UK Company Supply Chains

Anas Sarwar Excerpts

Tuesday 16th December 2014 Westminster Hall

[Huw Irranca-Davies (Ogmore) (Lab)]

It is a pleasure to take part in this important debate. I thank my hon. Friend the Member for Wansbeck (Ian Lavery) for a good opening speech, in which he highlighted the severe exploitation of workers in the tobacco industry, particularly under British American Tobacco and R. J. Reynolds. My hon. Friend the Member for Paisley and Renfrewshire North (Jim Sheridan) made specific reference to the Blood Bricks campaign, and there are many other examples. My comments will centre on the food industry.

As the debate is focused on the UK’s supply chain, I will consider not only what we could do with regulations, but what we should tell supermarkets. There are effectively only six major buyers among the supermarkets and retailers in the UK. Those buyers sit in offices alongside people who are responsible for corporate responsibility and ethical trading. If they wanted to, they could drive a race to the top, rather than a race to the bottom. There is case for regulation, as I will describe in a moment, but there is also a case for going beyond regulation and actually telling companies, “You should be showing British leadership and world leadership.” We should go far beyond what regulations can deliver and seek far higher standards right along global supply chains.

[Anas Sarwar (Glasgow Central) (Lab)]

My hon. Friend mentioned global leadership. The UK shows such leadership with our international development objectives in many of the countries where supply chains are located. Does it not make sense for us—a partnership of our business community, our public and our Government—to ensure that we are helping development in such countries with measures such as fair pay, decent work and decent working standards?

[Huw Irranca-Davies]

I agree entirely. While today’s focus has been on the deplorable gross exploitation of workers in different parts of the world, there is also routine, daily exploitation through the suppression of wages and the absence of terms and conditions and protections. There is no recognition not only of unions, but of grievances in the workplace. Many workers experience a dampening effect that keeps them under control, having to do what the employer says because they have no voice.

My hon. Friend is right to suggest what our cross-Government international development approach should be on the food and clothing sectors and so on. We should not only look to see where regulation can work, but work with the sectors and say, “As an island nation, we have such global reach that we should be forcing standards up.” We should not be waiting to be told to do that; we should be working at it now, whether in Africa, India or South America. Ultimately, if we have products on our shelves that are being produced extremely cheaply, we know that somebody or something is being exploited somewhere. In the food sector, that could mean exploitation of animals, communities or workers.

I ask hon. Members to cast their minds back to 2004 when some of this debate began. In the Morecambe bay tragedy, 32 Chinese cockle pickers died out on the mud banks. It was a horrendous incident that woke the country up to something that we thought could not happen in a modern society. Chinese workers, trafficked by rogue gangmasters into the UK, were exploited in terms of pay and conditions and then placed in hazardous and ultimately fatal conditions. They were paid £5 for 25 kg of cockles while being left to the ravages of the tide. In the eyes of the gangmasters, they were expendable. As a result of a cross-party and cross-sector approach, many people came together and said, “We must deal with this,” and the Gangmasters Licensing Authority was established as a result.

The GLA has done tremendous work on tackling exploitation in a lean and mean way, but it is still happening. Back in 2012, two people were arrested in Kent following the exploitation 17 Lithuanian workers, who were being moved around the country in minivans to work. Sometimes they went without pay for weeks on end. Sometimes they received a pittance, but with deductions. They slept in a van as they travelled. When they were not sleeping in vans, they slept on floors in the most basic of portakabin accommodation. It was complete exploitation. What surprised people after it was picked up by the GLA was that it was occurring in our supposedly reputable food supply chain. It involved Noble Foods, which supplied companies such as McDonald’s, Tesco, Asda, M&S and Sainsbury’s. The products that Noble Foods supplied to those companies included—with no irony—chicken bearing the Freedom Food mark, yet people working for the company were being exploited and had no freedom themselves. It was debt bondage. They worked 17-hour shifts and slept on buses. It was crazy.

