Ending Exploitation in Supermarket Supply Chains

John Hayes Excerpts

Thursday 18th October 2018 Commons Chamber

[Mr John Hayes (South Holland and The Deepings) (Con)]

Supermarkets have decimated high streets, destroyed livelihoods and distorted the food chain. The exploitation to which the hon. Member for Bristol East (Kerry McCarthy) drew the attention of the House is not an aberration and is not marginal to supermarkets; it is intrinsic to their business model.

In my lifetime—I should say my short lifetime—I remember parades of shops on council estates, like the one on which I was brought up, across the whole of the country; shops run independently by people who knew their customers and knew those who supplied them. They had an interest in ensuring that their practices were sufficiently ethical to maintain their customer base and to preserve quality relationships with their suppliers. In my lifetime, farmers and growers in my constituency could sell the goods they made to a variety of people in a variety of places. They could go to local markets. They could sell in local produce auctions. They could walk away from deals if they were not fair, reasonable and ethical. In my short lifetime—I emphasise that again, Madam Deputy Speaker—our high streets were vibrant places. Our towns and cities were made lovelier by the variety and particularity that one found there. Sadly, all of that is no longer the case. What Napoleon called a nation of shopkeepers has become a nation of automated checkouts with contactless cards. We are all worse off as a result.

I want to deal in particular with the exploitation that the hon. Lady mentioned, and which I have said is implicit in the food chain model we have created. It is inevitable that farmers and growers must sell to the handful of places available to buy their goods. A report issued in 2000 by the Competition Commission demonstrated that a business able to control as little as 8% of the market has sufficient means to engage in exploitative trading practices. The big supermarkets do not control 8% of the market or even double that. Combined, the five big supermarkets control the vast majority of the United Kingdom’s grocery market. That concentration of power, made worse by Tesco’s recent absorption of the wholesaler Booker, magnifies and exaggerates the potential for exploitation right through the food chain, with my farmers and growers in Lincolnshire unable to walk away from bad deals as they have nowhere else to sell their produce. We know what those bad deals look like: up-front payments and delayed payments for the goods that suppliers provide, and sometimes, suppliers being obliged to fund “marketing campaigns” on behalf of retailers. Payments are now delayed for an average of 45 days, which puts small and medium-sized businesses on the brink of survival, as the supermarkets routinely engage in these practices.

The Agriculture Bill is welcome. Clause 25 gives new powers to Government— thanks to the insight, will and vision of the Secretary of State for Environment, Food and Rural Affairs, no doubt—to take action against supermarkets that behave in the ways I have described. I have implored him to use those powers with alacrity and determination, for they are needed. The supermarket adjudicator, introduced when I was a Minister in the Department for Business, Innovation and Skills, has also made some progress, although I would like to see her powers extended and used more liberally.

However, we must do much, much more, because as well as the exploitative practices that the hon. Member for Bristol East raised and which I have tried to amplify, we must consider the character of our high streets. Most towns now suffer from out-of-town developments that draw people away from the small shops that remain. With footfall decreasing, fewer shops can survive, because they rely on busy town centres to attract their customers.

Hon. Members know the scene as well as I do in large parts of Britain, with boarded-up shops, boarded-up banks and decimation in many places. People who do shop at out-of-town estates are forced to drive there, as they can no longer walk or cycle to the shops. They are encouraged to buy in large volume because they visit the shops infrequently, so there is then the problem of over-purchasing and food waste. We are told that around 30% of the food purchased ends up being thrown away. Encouraging over-buying more than offsets the claim from supermarkets that they have driven prices down. They may have kept prices down, but people no longer buy what they need; they buy much more than they need and much of it goes to waste.

[Kerry McCarthy]

Food waste is not just about the food that has been bought; the issue exists throughout the supply chain. From farm gate to fork, between 30% and 50% of food is estimated to be wasted. A lot of it never even gets on to supermarket shelves, and that is an absolute scandal. If food waste was a country, it would have the third highest carbon footprint in the world.

[Mr Hayes]

The hon. Lady is absolutely right. There are any number of cases, for example, of suppliers having food rejected that they have grown to supply supermarkets, because it has not met the standard or because the supermarket has changed the volume that it requires. Much food goes to waste that was grown to meet the supermarket’s original need or requirement. That is another example of the sharp practice that I described.

The truth is that in constituencies across the country, this is the secret exploitation which dare not speak its name. Farmers, growers and food firms—primary and secondary producers—dare not say what I am saying today, because they know that if they did, they would no longer be permitted to sell their goods to the few people available to buy them. That is why the supermarket adjudicator finds it so difficult to get evidence. Even with the confidentiality that is part of her remit, people are still reluctant to tell the truth, because they so fear what the supermarkets might do in retaliation.

