we will find a whole group of people who are actively trading in the UK and who could be using forced or slave labour, but who are not included here. I do not think that would be right.
One question that I do not think has been raised is that of domestic worker visas. Changes to the Immigration Rules were introduced in April 2012 and under the system now in place new domestic workers in private households are able to stay in the UK only for a minimum of six months. They are no longer able to change their employer in the UK. The same thing applies to staff in diplomatic households. They are able to stay for up to five years but they can no longer settle permanently and, as before, they cannot change an employer in the UK. If you cannot change your employer in the UK, that is creating fertile grounds for you to be in a form of modern slavery. There have been enough cases in the press for us to know that this is not just people thinking about a worst case scenario. It actually happens and is an indictment on us. I would welcome the Minister’s response on that issue.
Baroness Hamwee
I just used the words “domestic servitude”, having all this in mind. That is not why I have risen. Does the noble Lord agree that there must be some sort of supply chain in the countries where some of these migrant domestic workers come from, where they are initially employed and then brought to this country by their employers? The term “supply chain” should cover that kind of relationship and arrangement as well.
Lord Young of Norwood Green
I thank the noble Baroness. She is absolutely right. There certainly are organisations that specialise in supplying people. Whether we can somehow embrace that in terms of the supply chain, I am not so sure.
The noble Baroness, Lady Cox, made a number of really interesting points. She gave us the example of the Noble Foods egg company—an absolute classic—and used the phrase “demonising a few”, which is what can happen in the current environment, where there are a number of companies that are upfront; in many cases they are members of the Ethical Trading Initiative. Of course, if their activities are found to be less than perfect, they are often pilloried, whereas a whole host of other companies are not required to do much at all.
I see the surveys and hear people talk about British consumers caring very much about the sources of goods but I am a little sceptical. When members of my own family come home and say that they have bought an item of clothing at a very low price and I ask them if they know where it came from, there is often a deafening silence. With the flourishing of various stores that are offering the opportunity to buy things for £1 or less, how many people are checking the source of what they are buying? Including these organisations would be good.
The last point I want to make is about the remit of the GLA. I was really interested to hear the right reverend Prelate the Bishop of Derby refer to proactive activities in engaging with other companies. If noble Lords cast their minds back, they will remember that when the previous Government set up the Gangmasters Licensing Authority in the terrible context of the Morecambe Bay disaster, it had a fairly limited remit. I join others in saying that it is time we extended the remit of the GLA. There is a whole host of other industries—I think it was the noble Baroness, Lady Cox, who referred to them so I do not need to repeat that. I have reached the end of my time and I look forward to the Minister’s response.
Lord Rosser (Lab)
My Lords, I join the procession and extend my congratulations to my noble friend Lady Kennedy of Cradley on securing this debate on an issue of real concern affecting the lives of many millions of vulnerable people and involving the approach to corporate responsibility and corporate accountability, both nationally and internationally.
As has been said, the Government announced earlier this month that a measure to address modern slavery in the supply chain would be included in the Modern Slavery Bill. Surprisingly, it had been omitted when the Bill was first published, even though the legislation cannot be complete or fully effective without addressing the supply chain question. The Bill is due to receive its Second Reading in this House on 17 November. According to the Government, the new measure will require big businesses to state publicly each year what action they have taken to ensure that their supply chains are slavery-free, and will apply regardless of the nature of the company or what it supplies, whether goods or services. Perhaps the Minister could say in what form and where this disclosure will be required to be given each year, and confirm who in a company would be deemed to be responsible and accountable for its content—that point has been raised already.
The Government have also said that a consultation will be held to set the exact threshold for the size of the business to be covered, and that statutory guidance will be produced setting out the kind of information that might be disclosed to help companies comply. Perhaps the Minister could say whether the Government will be making available a list of companies that would be required to report each year under the terms of the new measure they have announced, and how easy or otherwise the Government intend to make it for interested parties and individuals to obtain details of the information disclosed, in the light of their commitment to deliver greater transparency to enable customers, campaigners and shareholders to hold all big business to account.
