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

Lord Whitty Excerpts

Friday 8th July 2016 Lords Chamber

[Lord Whitty (Lab)]

My Lords, I strongly support this Bill and congratulate the noble Baroness on introducing it. As we know, modern slavery takes a number of forms: forced labour and domestic servitude; indentured labour; and sexual exploitation. The reality is that victims come in all walks of life and all sectors.

We were all taught at school that William Wilberforce abolished slavery but here in 2016, more than a century and a half later, we are still faced with products and services that come to us through our shops and daily lives which have in part been produced by what we now call modern slavery. The growing reliance on the internet and social media means that we should know what is happening all over the world, but still in the clothes shops and fashions, in the food we eat and even in our medical supplies there is a component that has been produced by what is, to call it by its proper name, slave labour and equivalent labour practices.

The Modern Slavery Act of last year was indeed a major step forward. I am sorry I could not play a more effective part in that Bill but I strongly supported it. It was a beacon of light shining on to a dark place. In many ways it put the UK at the forefront of nations attempting to deal with this problem. However, the commitments reflected in that Act need enforcement in the commercial sector and across the world if they are to be fully effective. While there is now a relatively high level of public consciousness, it is certainly not sufficient to rely on well-motivated consumers or the important consumer-led bodies and other organisations, some of which the noble Baroness referred to as supporters of this Bill, to enforce it. We have consumer organisations such as the Fairtrade Foundation and trade organisations such as the Ethical Trading Initiative. These are vital to public consciousness and have been vital in getting us this far—particularly in Britain and, with equivalent organisations, in Scandinavia. However, they need to be backed up by effective enforcement.

Enforcement comes in two forms: a legislative and direct regulatory form and an economic form through pressure on the supply chain from the most powerful point in the supply chain, which is usually the final commercial or governmental user. I will say a few words about regulatory enforcement in a moment but this Bill deals primarily with economic enforcement through the supply chain. That is why the original Section 54 of the Act required major commercial organisations of all kinds to report on the steps they have taken to try to ensure that their supply chains are as free as possible from dependence on any form of modern slavery. That could be slavery, trafficking or forced labour which occurred in this country. Frequently we forget that, but there have been some horrific cases in our courts and reports of what is happening in this very city and in the fields of our farming areas. The Act also covers abuse throughout the world.

Our supermarkets and clothes shops—Tesco and Primark as well as the more obviously ethical stores such as Waitrose and Marks & Spencer—now have an obligation to check their supply chains. That does not rely on outside pressure but is, as a result of the 2015 Act, a legal requirement on the retailer or final provider themselves. I am not claiming in any way, any more than the noble Baroness did, that this is fully effective. There are still many clothes in our shops and much food in our supermarkets that we have probably all bought even in the last week that is tainted by these practices. This Bill will further strengthen that requirement so that such companies are listed, their performance much more accessible and the requirement is more widely known.

At least there is already a clear obligation on such retailers and final providers, and campaigners and consumers can therefore hold them to account. However, it was a peculiarly strange omission from the original Act that an equivalent obligation and similar assurance do not apply when we use our GP or go to a hospital, attend university or schools, benefit from the protection of our Armed Forces or the police force, or when we walk by construction sites contracted by the Government. Yet all these contractors and procurers are in the very same markets most prone to abuse down the supply chain—the supply of mass apparel, food, furniture and construction. Indeed, during the passage of the Bill, the noble Baroness was assured by the Minister that public contracts would be dealt with in a different way. However, to my mind that has not been forthcoming.

Evidence for the need to include public procurement and contracting authorities in the requirement to vet their procedures comes from many sources. The need for public procurement to exclude from its supply chain organisations that have been clearly convicted of modern slavery and labour abuse is not even there. I particularly refer to evidence that came to me only yesterday from the British Medical Association. Other noble Lords may have seen that. I appreciate that the BMA is not necessarily the Government’s favourite organisation at this point but nevertheless it is a well-researched and effective report. It shows that in one quite large but obscure area—the procurement of surgical gloves—there are examples of severe labour abuses amounting effectively to forced and indentured labour, particularly in south-east Asia.

