Modern Slavery (Transparency in Supply Chains) Bill [HL]

Baroness Hamwee Excerpts

Friday 8th July 2016 Lords Chamber

[Baroness Hamwee (LD)]

My Lords, I wondered whether to congratulate the noble Baroness on her place in the ballot but I do not think it is a matter for congratulation. It is not an achievement; it is luck, says she who came 49th. Introducing a worthwhile Bill, however, is a matter for congratulation and I congratulate her warmly on that. Like her, I acknowledge the work done in the private and professional sectors on this issue.

The Modern Slavery Act was indeed an important landmark, and Section 54 was very welcome for starting us on the road we have been discussing. The recent paper, Good Business: Implementing the UN Guiding Principles on Business and Human Rights, which is as recent as last May, said:

“Companies understand the business case for respecting human rights and the benefits this brings. They understand that positive action, supported by due diligence, transparency and reporting”—

all three relevant terms today—

“can … help to protect and enhance a company’s reputation and brand value ... safeguard and expand their customer base … help them attract and retain good staff”.

I could continue with its list of nine points, which ends with a reference to supporting company ethics and values. I will come back to companies.

The moral issues—the last of those points—which underlie Section 54 extend beyond companies to the public sector. I recall many noble Lords, particularly the noble Baroness and the noble and learned Baroness, commenting on that when we debated Section 54. In any event, the line between the public and private sectors is increasingly blurred, but this is nothing new as a general concept for public authorities. We have equality duties, environmental considerations and more. I was a councillor when it first became common to include an environmental assessment of a proposition. There was concern then that this would become just a tick-box exercise, and maybe sometimes it has. Maybe it is because transparency in supply chains, TISC, is not a tick-box exercise for which you need only a statement—there is no statement—that the Government are rather cautious about this.

There are at least two sides to the moral aspect. “Do as I say, not as I do”, is not a very attractive way of going about things, and public bodies should have the highest standards. Earlier this week, I raised with the noble Baroness that local authorities were likely to have concerns about resources. This is not a new point to her, but I ask her today to give the House an assurance that, as the Bill goes forward—as I hope it will—she will consult local authorities, and specifically the Local Government Association. When the Minister responds, I hope he will confirm that the health sector, or certain parts of it—I am quite confused about this—would be covered by the clauses in the Bill.

In the commercial sector, we have said all along that it is crucial readily to identify the companies subject to the Section 54 duty because at present they are, in effect, anonymous. It is understandable that compliant companies feel they are not on the level playing field that has been referred to, and I know the Government consider it up to consumers to find out and to NGOs to do a good deal of leg-work. Frankly, both are unrealistic, and one has to acknowledge that consumers—I put myself in this bracket—often need spoon-feeding.

There is another aspect to this. Section 54 provides that the duties imposed on commercial organisations are enforceable by the Secretary of State bringing civil proceedings. The Secretary of State needs the information to be able to enforce the section in the statute. It is counterintuitive for the Government not to be working to find a way to give the infrastructure to the Secretary of State to enforce her own provision.

If the Bill is not the way to achieve transparency, including identification, I hope the Government can help us find the way that is. It is better not to be prescriptive about it, whether it is the annual report, annual accounts or whatever. It is about the transparency—about making the company’s position clear and accessible without insisting on it being a particular mechanism.

To come back to procurement, the sheer muscle, because of their size, that public bodies can exert is notable. We have the Public Contracts Regulations 2015, which I believe will bring the authorities that we are concerned about within their remit, through tracking Regulation 57(8)(a) back to Regulation 56. But what struck me in my failure to track that properly was that there is a heading to all this that says “Discretionary exclusions”. Regulation 57(8) states:

“Contracting authorities may exclude from participation in a procurement procedure any economic operator in any of the following situations”.

I would be grateful if the Minister could comment on that.

When we debated the Modern Slavery Act, there was much reference to consumer power and making your spending count. That applies, perhaps in spades, to public authorities. I very much dislike the much-used phrase in politics, “Isn’t it time that …” but the time came long ago to get this right. We cannot rewrite the past, but we can write the future, and I wish the Bill a very fair wind.

