Worker Exploitation: Leicester Textile Industry

Debate between Liz Kendall and Philip Hollobone

Wednesday 18th November 2020 Westminster Hall

[Liz Kendall]

My hon. Friend makes an extremely good point. This issue does not just affect the workers in this industry. It does not just affect those of us who have pensions that are invested in these companies. It also affects us as consumers, which is why it is so important that we get this right.

There have been long-standing and serious problems with workers being exploited in some textile factories in Leicester. In the last five years alone, they have been highlighted by the University of Leicester, the BBC’s “Dispatches” programme, the Financial Times and the Environmental Audit Committee. Many, although not all, of these appalling cases had been in the supply chain of fashion retailer Boohoo. The latest issues were exposed by The Sunday Times in July. Following those revelations, Boohoo finally commissioned a review into the supply chain, carried out by Alison Levitt, QC. The findings of this review, published in September, were utterly damning.

Ms Levitt found that repeated allegations of unacceptable working conditions and illegal underpayment of workers were

“not only well-founded, but substantially true”—

something that Boohoo had denied or downplayed for many years, which I know personally from my meetings with the chief executive and director of sustainability. The review found that a significant number of Boohoo’s suppliers and subcontractors had been paying their employees less than the national minimum wage and had serious health and safety violations, including the risk of fire that could lead to loss of life, and that employees’ rights had been ignored and neglected on a wide scale. The review concludes that these problems are endemic and

“exist across the best part, if not the entirety, of Boohoo’s Leicester supply chain.”

Ms Levitt says that Boohoo’s monitoring of its supply chain has been “inadequate” for many years, and that is down to “weak corporate governance”. She says:

“Commercial concerns such as growth and profit were prioritised in a way which made substantial areas of risk all but invisible at the most senior level.”

From March 2019, Boohoo knew there were problems in their supply chain, and,

“By December 2019, at the latest, senior members of the Boohoo Board knew for a fact that there were some serious examples of unacceptable working conditions and poor treatment of workers (including illegally low pay).”

Despite all that, in late June 2020, astonishingly, Boohoo unveiled a plan to pay bonuses of up to £100 million to its two co-founders, Mahmud Kamani and Carol Kane, and £50 million to its other senior executives.

Ms Levitt says that when the covid-19 pandemic struck,

“Boohoo was quick to take advantage of the commercial opportunities afforded by the increase in demand during the pandemic”,

but that

“at no point was any assessment made as to how the Leicester workforce was to cope with the increased volume of orders.”

She rightly concludes that that was “inexcusable” and that,

“in truth Boohoo has not felt any real sense of responsibility for the factory workers in Leicester…because they are largely invisible to them.”

An under-reported part of the review relates to the behaviour of Boohoo’s chief executive, John Lyttle, and the executive chairman and co-founder Mahmud Kamani. Ms Levitt questions why John Lyttle failed on three occasions to tell her about an email that identified extremely serious health and safety concerns in Leicester supply chain. She says:

“It was my view that, given that John Lyttle could not possibly have forgotten this, his failure to tell me about it was significant.”

Ms Levitt highlights Mr Kamani’s “lack of knowledge” or even “interest” in reports by Boohoo’s internal auditor about problems in the Leicester supply chain or the checks carried out by their independent auditor, Verisio. Significantly, she says that

“the Board has found it difficult to stand up to the current Chairman and to ensure that the best interests of all the shareholders are acted upon.”

She concludes that

“for too long, Mr Kamani’s priorities have been allowed to dictate company policy.”

Perhaps Ms Levitt’s most striking finding is that:

“No member of the Board I interviewed mentioned that the responsibility for what is happening in the supply chain derived from the duty of the company’s officers to act in the best interests of all the shareholders.”

She also highlights

“the failure of the company to grasp that their responsibility for the factory workers does not derive from a nebulous ‘moral’ duty but from their obligations as officers of the company.”