Well done to the GLA on that, but the point has already been well made by my colleagues that the GLA needs to follow its intelligence whenever exploitation is taking place. We know that it happens in the social care and construction sectors. It is a lean, mean organisation that now needs to target sectors where its nose suggests there is a stink and where exploitation is occurring.

I want to consider a more recent case that brings the issue right back home and into the produce that we take off the shelves and put on our plates. It has been reported that abuse and exploitation are widespread in the Thai fishing industry. It looks very much like slavery, but certainly involves human rights abuses. Thailand produces 4.2 million tonnes of seafood each year, 90% of which is exported. The main markets are the USA, the EU and the UK—we do like our seafood. The Guardian reported this year that people were forced to work 20 hours a day and endured regular beatings if they complained. They received one plate of rice a day to keep them going. People were purchased by boat captains from brokers for between £450 and £640—direct, old-fashioned slavery and exploitation of human beings. At every stage officials were bribed, so that the slaves could be brought in. The Guardian reported that a slave trafficker called the Thai police “business partners”, while the people forced to do the work were seen as expendable. Kevin Bales, an anti-trafficking activist, estimates that slaves cost 95% less than they did at the height of the 19th-century slave trade.

The vessels that use those slaves each year catch roughly 350,000 tonnes of so-called “trash fish”, turned into fishmeal for multinationals such as CP Foods, which supplies major retailers in the UK, including Asda, Iceland, Tesco, Morrisons and the Co-op. Many of those retailers—I come back to the point about the power of the retailers and the six major buyers in the UK—were not aware of what was going on, but many people would say, “You did not show due diligence in looking at what was happening in your supply chain.” The case has woken many retailers up, but the question is, why did it take that to wake them up?

CP Foods has stated that it requires its factories to buy trash fish only from legal and licensed boats. Captains, however, often fail to record where their fish comes from, so how can we have a trail for where the fish is being purchased? Tesco says that it regards slavery as unacceptable, and it is working with international organisations such as the ILO to achieve a broader change in the Thai fishing industry. All the retailers who were caught out have responded rigorously, in part to deal with reputational damage.

Exploitation remains a major concern. The two biggest industries in which exploitation, trafficking and slave labour are rife are the garment industry and the food industry. A tremendous amount could be done by the British food sector. My hon. Friends have already mentioned asks that go beyond where the Government are with the Modern Slavery Bill. We want to see elements from the Ethical Trading Initiative brought forward. We want to see comparability between different companies on reporting along the long line of their supply chains; we need to be able to compare Marks & Spencer, Tesco and everyone else in the UK—apples with apples, not apples with pears. We want to see directors having individual fiduciary duties to ensure the accuracy of reporting; we do not want another Thai fishing industry exploitation case to come up and a director to say, “I knew nothing about it. I did my best, but someone lower down the chain is responsible”—that is not good enough. Things have to stop right at the top; leadership has to come from the top. We also want not only large public, but privately listed companies included.

A lot more can be done, not only with regulation, but by working with such companies, so that we go way beyond regulation and so that the UK shows real leadership in ending exploitation in the food sector and every other sector mentioned by my colleagues. Consumers can also play a role, because the consumer voice, as we have seen in recent history, frequently shames sectors into taking action. Let us get on with it.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

It is a great pleasure to serve under your chairmanship, Mr Crausby. It is also a great pleasure to respond to this thoughtful and powerful debate. It is customary on such occasions to say that this has been a good debate, but it really has been striking, particularly the number of examples of individuals who are suffering in the most horrific conditions. Sometimes the discussion of business issues and human rights becomes abstract, and bringing it back to individuals is helpful.