A recent report that has clearly had an impact with its findings is one from the Salvation Army containing data gathered during the third year of its contract with the Government for managing the delivery of specialist support services to adult victims of human trafficking identified in England and Wales. The report indicates that more than 1,800 people were supported by the Salvation Army and its partners between July 2011 and June 2014. In the third year, there was a 62% increase on the number of people supported in the second year of the contract, and a 135% increase on the number of those supported in the first year. Most people referred to the Salvation Army had been subjected to labour exploitation; the number of people recovering from labour exploitation has overtaken those being supported after sexual exploitation, with the growth being at a faster rate for the first time.
Forced labour and slavery are big business. As my noble friend Lady Kennedy of Cradley said—and others have also mentioned it—the International Labour Organization estimates the illicit profit at $150 billion a year. Perhaps not surprisingly, where big money and big profits can be made, voluntary measures have proved inadequate for tackling the scale of modern slavery in our supply chains, and avoiding a race to the bottom in labour standards and respect for human rights.
More specifically, we have heard about cheap clothing being produced in Bangladesh through forced labour or servitude, and read the reports in the Guardian newspaper recently about the issue of the prawn fishermen. We have also been reminded in our debate today by the right reverend Prelate the Bishop of Derby and by the noble Baroness, Lady Cox, that exploitation of vulnerable people occurs in our own country as well.
The NHS spends in excess of £40 billion a year on the procurement of goods and services, with the supply chains providing these commodities being global and employing hundreds of thousands of people worldwide. The British Medical Association has drawn attention to a growing body of evidence that, in some areas, the basic employment rights of people in these supply chains are being disregarded through low pay, long and illegal working hours, little job security, risk of serious injury from machinery, and the use of child labour. The BMA has commented that there was an uncomfortable paradox in providing healthcare in the NHS at the expense of workers’ health in its supply chains.
Responsible large companies have called for legislation to address the issue of modern slavery in the supply chains in order to eliminate unfair competition and create a level playing field. The British Retail Consortium and the Ethical Trading Initiative—which I think has some 80 corporate members—have expressed their support alongside the Trades Union Congress. Clearly, the effectiveness of what the Government are now proposing will be influenced by where the threshold for the size of businesses to be covered is set. One proposition put forward by a conglomerate of organisations that has been campaigning on this issue, is that the provisions should cover all companies operating in the UK with worldwide gross receipts of more than £60 million. My noble friend Lord Young of Norwood Green queried whether this was in fact the appropriate level.
The effectiveness of the Government’s proposals will also depend on what the statutory guidelines say about the information that should be disclosed. The Government have said that their proposals will have similarities to the California Transparency in Supply Chains Act, but we do not yet know how specific the Government will be in respect of the disclosure requirements.
It has been suggested by organisations campaigning on this issue that company disclosure should include at a minimum how risks have been identified through the supply chain; who has been involved in the identification of such risks; what action has been taken once risks have been identified, and the steps taken to address modern slavery if it is identified. Perhaps the Minister could say in his response whether that sort of proposition would be in line with government thinking.
While it is certainly true that legislation and disclosure alone will not eliminate modern slavery in supply chains, and that there is a need to persuade, encourage and help businesses take action in this area, there is also the issue—not least in the interests of those companies which deliver on their responsibilities—of what happens if a company does not provide appropriate information within a laid down timescale, or does so in a form that is vague and largely meaningless or provides information which is subsequently shown to be incorrect or misleading. However, as well as requiring companies to act there is also an issue over how easy or straightforward it is for UK companies to inspect their suppliers. Help and active encouragement may be needed in this direction. Some companies have said that it is sometimes cheaper to have Fairtrade-certified products, because that reduces their costs and the level of resources needed, than try to investigate suppliers miles away in other parts of the world.
Any proposals must cover both public and private companies, which I understand the Government’s amendment to the Bill does. Of course, there is still the issue of the size of the companies covered. Secondly, the legislation, in requiring companies to report on their efforts to eradicate slavery, needs to be specific about what information must be provided to ensure that it is possible to compare properly the performance in this area of one company against another and, through that kind of transparency, assist the position of the consumer in knowing to which company to go to purchase a particular product or service. Surely that must be part of the transparency. If this is not the case then it will make pretty meaningless the Government’s statement that,
“greater transparency will give customers, campaigners and shareholders the information they need to hold all big business to account while also supporting companies to do the right thing”.