That BMA report on the working conditions surrounding the primary sector of the latex glove industry focused predominantly on Sri Lanka, Thailand and Malaysia. It is a damning insight into the living and working conditions of factory workers in those countries, with cases of severe exposure to safety hazards and retention of passports by the company so that people could in effect leave neither the company nor the country—it is mainly migrant workers who are employed. There is a long excerpt in the report from the examination of the situation in Sri Lanka, where the EPZ regions are designated by the Sri Lanka Government for special labour conditions. They are excluded from any of the labour standards that would apply in terms of ILO commitments in other regions of the country.

In terms of our procurement here in the UK, this area should already have been covered. NHS procurement rules and guidelines have, since 2009, been included in the code of conduct, which also includes a labour standards assurance scheme. However, it was due really only to BMA pressure that in December last year that assessment was applied to this trade in latex gloves. If that is one example, there must be myriad more examples in other areas of procurement by not only the NHS but also the major government contracting organisations both at local and national level. They really need to be included in the noble Baroness’s Bill, putting them on a par with commercial organisations.

Will the Minister put on record aspects of the other way in which we strengthen enforcement in this country—direct regulation? A Statement in June related to the extension of the role of the Gangmasters Licensing Authority, together with a changed name for that body. I have an interest in that field, having brought the GLA legislation through this House many years ago, but at that time—and since—its remit was limited. It has been made more limited by subsequent Governments. Both the coalition Government and this Government resisted extending the GLA remit from agriculture, fisheries and first-line food processing to other areas such as construction and catering where modern slavery practices are known to occur. The turnaround in extending the remit of the GLA is welcome and important but needs to be backed by resources and effective enforcement. In replying on the economic pressures on the supply chain, will the Minister also refer to what parallel steps are being taken by the Government on the GLA and by the Independent Anti-slavery Commissioner? What resources are being given to them? How will that more effectively close down some of the appalling practices of which we are all now aware? If the Minister is not in a position to do so today, will he please write to me and other noble Lords? Meanwhile, I strongly support the Bill.

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[The Advocate-General for Scotland (Lord Keen of Elie) (Con)]

My Lords, I am grateful to the noble Baroness, Lady Young, for introducing this Bill and this debate. This Government are determined to tackle modern slavery and ensure that UK supply chains are not driving demand for slavery around the world. That is why we included a world-leading transparency in supply chains provision in the Modern Slavery Act, and why we welcome suggestions for strengthening our approach.

The provision in the Act requires all commercial organisations carrying on business in the UK which supply goods or services and have a turnover of £36 million or more to set out the steps that they have taken to prevent modern slavery in their business and supply chains. This transparency will allow consumers, investors and civil society, and indeed commercial organisations, to hold businesses to account and drive a race to the top.

The first proposal in the Bill is to extend the transparency provision to include public sector organisations as defined by Regulation 2 of the Public Contracts Regulations 2015. The Government fully agree that the public sector must play a full part in increasing the transparency of supply chains. Work to achieve this is under way. Several major public sector procurers have already introduced anti-slavery measures in their standard procurement procedures. For example, the NHS standard terms and conditions for goods and services suppliers include conditions on labour standards, and the Department for Health and NHS Supply Chain have also developed a labour standards assurance system that encompasses issues of forced labour for auditing suppliers in high-risk categories.

We agree that such good practice should be used more widely. That is why we are taking action to ensure that information on slavery and trafficking statements informs future procurement decisions by the public sector. We are amending the cross-government procurement selection questionnaire so that large commercial organisations wanting to do business with government will be asked whether they are compliant with Section 54 of the Modern Slavery Act. This will enable contracting authorities in the public sector to decide whether to exclude the organisation from the procurement process. The new questionnaire will be in place later this year.