--- Later in debate ---

[Lord Keen of Elie]

I am obliged to my noble friend. I have already met the noble Baroness, and I am obliged to her for making time for that meeting. I am perfectly prepared to meet again to discuss how we can address some of the issues raised by the Bill because the Government’s position is that, while we welcome some of the proposals, we do not consider that primary legislation is required to achieve these ends. I would welcome an opportunity to discuss those points further in due course.

I turn to the observations by the noble and learned Baroness, Lady Butler-Sloss. She asked a number of questions about the burden of regulation and whether it was any longer an issue because, as she put it, in the consultation process the biggest companies said it was not a problem. We are not concerned with just the biggest companies, though; we acknowledge their role in this and the peer pressure that they can bring to bear, but this concerns every company with a turnover of £36 million or more and we have to take account of the burden upon all those companies, not just the biggest of them.

On the point about government procurement, I hope I have addressed that by pointing out that in a sense a parallel scheme is in place regarding procurement. I acknowledge the point made by the noble Baroness, Lady Hamwee, that the regulations do not carry an absolute. There are reasons for that. The code of practice will complement how and why those regulations should be taken into account.

[Baroness Hamwee]

Is the Minister aware, and he may not be, whether the Government have any plans to report publicly on the compliance with—“compliance” may be the wrong term for something that is discretionary, so perhaps I should say “observance” of—those regulations? In other words, will they report on how successful those regulations are? That is a matter of public concern, obviously.

[Lord Keen of Elie]

I can understand the observation but, as the regulations are to be complemented by a code of practice that I believe is going to be brought into force in October this year, I do not think I am able to anticipate how compliance may occur. I will address in writing to the noble Baroness the question of whether there will be some form of requirement for compliance auditing in respect of that matter.

The right reverend Prelate the Bishop of Derby raised the question of central repositories, and mentioned an instance of an organisation in Bristol. I am not in a position to go into individual cases at this time. As noble Lords are well aware, the Government have not launched an online repository, although we are aware of a number of proposals from third parties who suggest that they could develop a website to host these statements and to help people to search for them. I would like to complete a quotation that the noble Lord, Lord Alton, made regarding an answer I gave in April this year when I said:

“There never was an intention to establish any central monitoring system with respect to these provisions”.

That was in the context that there was never any government intention, which was perfectly clear. I went on to say:

“The Government have always been clear that it is for others to establish such a mechanism. We are aware of a number of organisations that propose to set up a central repository”.—[Official Report, 13/4/16; cols. 256-58.]

The right reverend Prelate went into some detail regarding a particular development in this regard, and I undertake to write to him on that matter because he raised a point that I am not in a position to address this stage.

The noble Baroness made the point, which was also made by other noble Lords, that these are early days. I remind your Lordships that this legislation came into force in October 2015, requiring companies to respond and to obtemper their Section 54 statement in their financial year from March 2016 onwards. We are at the very beginnings of this process.

That brings me on to a point made by my noble friend Lord Smith, who asked me a number of questions about the number of companies that have complied and the number that have relied upon Section 54(4)(b) of the Act and said they could not make a statement. It is simply too early to say what the position is regarding those matters. Those figures have not been collated and cannot be, because it is only from March this year that companies have had to address the question of compliance. I regret that I cannot provide figures at this stage.

The noble Baroness, Lady Goudie, raised the issue of local authorities and government departments. I hope that to some extent I have addressed the point that she was making by seeking to explain that the original legislation was designed particularly for the private sector, and that there are parallel provisions. They may not be regarded as quite as absolute as those that apply to the private sector, but there are parallel provisions that we have under the procurement regulations and which are being developed by reference to the code of practice.

I turn to the observations from the noble Lord, Lord Alton. Again, he referred to early indications of how the Act is being complied with. I underline that point: these are only early indications. We have to look further and consider how the Act is going to bed in. In my submission, it is too early to suggest that we should be tinkering with the legislation before we know how it is actually going to work in practice. He also alluded to the alleged lack of any monetary penalty for those who simply ignore the provisions of the Act. I remind noble Lords that the provisions are civil. The Secretary of State has the right to bring injunctive proceedings against a company that persistently fails to obtemper its Section 54 obligations, and if it still fails thereafter to obtemper those obligations it will be in contempt of court and liable to an unlimited fine.