Finally we will also want to see that there is a clear way of enforcing the regulations that will give effect to the legislation. Non-existent or weak enforcement is an invitation for some companies to get round the requirement that will be laid upon them and will defeat the objective of providing a level playing field and not leaving those companies that either have addressed slavery in their supply chains or are taking steps to do so at a disadvantage. The measure proposed will presumably apply to a significant number of firms. so even establishing that firms produced the required report will be a major exercise, let alone checking the quality of the report, including whether it meets the guidelines and is objective—for example, reporting not only successes but also on the areas where further action was required. Will the Minister at least outline what the Government’s intentions are in this regard?
We welcome the fact that the Government have decided to address the omission in their Modern Slavery Bill in respect of supply chains. We wait to see the detail of the proposals and the extent to which they are likely to make a genuine difference to working conditions in supply chains in the light of the Government’s statement, with which we agree, that modern slavery is a terrible crime.
The Parliamentary Under-Secretary of State, Home Office (Lord Bates) (Con)
My Lords, I begin on the point raised by the noble Lord, Lord Rosser. We entirely agree that modern slavery is a terrible crime. Indeed, that is underscored in the title of the Minister for Modern Slavery and Organised Crime. We see the connection between the two.
This morning, I began my day at the National Crime Agency, where I was told how organised crime in human trafficking is now in many ways overtaking trafficking in illicit drugs because criminals see that we are getting more effective in tackling drug culture and therefore they are turning to people. It seems incredible in the modern age that that is so, but it underscores the fact that criminals treat these people like commodities or chattels. That is why the term “slavery” is absolutely appropriate.
I join all noble Lords in paying tribute to the noble Baroness, Lady Kennedy, for securing this debate and also for the way in which she introduced it and covered all the broad range of points. In fact, the contributions have been of an incredibly high standard. There were a lot of questions and I have about 10 minutes in which to do my best to try and address some of them.
I should perhaps start by trying to place this in some sort of context. There is the amendment, and I accept that that is what the legislative process is about. We have pre-legislative scrutiny, which helps to shape the Bill, but we also have engagement with NGOs. We have round-table discussions, in which the Home Secretary is taking part, and we listen to business and to the NGOs, and we feed in various ideas. We then came forward with the proposed amendment on supply chains, which was tabled yesterday. It is to be debated and formally moved on Report on Tuesday in the other place. I know that I was invited to discuss a lot of the detail about what the amendment will do and the effect it will have, and of course your Lordships will have the opportunity to consider this. However, in order to observe correct practices within the department, my colleague Karen Bradley should be allowed to set out these issues in detail in the other place on Tuesday. We can then debate this when the Bill comes here on Second Reading.
The noble Baroness, Lady Kennedy, referred to the importance of leadership. That is absolutely vital in this regard. During her speech, I reflected on undertaking my MBA dissertation in China many years ago, looking at supply chains for—I had better be careful—what I will only say was a major international footwear manufacturer, and seeing the conditions that people were put under. The point made by the noble Lord, Lord Young, to whom I pay tribute for his work with the Ethical Trading Initiative, also brought home to me how, because of the increased demands from consumers for more intricate designs in their footwear and a lack of investment in appropriate equipment to do this, these young girls—and it was mostly young girls in those factories—were suffering horrendous injuries in trying to fulfil the demands of western consumers. Consumers therefore need to see themselves as very much in the frame here. This is something which we all need to address, and on which we all need to exercise judgment and leadership.
My noble friend Lady Hamwee referred to the scale of the problem, and her description of profits as being generated on the backs of these people was a very apt depiction of what we are looking at here.
The determination is there to take action. The amendment is of course one part of the Modern Slavery Bill, which is one part of the whole picture. The Minister for Modern Slavery and Organised Crime is another part. The National Crime Agency, which looks at organised crime and gang-related issues, is another part. The Serious Crime Bill, which we are considering and to which the noble Baroness referred, is looking at disrupting this evil trade with gang prevention orders and a range of other sanctions. That is another part, and there will be yet other parts required. There will be a modern slavery strategy, which will be brought before your Lordships during the passage of the Modern Slavery Bill through this House. We expect that to arrive with us before Committee stage, so that noble Lords will have an opportunity to look at it. That is another part of it.