I congratulate the hon. Member for Wansbeck (Ian Lavery) on securing this debate and on sharing his personal testimony and experience of the individuals he has visited. He is right that this is an issue on which there is a moral duty. Of course there are business benefits from improving human rights, as the hon. Member for Ogmore (Huw Irranca-Davies) and others have said, and it is important that we make that business case, but the hon. Member for Wansbeck put his finger on it when he said that this is a moral duty. We are all human beings, and human rights are universal. Whatever we do and whatever our role, whether we are working in business, politics or the media, we have a responsibility to other human beings and to ensure that human rights are upheld.

The Government are taking a range of action, of which I am proud and which I warmly welcome and champion, from narrative reporting to our work with different sectors, including the retail sector, to ensure that they are improving their practices. We have also amended the Modern Slavery Bill to address supply chain reporting, to which I will return. At EU level there is also non-financial reporting, and of course we support these issues at the United Nations through the business and human rights action plan, which we were the first country to create. We can take international leadership on this issue, but that does not mean that there is any room for complacency.

It is also important to recognise that, although the issue is simple in terms of morality and what is right, it unfortunately is not simple to work out how to stop human rights abuses. Various Members have mentioned that some companies sometimes offer the excuse, “We didn’t know what was going on,” but it is true that it can be difficult for companies to get to the bottom of every part of their supply chain. There is a role for sharing best practice and for helping companies to understand the best way to get that information. There is a dividend or benefit from taking the issue seriously and creating what the hon. Member for Ogmore described as a race to the top. We need to do that.

Earlier this month I was in Geneva for the UN forum on business and human rights. It was the third time the forum has taken place, which shows how international business is taking this issue more seriously. The feedback I received from the 1,900 delegates was that the forum was much more constructive and positive both for business groups and for non-governmental organisations than in the previous two years, which is a sign of progress. I met a group of UK businesses that have signed up to the UN global compact, which commits them to reporting annually on the actions they are taking on a range of issues from working conditions to environmental impacts and human rights. Businesses turning up to the UN forum on business and human rights are probably already fairly committed to taking the issue seriously, but it is good that the forum shows that a large number of UK companies are doing so.

[Anas Sarwar]

It is good to hear about that international co-ordination to ensure that multinational companies are rightly reflecting on this issue, but that principle should also apply across Government here in the UK. Is the Minister therefore disappointed that the Department for International Development has withdrawn its funding for the International Labour Organisation?

[Jo Swinson]

I will happily speak to colleagues in DFID and write to the hon. Gentleman with a fuller answer. A range of international organisations play a hugely important role, and obviously the Government always need to consider the best way to further our overall objectives. I will certainly write to him on the specifics of that point.

There were many NGO representatives in Geneva who were rightly passionate about ensuring access to justice for victims of human rights abuses. I spoke a little of my personal commitment to this issue. Indeed, one of my political heroines when I was growing up and deciding to study business was Anita Roddick. She was a pioneer in proving that business has a social responsibility that needs to be taken seriously. I remember reading her book, “Business as Unusual,” which I found incredibly inspiring on the role that business can play. Business should be, and often can be, a force for good in our society. It ought to be a way of taking humanity forward, rather than ultimately being responsible for exploitation. Capitalism goes wrong when that happens, as some Members mentioned, but business is able to be a force for good.

As I said, many UK businesses are taking this issue seriously, but some are perhaps not taking it as seriously as they should. The examples we have heard today back that up. The hon. Member for Wansbeck talked very powerfully about the squalid conditions in North Carolina. We are used to talking about such issues in other parts of the world, but we would not necessarily expect it to happen in a country such as America. That juxtaposition of such wealth with such poverty and disregard for rights is awful, particularly when he talked about the example of a seven-year-old girl or someone who had part of their finger cut off without even being able to get hospital treatment.

The hon. Member for Ogmore rightly focused on the responsibility of big companies such as supermarkets and their power to drive change. He is right that, if something is incredibly cheap, it is not always the result of wonderful business efficiency. Sometimes that might be the case, but sometimes it means that someone, somewhere is being exploited, and he is right to point that out.