I am going through this in so much detail because it beggars belief that the very people who denied and brushed aside this appalling exploitation are still in place and, far from suffering any penalties as a result of their failures, have instead given themselves a huge pay cheque. Hiring independent directors, however good they may be, will not solve fundamental governance weaknesses where boards are still in the power of an all-powerful founder chairman, as others have rightly said today.

Boohoo is still failing to take sufficient action and fobbing people off with warm words. It promised to implement all the recommendations of the Levitt review, but to take just one example, I have repeatedly asked Boohoo to send me its emergency plan for a second national lockdown and to spell out exactly how many people are now physically inspecting the factories in its supply chain—a key recommendation of the Levitt review—but I cannot get any clear answers. This is a serious question for the chief executive, the executive chair and other members of the Boohoo board. It is a serious question for Boohoo shareholders, too, because shareholders have a responsibility for the companies that they own, and fund managers should be held to account for their promises to champion responsible investing and environmental, social and governance—so-called ESG—issues.

Following publication of the Levitt review, I wrote to all of Boohoo’s major shareholders to ask what action they were taking as a result of what I think is one of the worst ESG scandals in modern UK history. I said that I did not think that those who had turned a blind eye to these problems over many years were the right people to take the company forward. To be clear, the executive chairman and the chief executive officer should be removed.

The response has so far been extremely disappointing, to say the least, save for the notable exception of that from Standard Life Aberdeen. Of those shareholders that have replied, Jupiter Fund Management has told me that it is in “close dialogue” with Boohoo. Fidelity Investments claims that it has had “positive engagement”. Invesco also says that it is “engaging”. And BlackRock says that it is

“following the situation with the company closely”.

None, however, has changed any of its actual investment decisions. That makes a total mockery of their promises and claims to champion responsible investment. This matters, because these are the companies that manage the retirement savings of millions of ordinary Britons.

In contrast, Standard Life Aberdeen has sold all the shares that it owned in Boohoo, because of the company’s failure to take proper action. It told me that it had over time made specific demands of the company to improve its supply chain practices and management. It met regularly with the company to monitor progress. It demanded an extension of the audits carried out on the company’s UK supply base and said that Boohoo should engage with industry-led supply chain initiatives. It said that its patience with the company’s response on these issues had been diminishing during all of last year, that that patience finally evaporated in the summer, when the allegations by The Sunday Times were published, and that that was why it took the decision to sell its remaining shares. Standard Life Aberdeen also told me that it voted against the appallingly hubristic pay package for the co-founders and senior executives when it was introduced at Boohoo’s 2019 annual general meeting.

Standard Life Aberdeen is to be applauded for its decisions, because fund managers need to champion responsible investing—not as the latest marketing gimmick, but because they intend to drive real change. Otherwise it is all just warm words and not worth the paper, or website, it is written on.

Let me turn finally to the role of Government. Although most of Ms Levitt’s review focuses on Boohoo, she makes it clear that inaction by Government has also contributed significantly to the problems of worker exploitation in the textile industry in Leicester. She concludes:

“Legislation is not merely a system for regulating society but also the mechanism by which society’s values and priorities are communicated. If the law is not enforced, this sends a clear message that the violations are not important and the people affected do not matter.”

I think Ms Levitt is right, yet over the last decade the very bodies responsible for tackling worker exploitation and enforcing workers’ rights have faced considerable budget cuts from this Government, which has significantly reduced their capacity for inspection and enforcement. For example, Her Majesty’s Revenue and Customs, responsible for enforcing the national minimum wage, has seen its budget cut by 17%, and the Health and Safety Executive has seen its budget cut by a staggering 46%. The HSE was also explicitly told by the Government to reduce its proactive inspections in the textile industry by a third, because Ministers wrongly considered this sector low risk. On top of this, Ministers have refused to implement recommendations from key reports such as the Environmental Audit Committee’s “Fixing fashion” report, which made some really important proposals, especially about improving supply chain transparency. The Government have also been far too slow in sorting out the mess of different regulatory bodies involved in this area.