It is time for the Government to act. The Agriculture Bill is helpful—I was delighted when I read clause 25, as I said—but we need to think about planning reform. We need to encourage people back into town centres and to our high streets. We need to give the adjudicator additional powers to deal with these exploitative terms of trade. We need to protect the workers in supermarket businesses in the way that was highlighted by the hon. Lady, whom I congratulate on bringing this matter before the House. We also need to recognise that far from extending choice, supermarkets have restricted it. If the only place someone can go to buy their groceries conveniently and affordably is a single store in a single place, how is choice extended and protected?

The Government really need to step up, and no Minister is more capable of doing so than my great friend and Lincolnshire neighbour who will respond to this debate. I ought to pay tribute, too, to the hon. Member for Swansea East (Carolyn Harris), who will sum up for the Opposition, because she is also a friend—there is no favouritism here. I know that they will both want to use this opportunity to expose this dreadful secret, as I have called it—this thing that dare not speak its name, this exploitation at the very heart of all that supermarkets do and are.

Before I close—this case is so self-evident that its amplification demands brevity rather than loquacity—I want to say that around the corner there is another spectre: the amalgamation of two supermarkets, with Sainsbury’s and Asda coming together. I spoke a moment ago about the consolidation of the market that resulted from the takeover of Booker by Tesco. This further step would give the combined business 30% of the market. I call upon the Competition and Markets Authority, which did so little about the Booker case, by the way, and which I have written to recently, to recognise in the investigation that has been announced that further consolidation of the groceries market will be injurious to the interests both of consumers and of those who supply them, with all the ill effects for the workers and customers that have been highlighted in this debate.

Let me end—I am coming to my peroration, and I like to give notice of that so that enthusiasm can build—by saying this: two futures are available to us, and we must choose which path we take. We can once again have vivid, vibrant, vital, vivacious high streets, full of eclecticism and particularity and full of choice, or we can have the dull, deadening, draining ubiquity of supermarkets, of out-of-town megastores. That choice is available to us, but we will only choose the first, to the immense benefit of the people, if we are determined to take decisive action to make that come true.

There is a cruel deception—this is an easy thing to misjudge—that the future lies in hands other than ours, that it is pre-determined, that we are somehow simply acting out a script written for us. In fact, the future can be as joyful as we choose it to be, and if it is not fixed, influenced and shaped by the people in this House, we will be failing in our duty to pursue the national interest for the common good.

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[Mr John Hayes]

The hon. Lady is absolutely right. Does she agree that supermarkets have also extended the food chain so that it is now much less likely for someone purchasing a good to know its source? They pay lip service to traceability, but in a greatly extended food chain, exploitation is much more likely to occur.

[Carolyn Harris]

The right hon. Gentleman is absolutely right, and I totally agree with him.

Taking Indian tea and Kenyan green beans as examples, the research by Oxfam found that workers and small-scale farmers earned less than 50% of what they needed for a basic but decent standard of living in their societies. The report also found that the gap between the reality and a decent standard of living was greatest where women provided the majority of the labour. In South Africa, over 90% of surveyed women workers on grape farms reported not having enough to eat in the previous month. Nearly a third of them said that they or a family member had gone to bed hungry at least once in that time.

In Thailand, over 90% of surveyed workers at seafood processing plants reported going without enough food in the previous month. In Italy, 75% of surveyed women workers on fruit and vegetable farms said that they or a family member had cut back on the number of meals in the previous month because their household could not afford sufficient food. In less than five days, the highest paid chief executive at a UK supermarket earns the same as a woman picking grapes on a typical farm in South Africa will earn in her entire lifetime. That is simply not good enough.

Large UK supermarkets lack sufficient policies to protect the human rights of the people they rely on to produce our food. Supermarkets need to act on human and labour rights, support a living wage and radically improve transparency of their own human rights and those of their suppliers. This is vital if our supermarket supply chains are not to be a breeding ground for trafficking. We must be persistent on this matter. Unfortunately, we cannot depend on supermarkets to do this on their own. We need the Government to enforce compliance with the Modern Slavery Act 2015. They must set out how they will measure decent work practices, reform company law and support the adoption of a binding United Nations treaty on business and human rights.