We are not, however, convinced of the merits of the proposal in the Bill which involves applying to the public sector a provision that was specifically designed with private sector organisations in mind. The public sector already has different kinds of transparency requirements and accountability to Parliament, which means that it is held to account in a different way from the private sector. Public authorities are also already legally required by Section 6 of the Human Rights Act to act compatibly with the European Convention on Human Rights, which incorporates Article 4 prohibiting slavery, servitude and compulsory labour. Public authorities can therefore be challenged under the 1998 Act for acting incompatibly with convention rights, which private sector organisations cannot, and there are other ways to make progress that do not require primary legislation.

The Bill would also require all organisations to include their statements in their annual report and accounts. This would be a departure from the current provision, under which the Government have made clear that businesses can include their transparency statement in another publication or report, as long as it is clearly marked as their slavery and human trafficking statement and there is a link directly to the statement in a prominent place on the organisation’s website. The existing approach was very much based on a consultation with businesses and NGOs and reflected their desire to avoid a one-size-fits-all rule that could be restrictive. We remain open to feedback about this, but we would prefer to assess the impact of the provision in its existing form before considering any changes to the guidance.

This Bill would also require the Secretary of State to publish a list of all applicable organisations covered by this legislation. This is an interesting proposition. The Government are committed to doing everything we can to amplify the value of information in the slavery and trafficking statements. We want consumers, businesses and civil society to make informed choices that reward companies that take action to eradicate slavery. In theory, publishing a list of the commercial organisations which are captured by the duty by dint of their operation in the UK and their annual turnover could help with this. In practice, producing such a list is likely to be difficult and resource-intensive and may, in any event, not require primary legislation. We are prepared to look at this, but at this time we believe that no legislative change is needed.

The Bill would make it mandatory for contracting authorities in the public sector to exclude an economic operator from a procurement process, if it was established that it should have complied with Section 54 but had not. It would also require the Secretary of State to publish guidance for those public contracting authorities on how to comply with this requirement and with Section 54. We agree with the objective of this provision but do not think that legislating for more guidance is necessary. First, contracting authorities can already exclude an economic operator which has failed to comply with Section 54 of the Act. This is provided for under Regulation 57(8)(a) of the Public Contracts Regulations 2015, which was referred to by the noble Baroness, Lady Hamwee. The regulation is not absolute, as she observed. Secondly, the Cabinet Office will later this month publish cross-government guidance on social, labour law and environmental aspects of the public procurement regulations. This will help public sector authorities decide when and how to exclude economic operators. This guidance will be issued via a Crown Commercial Service procurement policy note which is binding on central departments, their agencies and non-departmental public bodies and which is recommended for the wider public sector. Thirdly, as I mentioned earlier, we are already taking steps to encourage compliance with Section 54 by amending the cross-government procurement selection process. We are confident that these steps will achieve the desired outcome.

I shall now consider one or two particular questions raised by noble Lords. The noble Lord, Lord Whitty, acknowledged that the United Kingdom is at the forefront of this form of legislation. He suggested that it may not be enough for us to rely on consumers and consumer organisations. Over and above that, we rely more particularly on peer pressure. That was underlined in the consultation process that preceded the original Act. There is a desire, particularly on the part of larger businesses, to ensure that at an economic level they are not unfairly prejudiced by the unlawful and disgraceful conduct of potential competitors. Therefore peer pressure plays a part in this process.

The noble Lord referred to the strange omission of public authorities but, with respect, the legislation was designed to apply to the private sector. I pointed out the distinction that arises under the Human Rights Act. Under Section 6, all public authorities are bound by the terms of the convention. He also asked questions with regard to gangmasters and the Gangmasters Licensing Authority. As the noble Lord may recollect, the Government used the Immigration Act 2016 to extend the remit and powers of the GLA. It will be renamed the Gangmasters and Labour Abuse Authority, and its new mission will be to prevent, detect and investigate worker exploitation across the entire economy, which will result in more scrutiny of companies from a law enforcement agency which can examine their supply chains. I hope that meets his concerns about the position of the GLA in that context.

[Lord Whitty]

I recognised the extent of its remit and asked what resources were given to it and to the other bodies involved in that area. Will the Minister reply to me in writing if necessary?