Modern Slavery Bill

Baroness McDonagh Excerpts

Wednesday 10th December 2014 Lords Chamber

[Baroness McDonagh (Lab)]

I shall speak to Amendment 98A and support Amendment 98. I start by declaring an interest as patron of the Lily foundation, an anti sex-trafficking charity operating in India and the UK. Is it not absolutely fantastic that we are here on all sides of the Chamber to support a Bill that we all want to see enacted? That is a very unusual occurrence. In that spirit of unity, I am pleased that this amendment is being supported by me and the noble Lord, Lord Hastings of Scarisbrick.

Our concern is that this clause on supply chains will turn out to be warm words and good intentions. Indeed, when assemblies all around the world have sought to phrase legislation in these terms, they have rarely been able to meet their objectives. If the Bill cannot meet its objectives, what then? That is what this small enabling amendment covers. It would allow the Home Secretary to intervene and require extremely large companies to risk assess, create an action plan and audit. We think this is a very simple thing to do and would welcome a meeting with the Minister to discuss it further.

Let me be clear about the companies to which this amendment would apply. I understand that the Government would be concerned if it were to apply to all companies. I understand that placing such a regulatory responsibility on SMEs would be extremely difficult. Indeed, our amendment would not even apply to large companies; it would apply to really large global entities, which are very specifically defined as companies with a turnover of £1 billion per annum. Not only that, there is a secondary locking qualifier, which is that they would be in the wholesale, retail, manufacturing and construction sectors, in which you find more people who are working in servitude in the supply chains.

I ask the Minister and the Government to accept this small enabling amendment. It is a safety net to ensure that all the hard work in tackling this terror will not have been in vain. If it is needed—and if the Bill does what is intended, it will not be needed—it will apply to a small number of companies. Behaviour change in the 124 companies which would qualify would have the biggest impact on the greatest number of people and would bring up the standards of all.

[Baroness Kennedy of Cradley]

My Lords, I support Amendment 98, which was moved by the noble Lord, Lord Alton of Liverpool.

The case for legislating for transparency in supply chains as part of the Bill has been well made and it is very welcome that it is being progressed by the Government through Clause 51. Now, as many noble Lords have said, the task is to get the detail of the legislation right and agree between us a well crafted clause that levels the playing field for business, informs investors, shareholders and consumers and drives change to end slavery in supply chains. I support Amendment 98 because it would do exactly that.

Amendment 98 would rewrite Clause 51 by adding, where necessary, elements of detail to ensure that it is more meaningful, effective and workable. As the noble Lord, Lord Alton, said, in line with the California Transparency in Supply Chains Act, which came into force in 2012, the amendment defines the threshold as not less than £60 million and, most importantly, includes the term “group undertaking” when determining the total turnover. That is important because it allows multinational companies that may have small operations in the UK to be covered by this legislation.

We all want the Bill to have global reach. Therefore, having a way to ensure the inclusion of all large foreign companies that provide services to the UK is vital. Clause 51 is ill defined in parts and Amendment 98 seeks to correct that in a number of ways. First, it suggests a simple change in the language to make the intent of the clause explicit. In the Modern Slavery Strategy the Government make it clear that they want this legislation to ensure that businesses investigate and report on modern-day slavery through the annual statements they are required to produce. It is therefore important that that aim is made explicit in the Bill. Subsection (4)(a) is consequently amended to confirm that the statement is specifically to “identify and address” the issue of slavery and human trafficking. It is its primary aim.

It is also important that the remit of this statement is more tightly defined. The clearer this legislation is, the better for business and consumers alike. Subsection (5) of Amendment 98 provides a framework for the statements. It makes sure that minimum disclosure measures are included in the Bill: the need for risk assessments; the need to set out who has been involved in identifying the risks; what actions have been taken to mitigate the risks; and what has been the impact of those actions. The “how” should be left to guidance. Without those minimum criteria, as other noble Lords have said, comparisons between companies will be impossible to make and the level playing field desired by good businesses will be difficult to achieve.