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[The Parliamentary Under-Secretary of State for the Home Department (Victoria Atkins)]

I thank the hon. Member for Bristol East (Kerry McCarthy) for securing the agreement of the Backbench Business Committee to hold this debate. We can all agree that it has been valuable and has sent out clear messages to the businesses and people involved in increasingly complex international supply chains about the expectations not just of the House, but of the public at large. Although the hon. Member for Cardiff East said—[Interruption.] Forgive me, I meant the hon. Member for Swansea East (Carolyn Harris)—I am causing all sorts of trouble in Wales, sorry. My shadow number was right to say that what we have lacked in number we have more than made up for in quality and the range of issues raised across this debate. I hope Members will excuse me if I do not manage to answer all their points, but I hope to tackle a great many of them.

We are all agreed that modern slavery is an invidious and destructive crime that affects some of the most vulnerable people in society. This Government are determined to end this injustice and eliminate this exploitation in our communities and in the global economy. Since the passing of the landmark Modern Slavery Act 2015, we have seen more convictions and arrests every year and increased specialist support for victims. There are currently more than 950 live investigations into accusations of modern slavery, and the Government will invest at least £61 million this year alone into work to end modern slavery in the United Kingdom and abroad.

The quality of today’s speakers will become clear as I attempt to answer many of their excellent points. The hon. Member for Bristol East set out the complexity of international supply chains, and I know that she and others support the Prime Minister’s call at the United Nations last year for us to end slavery by 2030. It is an ambitious target to set ourselves, but the Prime Minister has clearly identified a will within the international community to do that. More than 80 countries have signed up to the call for action, and a great deal of work is flowing from that effort.

The hon. Member for Bristol East also mentioned seafood from Thailand, and I am pleased that she and other Members took the opportunity to educate and inform the wider public as to some of the conditions that we are learning of when it comes to how seafood is extracted from our seas. In fairness, some UK supermarkets, including Tesco and Morrisons, are members of the Seafood Task Force, an industry-led coalition of retailers, Governments and NGOs set up to address the human rights abuses and seafood supply chains that the hon. Lady so clearly identified in her speech. If she will bear with me, I will deal with her other points later.

Moving on with great excitement to the speech of my right hon. Friend the Member for South Holland and The Deepings (Mr Hayes), my Lincolnshire colleague and dear friend in the House reflected in his usual stylish way on the changes to the high street during his “short” lifetime. He painted a picture of the high streets in our county as they were only a few years ago and then the differences that we now face, describing with chilling accuracy the business conditions that many of his and my farmers in Lincolnshire face at the hands of large supermarkets. He made particular reference to delayed payments. Since April last year, all large UK businesses have had a duty to report publicly on their payment policies, practices and performance, because the Government recognise the helpfulness of transparency in driving change. If he or any other Member is aware of supermarkets that are not playing their part, I ask them to let me and the relevant Ministers know, so that we can ask why they are not doing what they are obliged to do.

My right hon. Friend and other Members also mentioned the proposed merger of Sainsbury’s and Asda. The Competition and Markets Authority is investigating independently, but I am pleased to note that the Select Committees on Business, Energy and Industrial Strategy and on Environment, Food and Rural Affairs wrote a joint letter in early May to the CMA raising concerns about the impact that the merger would have on the grocery supply chain and asking for details on the approach of any investigation. The Secretary of State for Business, Energy and Industrial Strategy also wrote to the CMA in May to stress the importance of considering the possible impact on the supply chain, among other competition-related issues.

[Mr John Hayes]

I am grateful to my hon. Friend for her complimentary remarks, which were delivered with her usual style. Will she also consider making the groceries code statutory? The code is voluntary and is largely ignored. In my judgment, a statutory code would protect suppliers, with all the beneficial effects that that would have right down the supply chain.

[Victoria Atkins]

I hesitate to take responsibility for all the work of Government, as I fear that that is a matter for BEIS, but I will ask the relevant Minister to write to my right hon. Friend. Having listened to his speech carefully, I absolutely understand why he asked that question.

The hon. Member for North Ayrshire and Arran (Patricia Gibson) and the hon. Member for Swansea East both raised the important issue of women in supply chains, which I obviously take an extra interest in given my responsibilities as Minister for Women. Women and girls are often among the most vulnerable people working in global supply chains. They are more likely to be subject to sexual, mental and physical abuse, both within the workplace and while travelling to and from workplaces, and sadly they are regularly paid lower wages than their male counterparts. The Department for International Development is working to tackle the issue with its flagship initiative, the Work and Opportunities for Women programme. I know that acronyms are not allowed in the MOD, but the DFID acronym for that is WOW, and the programme will collaborate with British and global businesses, providing access to the latest expertise on women’s economic empowerment to improve outcomes for women and enable them to build more resilient, sustainable and productive supply chains.