The hon. Gentleman also addressed the comparability of reporting so that people can compare apples with apples, rather than with oranges, which is a useful analogy in the context of our conversation about the food industry. This is an important issue, and at the event in Geneva there were some interim results from an interesting, in-depth study by The Economist on business attitudes to human rights. One of the early indications is that, when business leaders were asked what would make the biggest difference to their behaviour, they talked about some kind of benchmarking tool so that companies can be compared. Such a tool needs to be developed with care because these are genuinely complex issues, but UK companies such as Aviva are leading the way. There is an exciting project to create a human rights benchmark so that companies across the country, and internationally, can be compared so that we may have a proper analysis of their human rights records.

The hon. Member for Derby North (Chris Williamson) relayed stories about his experiences in Qatar, and they are a hugely powerful account of disgraceful behaviour, particularly in such an incredibly rich country. What I found most breathtaking about his speech was Balfour Beatty’s reported comment that we must not look at this issue through western eyes. I was blown away by that comment. Human rights are universal. Whether someone is in squalid conditions and having to work ridiculous hours here or in another part of the world, we should be concerned and acting to change the situation—responsible UK companies will act to change the situation.

I appreciate the hon. Gentleman’s action on writing to UK companies, and I know that he wants action from the Government, which is why we are introducing the reporting requirement on supply chains so that companies have to say what they are doing on slavery and trafficking. I am delighted that that amendment has been made to the Modern Slavery Bill. I have met campaigners on that issue over the past couple of years, and there is a strong case for introducing the requirement to drive transparency and change behaviour.

The hon. Member for Foyle (Mark Durkan) mentioned the voice of business, and there is a strong voice within the business community, which wants to see progress on these issues and is supportive of many of these measures. This is a complex issue, which is why the solution cannot be easily described in a soundbite; it is about proper engagement with business, and it is about taking the UN guiding principles that were developed by Professor Ruggie over a significant course of time and therefore have the buy-in of key players. He and his team are still very involved in trying to make that a reality. The UK has published its action plan, and a handful of countries have now published their own action plans, but we must ensure that we use that leadership to do what we need to do in our own country and to encourage other countries to do the same. I fully believe that in 20 or 30 years, this will be seen as a key and obvious business issue, but we are now at the stage where it has to be established. We have made great progress compared with 10 or 15 years ago, but there is still a lot more to do. I welcome today’s debate.

Low Pay

Anas Sarwar Excerpts

Wednesday 30th October 2013 Westminster Hall

[Mr Bain]

That is a very good idea. We should be considering what is available in fiscal terms and what we can do through procurement. As I will describe, local authorities and other parts of the public and voluntary sectors have a good record of addressing low pay, but that needs to be extended to the private sector. Procurement is one means by which we can do that.

My hon. Friend the Member for Glasgow Central (Anas Sarwar) is here today. He will know that the Procurement Reform (Scotland) Bill, presented by the Scottish Government, is particularly disappointing and simply does not meet the test of ending low pay in Scotland.

As many as 220,000 direct care workers may be paid less than their legal entitlement to the national minimum wage. That is a national scandal, and the Government must act to end it. Worse, poverty pay is creating an even larger burden on the state because it is one of the biggest drivers of the increasing costs of housing benefit and tax credits. The recent report of the Social Mobility and Child Poverty Commission found that 84% of the public agree that employers should do more to pay wages that better reflect the cost of living.

It is becoming increasingly clear that, if there is to be a wage-led recovery that reaches all the people of the United Kingdom, further action on the national minimum wage is needed now. According to the 2012 labour force survey, low pay is more prevalent in the private sector, with sole traders, partnerships and companies reporting rates of low pay at 47%, 35%, and 26% respectively. That compares with a low pay rate of only 15% in local government.