Ministers proposed a new single enforcement body almost two years ago, but we have yet to see a response to the consultation on that important change, let alone the Government’s actual proposals. There are lots of important questions about this body that need to be answered: how much of a local presence it will have, how much it will engage with the local community and trade unions, what kind of sectoral expertise it will have, and what its enforcement powers will be. The Minister will know, as I met him to discuss this yesterday, that I think there is much that could be learned from the work being done by Leicester City Council as the Government develop their proposals for the single enforcement body.

Although local authorities have no powers to check on working conditions inside a building, enforce the minimum wage, or monitor the legality of the workforce, Leicester City Council has nevertheless been working hard to do what it can within the current framework and legislation. It has appointed a co-ordinator to bring the various national enforcement agencies together to improve intelligence sharing and enforcement—the very first post of its kind in the country. The city council is working closely with trade unions, local community and voluntary groups, the citizens advice bureau and Crimestoppers to raise awareness about the problems, better engage with employees, and give exploited workers the courage to speak out, because we know the fundamental problem is that many people are too scared to say what is really happening.

The council is also proactively helping the textile industry modernise by providing bespoke business advice, holding training sessions with factories and supporting businesses with nearly £600,000 of grant financing, for new equipment in particular. It is also investing £200,000 into setting up a new skills and training centre for the textile sector, and seeking investment and support from the industry and others.

Before I finish, I particularly want to emphasise to the Minister the importance of working with trade unions to support the positive changes we need. If we want greater openness and transparency, if we want a partnership between employers and employees to improve workplace safety and standards, and if we want all workers to have the courage and confidence to speak out, we must increase union representation in the textile industry. I hope that when the Minister speaks he will commit to working on these issues with trade unions such as Community and the GMB, because this is a critical issue for the future.

In conclusion, the responsibility for tackling worker exploitation in the textile industry—not just in Leicester but across the country—lies with the boards of textile companies and fashion retailers, with the shareholders of those companies and with the Government. Action is required by all three to end exploitation and ensure that not only Leicester’s but the entire country’s textile industry improves its standards and has an ethical, productive and sustainable future. I hope the Minister agrees, and look forward to hearing his response.

[Mr Philip Hollobone (in the Chair)]

The debate can last until 11.30 am.

Children’s Cardiac Surgery (Glenfield)

Debate between Liz Kendall and Philip Hollobone

Monday 22nd October 2012 Westminster Hall

[Liz Kendall]

We have all met many children, some of whom are now adults, and families who have received excellent care and support. It is important that we put their views forward strongly and that the best peer-reviewed and validated clinical evidence is considered in the new review.

As many hon. Members have said, Dr Palmer wrote to the former Secretary of State saying that he sharply opposes the use of his name for the proposed transfer of services from Leicester to Birmingham. A similar view is taken by leading international ECMO experts from the Extracorporeal Life Support Organisation, which also wrote to the former Secretary of State:

“We are united in our dismay. We are united in our dismay at the proposed move of ECMO services from the Glenfield programme in Leicester to elsewhere…The Glenfield program is clearly and objectively recognised as one of the finest ECMO programs in the world. Movement of an established unit such as Glenfield in the manner described will have profound negative consequences on the outcomes of patients needing ECMO. This move…is one clearly likely to produce results that will have a human toll in increased deaths.”

That is why the specific evidence on ECMO must be fully considered, including by the new review.

An issue raised by my hon. Friend the Member for Leicester South (Jonathan Ashworth) and several other hon. Members must also be considered by the new Independent Reconfiguration Panel: whether the assumptions about the level of cases remain based on the best available evidence. The Safe and Sustainable review looked at surgical activity data from the central cardiac audit database for 2002 to 2006—the latest evidence available at the time—which suggest that the number of cases for heart surgery would remain roughly stable over the next 20 years. New validated data, however, are now available for three more years—to 2010—showing a consistent rise in activity, suggesting that adult and paediatric activity will each increase by approximately 75 cases per year.