Turning to transparency in supply chains, it is an uncomfortable truth that forced labour exists in the supply chains of products on our supermarket shelves, which is simply unacceptable. I welcome Oxfam’s research, which shines a light on the suffering of workers in supermarket supply chains. Agriculture and fishing is a particularly high-risk sector that is estimated to account for 12% of forced labour globally. Supermarkets and businesses in food supply chains clearly need to do more, but the truth is that no sector is immune from the risks of modern slavery. Almost all businesses will face the risk of modern slavery somewhere in their supply chains, which is why the world-leading transparency in supply chains provision in the Modern Slavery Act 2015 requires large businesses in the UK to publish an annual modern slavery statement.

Thousands of businesses are stepping up to the challenge and have published statements detailing the action they are taking to tackle modern slavery in their supply chains. Many are demonstrating their commitment by partnering with experts, changing their purchasing priorities and reporting transparently about what they have done. Companies such as the clothing company ASOS and the Co-op are leading the way in being open and transparent about where they have identified modern slavery risks and what actions they have taken to put them right and prevent the problem from happening in the future. For example, the Co-op’s modern slavery statement disclosed that it had identified a case of modern slavery on a supplier’s farm in Nottinghamshire. As a result of Co-op working closely with its supplier, the police, the Gangmasters and Labour Abuse Authority and the Salvation Army, the victim was safeguarded and the perpetrator jailed for eight years.

I am also pleased to see that more and more companies, including Marks & Spencer, Unilever and Tesco, are signing up to the employer pays principle and taking steps to ensure that workers in their supply chain do not pay exploitative recruitment fees, which can often lead to debt bondage. Although large companies that meet the relevant turnover threshold are obliged under the Act to issue a statement on their supply chain, we are finding evidence that that is having a trickle-down effect on smaller businesses that do not reach the turnover threshold. It is a positive thing that companies are being required by their larger business partners to meet those standards so that the larger businesses can issue a statement.

I am conscious that, although thousands of businesses are taking their responsibility seriously, too many are still publishing poor-quality statements or are failing to meet their basic legal obligations. Today, the Home Office has begun to write directly to the chief executive officers of all 17,000 UK businesses believed to be within the scope of the Act. We have made it clear what their obligations are and how they can meet them. There are no excuses for non-compliance, and those businesses that continue to flout their legal obligations should understand that they can expect to face far tougher consequences.

Members have rightly said that this is about not just companies publishing statements, but the quality of those statements. Having written to those companies, the Home Office plans to audit the statements at the end of this financial year and to name non-compliant companies after that date. That is a significant development in transparency.

We will also be establishing a transparency in supply chains advisory group, with experts from the modern slavery sector and from the business community, to help inform our approach to tackling slavery in public and private sector supply chains. Later this year, we will be revising the business guidance on modern slavery reporting, and businesses can now register on the modern slavery contacts database for guidance and resources to help them report effectively.

Of course, the independent review of the Modern Slavery Act, chaired by the right hon. Member for Birkenhead (Frank Field), my right hon. Friend the Member for Basingstoke (Mrs Miller) and a noble baroness, will consider how the transparency provision is working and what measures we can take to ensure it is as effective as it can be. I hope that that shows the Government’s direction of travel on this important issue.

The crucial action for these companies to take is to set meaningful targets, report on them and strive to make year-on-year progress in addressing these risks. We recognise that identifying and addressing modern slavery can be a complex task, which is why we are strengthening the guidance we are giving to businesses. We are also funding projects run by experts, including the Ethical Trading Initiative and Stronger Together, to support UK businesses in training their suppliers and addressing the risks in their global supply chains.

The Independent Anti-slavery Commissioner is an important part of this analysis, and hon. Members have mentioned the commissioner’s independence. As I have said in other debates, I have always found Mr Hyland to be incredibly independent and independent-minded, and I very much enjoy working with him. To reassure the House on this important appointment, we remain absolutely committed to the commissioner’s independence, and we are considering how this role can be further strengthened as part of the modern slavery review.

The Government recognise the importance of labour market enforcement and have continued to strengthen their response to exploitation in the UK labour market. We have created the role of director of labour market enforcement, who is responsible for producing an annual strategy that provides an assessment of the scale and nature of non-compliance in the labour market and sets strategic priorities for the three main enforcement teams in this field: the Employment Agency Standards Inspectorate, the Gangmasters and Labour Abuse Authority and HMRC’s national minimum wage team.