I pay tribute to the previous Government for introducing the Gangmasters Licensing Authority and the work which it has done. We are moving it from Defra into the Home Office as part of this overall initiative, and I think that was touched upon by the right reverend Prelate the Bishop of Derby. We want to see that happen. However, I think it was absolutely right for the scale to be focused on.
The noble Baroness, Lady Cox—I want to call her my noble friend—has done so much in this area internationally in speaking up for those people. She summed it up perfectly when she talked about the clothes your wear, the phone in your pocket and the food on your plate. This touches every part of our daily lives. We need to think about the hands that prepare and make these things.
There needs to be activity on this issue not just in the Home Office but across government. Indeed, there are inter-departmental committees. However, we are talking about activity not just within this country—although the noble Baroness was right to point out that it is sometimes our fashion to take a great interest and almost a certain pleasure in telling people in other jurisdictions and other countries how they should behave without recognising that we have a very serious problem right under our noses in this country which we need to address. Figures presented to me this morning show that it is believed that nearly 3,000 people in this country fall into the category of slavery at the present time. We need to work on that.
The noble Baroness may be interested to know that, as part of a joint FCO-Home Office project in December last year, the NSPCC trained—many noble Lords referred to the need for training—UK and Nigerian officials better to identify trafficked children in Abuja, Nigeria, and repeated that training in Hanoi and Beijing. The Department for International Development also works in a number of ways which directly and indirectly help combat modern slavery. More specifically, DfID runs a Work in Freedom programme in partnership with the International Labour Organization to help girls and women in south Asia avoid being trafficked to work in the Middle East in domestic worker and garment manufacturing sectors. More than 100,000 girls will directly benefit from this project over five years. So it is part of a wider initiative.
A number of noble Lords referred to the public sector and were telling the private sector what it should be doing. Under the Companies Act, a requirement was introduced to include a statement on human rights in the annual report, which would of course need to be signed off by the directors, who carry the ultimate responsibility for standing by that report. The accuracy of that statement is every bit as important as the accuracy of the financial data which are in subsequent pages. Under an amendment which has been proposed and which will be debated, we will look at what form that statement should be in to make sure that it is clear that firms have given due cognizance and shown due diligence in sourcing materials as part of their trading.
Other noble Lords said that the Government themselves need to do more. Some specific, quite disturbing issues relating to the Department of Health were mentioned, including by the noble Baroness, Lady Hamwee, and the noble Lord, Lord Young. The Department of Health and the NHS Supply Chain have developed a labour standards assurance system that encompasses issues of forced labour. This is used as a basis for auditing suppliers in categories of supply where the risk of labour standards abuses is assessed as being high. To date, this approach has been successfully applied to supply agreements covering surgical instruments and medical textiles, and it will be extended to cover other categories in the future as agreements are retendered. The Department of Health is working with the Ethical Trading Initiative and the British Medical Association to develop guidance. I understand that there are concerns in that area, but some steps are being taken.
I shall try to deal with one or two other points. On minimum requirements, which were mentioned by the noble Baroness, Lady Cox, the Modern Slavery Bill allows the Secretary of State to publish detailed guidance, on which we will consult widely. Disclosure must be published prominently on an organisation’s website and home page.
The noble Lord, Lord Rosser, asked where the California-style disclosure list sat in the Government’s thinking. We will be publishing guidance on the kinds of formation in the disclosure and will consult on these matters. We will consider the Californian requirement very carefully in this exercise, along with any other helpful examples. In conclusion, we will return to this issue many, many times in your Lordships’ House, and rightly so.
Lord Rosser
I ask the Minister—and I accept that in the time he has had it was not possible to respond to the numerous questions raised, and he has referred to the amendment coming up in the other place shortly—whether he is prepared to look at Hansard and the various questions that have been raised and, if he feels that he has not responded to some of them, whether he will write to noble Lords who have raised those questions, so that we have those replies ready for Second Reading in November?
Lord Bates
That is a very good suggestion. I was certainly intending to do that, and I will make sure we do it. It would also be helpful if noble Lords who take an interest in this area could meet me and the officials who will be working on the Bill to talk through the detail of it, ahead of Second Reading on, I think, 17 November. I would like to do that. We share a lot of common ground in trying to make this work, and once again I pay tribute to the noble Baroness for bringing it before us today.