Although the tax credit system cushioned living standards between 2003 and 2008, and remains an important means of improving work incentives now, the case for building on the success of the national minimum wage has never been stronger. We should support councils and other parts of the public sector that pay or use procurement rules with the voluntary and private sectors to extend a living wage to more and more people. The Government should at last support the recognised living wage accreditation scheme, which would be a splendid way to mark national living wage week next week, but we also need to understand that a rise in the national minimum wage will help substantially more workers than even a voluntary expansion of the living wage by employers.

We also need better enforcement of the minimum wage to stop the exploitation of unpaid interns for months on end and should back the superb campaign led by Intern Aware. Equity highlights the ongoing issue with performers and arts organisations in relation to the exemption in section 44 of the National Minimum Wage Act 1998.

It is particularly shameful that the maximum penalty for fly-tipping is 10 times the penalty for not paying a worker the legal minimum rate for an hour’s work and that the average fine per breach of the minimum wage rules was just over £1,000 in the last financial year. There were just two successful prosecutions of employers last year for failing to pay the minimum wage rate, according to information provided to me by the Treasury. The Government can do a great deal more on enforcement, and I hope the Minister will outline the next steps.

As I said to the hon. Member for Hexham (Guy Opperman), increasing the personal tax allowance does not in itself end the crisis of low pay. Many low-paid workers do not earn enough to pay income tax and so would not benefit from further rises in the personal allowance. For lone or couple households with children, the interaction between a rising minimum wage and the help provided by the tax credit system will do the most to raise living standards.

We also need to be mindful that the introduction of universal credit will mean that what low-income taxpayers may gain from a higher personal allowance will be lost through the new tax credit system, which is assessed on after-tax income. New research by Gingerbread published this morning shows that the Government’s current plans for universal credit will make it far harder for low-income lone parents to make work pay beyond 20 hours a week, as the incentives rapidly taper away.

[Anas Sarwar (Glasgow Central) (Lab)]

I congratulate my hon. Friend on securing this important debate. He rightly says that having a job is not an automatic route out of poverty. For example, 50% of people who use a food bank in my constituency are in work. Does that not demonstrate that we need to create not only employment but a quality level of income so that people can lift themselves out of poverty and give opportunities to their children?

[Mr Bain]

My hon. Friend is entirely correct. He represents a constituency in which nearly half—44%—of male part-time workers are earning less than the living wage and in which nearly a third of all part-time workers are in the same predicament. We both see, therefore, the costs that that has on society, with people unable to make their salary or wages last the week or the month, so that they are forced in increasing numbers into using food banks, just to feed their families. That is wrong and shameful, and we can collectively do something about it.

The Resolution Foundation has shown recently that once workers, women in particular, are trapped in jobs paying the minimum wage, they find it hard to progress out of them. The Government need to do a lot more on skills in the workplace, to help progression and allow people to advance within a job and have the potential to earn a larger salary as a result. The truth is that the low rate of the national minimum wage is acting as a ceiling, rather than as a springboard, to higher living standards. The Government must do more on workplace skills to ensure that people can progress in their jobs.

I have some specific points, which I hope the Minister can deal with. In what ways might the Government change the remit of the Low Pay Commission? Are they looking to what Gavin Kelly of the Resolution Foundation has termed “forward guidance” on future rises in the national minimum wage as the economy, we hope, continues to grow?

What particular issues has the Minister asked the Low Pay Commission to examine in looking at how, sector by sector, national minimum pay rates might be increased? In sectors such as finance and banking, it has been established that higher pay rates might be affordable now, at no or relatively little cost to those employers, whereas for hotels and restaurants a more phased approach to raising wage rates might work best, to maximise employment.

The prize for employers is real: higher productivity, higher job satisfaction and reduced staff turnover. For workers, the Government and society, tackling chronic low wages could restore the principles that work will pay and that low-income Britain should share more fairly in the wealth that it generates for this country. Such a policy should commend itself not only to Opposition Members, but to every shade of political opinion in the House. It is time for this Government to do the right thing for once, and to support giving low-wage Britain a much-needed pay rise.