We also have new evidence from the Office for National Statistics about population growth, which comes from data published in October last year and indicates that there will be substantial increases in the number of nought to four-year-olds, in particular in the east midlands, the east of England and London. That causes real concern about whether Birmingham will be able to cope with all the extra cases that it will receive.

Birmingham’s case load will also increase because of the closure of Northern Ireland’s children’s heart surgery services. The Safe and Sustainable review reports an all-Ireland framework, with Northern Ireland cases going to Dublin, but that will take several years to establish and, in the meantime, a significant and increasing number of babies will continue to travel to Birmingham.

The Birmingham children’s hospital itself is concerned about whether it has the capacity to cope with all the extra cases that it will receive from a closing Glenfield, from the likely increase in surgical activity, from the increase in population, in particular among the nought to fours, and from the increase in cases coming from Northern Ireland. The hospital, I understand, has analysed the case load and produced an internal paper concluding that it would have to perform 1,000 cases a year, which is at the very limit of what the Safe and Sustainable review panel reported as a safe number for cases to be treated. I urge the IRP—rather than the Minister, if she cannot do anything—to look at whether that paper has been written and to assess all such evidence in its review.

Finally, like the previous Government, this Government rightly want changes to children’s heart surgery services so that they provide not only safe standards of care, but excellent, high-quality standards for every child in every part of the country. Just as they want that for children’s heart surgery services, they must want that for children’s ECMO services. It is not good enough to say that it is possible to move a service; we want to know whether it is desirable to move a service to get the very best outcomes.

Glenfield survival rates are 50% higher than any other unit’s in this country and internationally. It will take at least five and probably up to 10 years to redevelop the same quality of service. No one would take the best service in the country for children’s heart surgery and close and move it, so no one should do that for ECMO either.

The issue is of concern to my constituents and those of hon. Members from throughout the east midlands, and to families everywhere in the country. Such people include Clare Johnson, a constituent of my right hon. Friend the Member for Kingston upon Hull West and Hessle (Alan Johnson). She contacted my right hon. Friend to tell him about the experience of her son, Michael. Michael was born in July last year with severe meconium aspiration, which means that his lungs fill with a substance that makes it very difficult to breathe. His lungs haemorrhaged and his heart failed. The paediatric mobile ECMO service from Leicester came to collect him and transferred him to Glenfield. He was on the ECMO machine 24 hours a day for four days; when he came off it, his heart and lungs were working for themselves. Ms Johnson said:

“As soon as the team arrived to prepare him for transfer, their evident skill and professionalism gave us that very first glimmer of hope…The care we received was second to none.”

Ms Johnson also said that:

“although I am not the best person to point out facts and figures, I cannot help but pore over the evidence available and the main thing that strikes me is the ECMO survival rate”,

which is so much better. She said:

“Glenfield is the only unit to offer Mobile ECMO”—

the very service to save her son—and concludes:

“I understand that I probably sound like a Mother who is just wanting to support the unit who saved her baby’s life”

but:

“My beautiful baby boy Michael Martin Johnson died at 10.40 pm, 8 days after his birth and 3 hours after being transferred back to Hull from Leicester. He had a reaction to some medication he was given and died very suddenly and unexpectedly of a severe gastric perforation. A successful result will not bring my son back. But it WILL prevent other mothers from losing their child, as that IS the ultimate and inevitable result that stopping ECMO at Glenfield will have.”

Clare Johnson makes the case far more eloquently than I ever could. I hope that the IRP looks properly at Glenfield’s ECMO service and at the real benefits that it brings. The Minister has rightly said it is up to the IRP to consider the evidence, but it was the new Secretary of State who decided not to include ECMO as part of the review—that is what he says in his letter today—and that is a mistake, because the two services need to be looked at together. I ask the Minister to explain why the Secretary of State has explicitly excluded ECMO from the new review. That is the wrong decision and I hope that it will be changed.

[Mr Philip Hollobone (in the Chair)]

After the Minister has spoken, I will call Sir Edward Garnier to wind up the debate.