Modern Slavery Act 2015 (Transparency in Supply Chains) Regulations 2015

Earl of Sandwich Excerpts

Monday 19th October 2015 Lords Chamber

Creating a repository will more effectively fulfil the Home Secretary’s stated desire that civil society and consumers drive the impact of transparency in supply chain reporting, as there will be one central place to read the reports. I look forward to hearing from the Minister about the outcome of the consultation and when such a repository will be established. Tonight is a rare opportunity to press the Minister further on these points. I think he was expecting this issue to be raised, so we look forward to hearing from him.

[The Earl of Sandwich (CB)]

My Lords, I supported my noble friend’s original amendment on the question of monitoring, and I will return to that in a moment. Whether we should go as far as the website and central information, I still am not certain in my own mind.

Having looked through the original consultation and the Government’s response, I am very impressed by the detailed work that has been done on this issue. It is rather a contrast with the Energy Bill, where the Government were castigated for bringing everything in at the last minute. I think that the whole process of pre-legislative scrutiny and consultation on the Modern Slavery Bill has been a model. I believe that the Government are genuinely behind this legislation, especially the Minister, who has shown commitment over many years, including his Nike research in China, his links with Gateshead and Traidcraft and his promise to consult widely following the Bill. This is where my noble friend’s amendment is very relevant. We are delighted that he has come up with the regulation, and I warmly welcome the decision to go for the lower threshold. This was the clear view of the respondents and I am glad to see also that companies will be given some flexibility on the form of the statement. So we are proceeding gradually in the right direction.

This does not mean that I have no misgivings. The first one is about monitoring. I notice that under section J of the impact assessment, the Government undertake to engage with businesses for a further 12 months after commencement. However, it seems that this will be only a limited assessment about reporting requirements and whether organisations have any difficulty in providing information. What about the monitoring of performance by the companies themselves after 12 months? Who is going to assess whether the companies have adequately researched their own supply chains to the point where they can revise earlier statements? I suspect that much of the monitoring will fall to civil society.

I remember the discussion under Section 54 on 10 December, when the noble Lord, Lord Rosser, questioned the Minister very closely on the amount of information that would be required from a company to enable civil society, for example, to make a judgment. This is an important point because it might be easy for a company to make very brief statements with so little content that the Government and NGOs would hardly be able to question them.

Presumably the Government will be involved after the 12-month period. Will they create a forum involving the NGOs, or will the anti-slavery commissioner, Mr Hyland, be involved in the process? I see that he has just published his impressive strategic plan: his workload is formidable. I know that he works with the NGOs a lot but surely he will have to stick primarily to policing and law enforcement and will not have the extra time that is required.

If the aim of the regulations and the Act is to,

“ensure there is no modern slavery in … supply chains”,

and to,

“aid the detection and elimination of modern slavery”,

surely a lot more needs to be done in the direction that my noble friend has mentioned than publishing what could be very limited information.

Finally, I ask the Minister whether charities are covered by the regulations. Section 54 of the Act refers to a “commercial organisation”, but the Explanatory Memorandum to the regulations says at paragraph 10.1:

“The impact on ... charities or voluntary bodies is small”.

Perhaps he could clarify this point, because there are charities with substantial overseas trading interests.

[Baroness Hamwee (LD)]

My Lords, this is indeed a significant statutory instrument. Whether it will fulfil its potential depends on its implementation and the practice that is adopted by organisations, as well as the response by the public. Like other speakers, I think that the content of the statements is more important than the process, and inevitably the statutory instrument is focused on the process.

Actions beyond the legislation—the statute and the statutory instrument—will be important. Like other noble Lords, the first point that I wrote down related to monitoring and whether there would be a central repository and a website to cover what may be, according to the impact assessment, 17,000 or 11,000 companies—a number of figures are given. It seems to me that the demand for that was reflected in the responses to the consultation, as reported on the Home Office website. This is not just for citizens, NGOs, civil society or indeed government to check and to hold companies to account; surely the repository, or depository, also has a function in spreading good practice and disseminating information about methodologies. The responses to the consultation seemed to show a need on the part of companies for assistance in how to identify slavery. The section on supply chains in the commissioner’s strategy, to which the noble Earl has just referred, under the heading “How will we know that the response is improving?”, says:

“Best-practice models of business and supply chain transparency to be established and widely adopted”.

Clearly there is a lot of work to be done in this area, so the guidance on how to do it is important. We are told that this is to be,

“published to coincide with the duty coming into force”,

which, I understand, will be in October. Can the Minister help the House as to whether the guidance will be published before then? Surely if a duty is in effect, one needs to know beforehand how to comply with that duty in the way that, I hope, the guidance will cover.

I note, too, that transitional provisions are to be developed, and I wonder whether the Minister can explain what that means. The first point that occurred to me on this was that the duty comes into effect in October, but how does that relate to any given company’s financial year? Presumably that will be a basis for making a statement and an assessment. The Government must have thought through whether, for instance, the duty will apply to a report only after there has been a full financial year of experience. I may be barking up the wrong tree here but if the Minister can help the House on what is anticipated in the transitional arrangements, it would be useful.

The responses asked whether the provisions could apply to companies below the threshold. I assume that there is no reason why not. In our debates on the Bill, we talked about the reputational benefits of providing statements.

More widely—I do not know whether the Minister can answer this—what sense does the Home Office have of a buy-in of enthusiasm for this process, for instance among institutional investors? During the progress of the Bill, we talked about the position that shareholders have and the influence that they may have on companies, so the institutions, as the biggest shareholders generally, will be in an important position. I used a search engine to see what was being said about this subject and found that a number of City lawyers and accountants are including advice on the subject in their newsletters, but it will be the shareholders—and the concern not to upset shareholders—that will be central to the operation of this measure.

The noble Lord, Lord Alton, referred to the effectiveness of these arrangements. In that connection, I noted that the impact assessment seems to deal with the regulatory burden, not with the costs of the investigation leading to the content of the statement. Checking that there is no slavery in the chain is the objective, despite the get-out of the “no statement”, so it seemed to me that there was a danger that the impact assessment might be sending an inappropriate message.

I was interested, too, that quite a lot of respondents disagreed with providing key performance indicators—not a majority by any means, but the indicators are referred to in the legislation and they are important because they will show trends. We are talking here about not just snapshots but trends. I do not know whether the Minister can say anything about that.

Almost finally, we have heard about the requirements on the Home Secretary to report. Is there an intention to report more frequently than the statutory minimum? And finally—this matter was raised by the noble and learned Baroness, Lady Butler-Sloss, during the passage of the Bill—can the Minister tell us what the Government are doing to check on their own procurement?

--- Later in debate ---

[The Earl of Sandwich]

Can the noble Lord clarify whether the commissioner has any role in this? It is quite an undertaking to leave it entirely to the voluntary sector.

[Lord Bates]

In the strategy which he published, the commissioner did not say that he felt that it was for him to do this. He did not express that as a view and he set out other priorities. Of course, whatever the sums are that he has to work with, we know that many demands will be made on those resources, and he wishes to target them in a particular way. I am aware that discussions are going on with third-party organisations which might be willing to step forward in this area, but we feel that it is not something for the Government themselves.