Oral Answers to Questions

Anas Sarwar Excerpts

Thursday 8th November 2012 Commons Chamber

[Vince Cable]

We will do just that and I congratulate the hon. Gentleman on his role in promoting local companies. I was in Leamington Spa recently to meet some video game companies that have started up and he has played a useful role in promoting all that. Last year, encouraged by the overall improvement in the business climate, half a million new companies were established in this country, which is a major indication of the growth of entrepreneurial commitment.

[Anas Sarwar (Glasgow Central) (Lab)]

The Secretary of State will be aware that with the number of university and college places falling and youth unemployment increasing, now, more than ever, we should be encouraging young people to set up their own businesses. Will the Secretary of State be willing to come and visit the Entrepreneurial-Spark scheme in my constituency and see the innovative ways in which Glasgow is helping to encourage young business people to come forward in the city?

[Vince Cable]

As the hon. Gentleman knows, I take a particularly close interest in positive news in Glasgow and I would be happy to come and see that project. Suffice it to say that there is a new start-up loan scheme for young entrepreneurs, of which large numbers of young people are taking advantage. I am delighted to see that it is happening in Glasgow, too.

Oral Answers to Questions

Anas Sarwar Excerpts

Thursday 6th September 2012 Commons Chamber

[Matthew Hancock]

One of the things that my predecessor brought to this job was a cross-party focus. I agree with the hon. Gentleman on the importance of FE colleges and the excellent work that they do in ensuring that people are ready for work when they join the work force and in continuing to improve people’s skills once they are in the work force, so that we can compete with the best in the world.

[Anas Sarwar (Glasgow Central) (Lab)]

4. What assessment he has made of the likely effect of proposed changes to employment law on low-paid and vulnerable workers.

[Gemma Doyle (West Dunbartonshire) (Lab/Co-op)]

22. What assessment he has made of the likely effect of proposed changes to employment law on low-paid and vulnerable workers.

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

We are conducting a Parliament-long employment law review to remove unnecessary burdens on businesses and give them the confidence to grow and create more jobs. Of course, we also remain committed to providing protection for low-paid and vulnerable workers.

[Anas Sarwar]

I welcome the hon. Lady to her new job and congratulate her. I advise her to take more advice from the Business Secretary and a little less from the Chancellor’s prodigy, the hon. Member for West Suffolk (Matthew Hancock), who is sitting two up from her.

Obviously, there is genuine concern as taking away employment rights from low-paid workers is not a substitute for a proper economic growth strategy. At a time when we should be looking at ways to encourage growth and hire people, rather than fire them, what assessment has been made of the positive impact on GDP of the proposed changes?

[Jo Swinson]

I thank the hon. Gentleman for his question and his kind words. It is a particular delight that my first questions at the Dispatch Box come from my near neighbours in the west of Scotland. I also thank him for his advice. Of course he is right to point out that just removing employment rights is not the way forward. However, impact assessments have been published in respect of the Enterprise and Regulatory Reform Bill. It is still progressing through this House and the Government intend to make further announcements next week on employment law reform.

Oral Answers to Questions

Anas Sarwar Excerpts

Thursday 14th October 2010 Commons Chamber

[Mr Willetts]

We are, of course, considering Lord Browne’s proposals very carefully and in greater detail. One issue that we will certainly consider is the exact interest rate that should be applied.

[Anas Sarwar (Glasgow Central) (Lab)]

What an incredible transformation the Business Secretary has made from a Labour councillor in Glasgow to a Tory front-man in Westminster, with every principle dropped at the first sniff of power. Will he please detail what consultation process took place with the National Union of Students before reaching his own conclusions on the Browne report?

[Vince Cable]

I fondly remember my days on the Glasgow city council, where we achieved much. I have met representatives from the National Union of Students on several occasions. We have consulted them and continue to do so. The NUS has some useful ideas, which will hopefully supplement our response to the Browne report. We shall continue to maintain a dialogue.