My Lords, as the noble Lord, Lord Bates, said, this is the second of three amendments that consider supply chains. It is an issue that I flagged up at Second Reading. The amendment emerged from a meeting which I chaired in this building with many of the charities and non-governmental organisations involved in this question. I particularly thank the noble Baronesses, Lady Kennedy of Cradley and Lady Mobarik, and my noble and right reverend friend Lord Harries of Pentregarth, who are all signatories to the amendment. I also thank those Members of your Lordships’ House, some of whom are here this evening, who signed a letter to the Times last Saturday supporting the arguments outlined in the amendment—about 20 Members from all sides. On the same day, the Daily Telegraph published a letter signed by 19 of the leading charities and non-governmental organisations, also supporting the proposal.
Inevitably, we want in the amendment to take the opportunity, while legislation is before your Lordships’ House, to tackle the problem, not to leave it, as the Minister said, to a consultation and review process, which can seem like the long grass. The Government have every reason to be very proud of the Bill. I welcome the fact that they introduced Clause 51—Part 6—at a late stage in another place, but clearly it was not subject to all the pre-legislative scrutiny that everything else in the Bill received. There was some, but not much, and it was not considered in Committee in another place. Therefore, we have a particular duty, while these issues are before your Lordships’ House, to spend some time on them. There are 16 subsections in the amendment, so I hope that the patience of your Lordships’ House, even at this late stage in our deliberations on the Bill, will not be too exhausted as I try to describe why so many Members and organisations outside the House feel that they are
necessary. All the signatories of both letters I have mentioned welcome the inclusion of a new requirement for business to report on slavery and forced labour in their supply chains, but the provision must be strengthened if it is to drive real change in company supply chains.
8 pm
Part 6, and this amendment, should be read in the context of the International Labour Organization’s estimate that around 21 million men, women and children around the world are in a form of slavery, estimated to generate a profit of $150 billion every single year. Part 6 rightly recognises that we all have a responsibility—a point alluded to by the Minister in the earlier group of amendments—to encourage businesses to look deep into their supply chains to investigate the practices of their suppliers and subsidiaries and to then take action. That is why the Government have repeatedly emphasised that compliance with the transparency and supply chain measures will be driven by consumers, investors and campaigners.
As the noble Lord, Lord Rosser, said on the previous group of amendments, there is a temptation here simply to hope that it will be all right on the night. These amendments seek to provide real strength in putting into practice the sentiments which have been expressed by the Government. As currently drafted, neither the content of what is reported on, nor the location of the report are likely to produce the meaningful, accessible and comparable information that is so essential to take a proper view on how companies are tackling the risk of slavery in their supply chains. As it stands, the provisions will encourage superficial reporting, which is why the Ethical Trading Initiative, to which the Minister referred, the British Retail Consortium and many investors are demanding more specificity. Simply relying on follow-up guidance to fill gaps in the legislation is a doomed strategy, as only the leading companies are likely to pay heed to the guidance.
At present, there is no requirement on businesses to publicise what action they have taken to ensure that their supply and product chains are free from slavery. While some businesses are already taking positive action to address this issue, many clearly are not. I remind your Lordships that in 2013 a factory building collapse in Bangladesh killed more than 1,130 workers at one site, highlighting the life-threatening conditions faced by garment supply chain workers in low-cost sourcing countries. It is just one example of the gap between industry codes and the real situation on the ground. My noble friend Lord Hylton reminded your Lordships of other examples, such as kiln workers making bricks in inhuman conditions in Pakistan and children manufacturing matches in India. There is a growing public expectation that businesses should act ethically and take action to ensure that forced labour does not occur in their supply chains or business practices.
The Government’s own Modern Slavery Strategy recognises the importance of addressing slavery in supply chains. Paragraph 6.24 says that,
“if we want to ensure that the UK plays no part in perpetuating modern slavery we must ensure that consumers here are not unwittingly creating demand for modern slavery elsewhere”.