Sir David Metcalf took on the role in January 2017 and published his first full annual labour market enforcement strategy in May 2018. The Government are considering Sir David’s recommendations for the three enforcement bodies and will publish their response shortly.

We have also given the GLAA powers, equivalent to police powers, to investigate serious cases of labour market exploitation across the entire economy in England and Wales. Just last year, the GLAA conducted more than 100 operations, leading to more than 100 arrests for suspected labour market offences across a range of sectors, including construction, hand car washes and hospitality. The GLAA has also done some excellent work in partnership with businesses to raise awareness of the signs of modern slavery and to share good practice within the agricultural, construction and textiles sectors. For example, the GLAA has partnered with Sainsbury’s to deliver training sessions to its suppliers so it can better identify and manage risks in its supply chain.

Just outside my constituency in Lincolnshire, the GLAA has partnered with Boston College, an important college in our local area, to help educate young people not just to spot the signs of modern slavery in and around the fields of Lincolnshire, but to know their rights when it comes to their own careers and jobs. We need to get the message out that young people should not feel they need to accept jobs that pay poorly or in which the conditions are not acceptable. This is part of a programme of education that I hope will be followed up across the country.

Colleagues have rightly mentioned the seasonal agricultural workers pilot, and it is a key objective of that scheme to ensure that migrant workers are adequately protected against modern slavery. The GLAA will license the scheme operators, and the Home Office and the Department for Environment, Food and Rural Affairs will closely monitor the scheme to ensure that operators adhere to the stringent requirements we have set to ensure workers’ safety and wellbeing, including paying the national minimum wage as a minimum.

The Government recognise that we have a responsibility to use all the levers we have to tackle this crime. As for any business, there are risks of modern slavery in the goods and services procured by the Government and the public sector. We are already leveraging our buying power and requiring bidders for central Government contracts to certify that they are compliant with the transparency requirement in the Modern Slavery Act. In June, the Cabinet Office announced that the Government’s biggest suppliers will be required to provide data and action plans to address key social issues, including modern slavery. We are stepping up our activity to address modern slavery risks in our own supply chain, and we will be supporting the wider public sector to take action.

Of course, modern slavery is an international, indeed global, issue that requires a global response, which is why the United Kingdom is playing a leading role in tackling modern slavery away from our shores. At last year’s United Nations General Assembly, the Prime Minister launched a global call to action to end modern slavery, and more than 80 countries endorsed that call to action and pledged their support.

Building on that work, at this year’s UN General Assembly, the UK—in partnership with the US, Canada, Australia and New Zealand—launched a set of principles for combating modern slavery in supply chains. The principles set out the steps countries should take to prevent exploitation in both public and private sector supply chains. We are sharing lessons from our world-leading transparency and supply chains legislation with other countries, and Australia has looked to the UK for our experience and is now introducing legislation similar to ours.

We are also strengthening our bilateral relationships to tackle this crime. Those who take an interest in this area will know that, sadly, Albania features highly when it comes to the number of people referred to the national referral mechanism. Last week, I met the Albanian Deputy Minister and committed to an ambitious £2 million package to support victims to rebuild their lives and to deter vulnerable people from falling into the hands of traffickers in Albania. Today, we are launching the second round of our modern slavery innovation fund, which will make £5 million available for new approaches to tackle modern slavery globally, and just yesterday the UK held its day of action for the Amina project, a cross-Europe project to prevent child migrants from becoming child slaves.

Colleagues asked about the draft EU directive on unfair trading practices, and although the UK supports the broad aims of the draft directive, it is important to ensure that the measures in it are proportionate and appropriate for each member state, so we have argued for greater discretion for member states in how they implement the provisions.

I have also been asked about the UN guiding principles on business and human rights, and we are proud to have been the first country in the world to produce a national action plan responding to those guiding principles. As for the UN treaty, we are engaging in this process as part of the European Union and we are obviously carefully considering our approach to this proposed legally binding instrument.

To mark Anti-Slavery Day, buildings and businesses across the country will be lit in red tonight to raise awareness of this scourge on society, including buildings in Whitehall, Marble Arch in London, Cardiff City Hall—I apologise to the hon. Member for Swansea East—and the Etihad stadium in Manchester. That will raise awareness and give the message that this problem affects us all and that we should take an interest in this incredibly important issue.

To eradicate this crime from our communities and economy, Government, businesses and society need to work together. We should continue to be ambitious in our expectations and approach. No production line, however far reaching, should ever involve the exploitation of human beings, and we are determined to ensure that the rights of those who grow and produce our food are valued and defended.