We also need to look to and learn from the Californian Act and not repeat its mistakes. The learning from the application of the California legislation to date also shows us why it is necessary to be clear in the legislation about what you want to achieve and what you expect business to report. In California hundreds of organisations have issued statements in line with the Act, but there is a wide variation in the information provided in those statements. Some have disclosed meaningless information, some have disclosed misleading information, and a few—perhaps worst of all—have thwarted the legislation and disclosed that they do nothing and are indifferent to the issue of slavery in their supply chains. For example, Caterpillar Incorporated, a multinational company reported to hold $89 billion in assets, which manufactures its products and components in 110 factories worldwide in high-risk countries such as India and Indonesia, issued a woefully inadequate statement. Krispy Kreme Doughnuts issued a statement of just 182 words, using them to say that as regards slavery it does not verify product supply chains, conduct audits of suppliers or require direct suppliers to certify materials.

Getting businesses to produce statements of that kind is not what this part of the Bill is about, and I do not believe it is what the Government intended it to be about. Clause 51 is not a paper exercise for businesses to write down in 200 words or less that they do not do any of this kind of work and do not intend to start. It is a serious measure that we need businesses to engage in and which good businesses want to engage positively with, properly and on an equal footing with each other. It is not fair that the good businesses that do excellent work, actively searching for evidence of exploitation, are being undercut and undermined. That is why having minimum criteria in the Bill is vital. Setting out those minimum criteria would not make the task more burdensome for business; the task—the production of the statement—remains the same. Minimum measures just give a framework for the task so that a level playing field between businesses is achieved.

Proper monitoring is also vital and, as the noble and learned Baroness, Lady Butler-Sloss, said, it is not currently clear how this part of the Bill will be properly monitored and enforced. Amendment 98 seeks to address that, too. Again, if we look to learn from the experience of the Californian Act, here some companies have ignored the Act completely. Research in January of this year quoted 85 companies as ignoring the legislation. That level of disregard is unacceptable, and we should make sure it is not replicated in the UK. Amendment 98 also ensures that a named government department receives and makes sure that the statements are easily publically available. It ensures that there will be consequences for blatant flouting of the legislation—as we have seen in California—by companies that do not comply or refuse to comply. Most importantly, it makes sure that compliance with this clause is a corporate responsibility. You need leadership from the top to change attitudes and make things happen.

I also very much support the requirement for a review after three years, which is included in Amendment 98. This part of the Bill in particular, as it is a completely new area of work, would benefit from a re-evaluation over a specified time period. Formally being able to hear the views of businesses, NGOs, trade unions and consumers on how this legislation operates in practice, and committing to bring forward changes where needed, would be a positive step forward.

I hope that the Government can accept much—if not all—of what is included in Amendment 98 and that they will look seriously at Amendment 98A in the name of my noble friend Lady McDonagh. She has clearly set out the impact multinational corporations can have in the fight against slavery. The 124 companies to which she referred, which operate in high-risk sectors and which have a combined turnover of approximately $1 trillion, can clearly influence the working conditions in tens of thousands of workplaces and help many millions of workers across the world. The power of this small group of companies is huge. They have the power to reform their business models, insist on inspection regimes, support local efforts to empower workers and insist on decent wages and formal contracts for all workers here in the UK and across the world. Her amendment brings home to us that we cannot rid the world of slavery without the help of big business.

The provisions in my noble friend’s amendment would enable the economic strength of these companies to be a force for good—something they want to be and something we desperately need them to be. Many if not all those companies understand the reputational damage and loss of both consumer confidence and market share they will suffer if they are found to be sourcing from suppliers which use exploitative labour. Most companies want supply chains that reflect their brand, not brands that reflect their supply chains, so I am sure that, like Amendment 98, this amendment will not be seen as a burden but an advantage. I hope that both amendments and what they set out can be accepted by the Government.