Paragraph 6.25 says:
“This will take a concerted, collaborative effort by Government and business, within the right regulatory framework”—
not consultations or reviews, but the right regulatory framework—
“We will ensure that businesses investigate and report on modern slavery, and then help them to stamp it out”.
Paragraph 6.27 says that,
“we are committed to introducing measures that specifically address modern slavery. We will use the Modern Slavery Bill to introduce a legal duty on all businesses above a certain turnover threshold to disclose each year the steps they have taken to ensure that modern slavery does not take place in their business or supply chains anywhere in the world”.
The strategy is right and the Government have articulated the need; the question is, does the legislation do it? Clearly, there is a real need for measures to tackle modern slavery in company supply chains. This is amply demonstrated by abuses and exploitation of workers in such places as the cotton mills of Tamil Nadu in India. The mills in that region supply high-street retailers such as C&A, Mothercare and Primark. The Flawed Fabrics report, published by the SOMO Centre for Research on Multinational Corporations and the India Committee of the Netherlands in October, details many examples of forced labour abuses.
I suspect that my noble and right reverend friend, if he is able to speak a little later, will probably mention the situation he has regularly raised about the Dalits in India and say how many of those in the untouchable caste are doubly exploited because of the way in which they are used as forced labour and become part of these supply chains. That can include physical confinement in the work location, psychological compulsion and false promises about types and terms of work. The SOMO report also details trafficking abuses such as recruitment by deceit and by abuse of vulnerability, exploitative working conditions, coercion and abuse of vulnerability in the workplace.
The report highlights the severe restrictions on freedom of movement. Women and girls are mostly forced to live in hostels within the factory grounds. Rooms are shared by up to 35 people and the facilities are very basic. Toilets and bathrooms are shared by 35 to 45 workers. A local NGO reports that during recruitment some families were even shown photographs of the swimming pools that workers would be able to use—needless to say, these swimming pools did not exist. In the face of such stories, the Bill, as drafted, would not be effective, for the following reasons.
First, there is insufficient content in the Bill to deliver on what the Government has promised and desires. Secondly, there is a real risk that the Bill will not result in this issue being given the attention it deserves at the top of a company’s decision-making hierarchy. The reality is that slavery and forced labour in supply chains will need to be on the agenda and priorities of boardrooms if real and lasting change is to be achieved: this is the desire of many companies. Thirdly, there is no effective mechanism by which the provision will be monitored and enforced. Fourthly, there is no penalty for non-compliance.
We should study with care the example of California’s Transparency in Supply Chains Act 2010. There is a great deal that we could learn from it. Indeed, this amendment seeks to build on the experience in California. Let me spell out the amendment’s provisions. Subsection (2) specifies a £60 million worldwide receipts threshold. This provides a consistent approach with the size and international nature of companies covered by the California Act, and is a similar provision to that which applies to companies operating in that state. Companies have expressed a desire for parity with California around the threshold level here in the United Kingdom. It also recognises the reality that large companies have the resources to do the initial heavy lifting, as it were. This experience will then be shared across business sectors and, over time, have application in smaller companies. Effective legislation will swiftly work its way down the procurement and subcontracting chain.
Subsection (3) introduces the term “group undertaking”, which allows for a definable aggregation of turnover. Subsection (4) proposes a modification of the Government’s wording, bearing in mind the reality of current corporate reporting and accountability mechanisms. The amendment requires a statement setting out the steps the organisation has taken to identify and address slavery and human trafficking in any of its supply chains or parts of its own business. It is vital to have minimum disclosure measures in the Bill because of the lack of transparency in many of the organisations which the requirement is designed to cover. Significantly, it is the business world which is calling for these minimum measures. I suspect that we will hear from the noble Baroness, Lady Mobarik, on that specific point. The Ethical Trading Initiative and the British Retail Consortium, as I have already explained, support the principles that underpin this amendment. The amendment encourages companies to identify the process they have gone through in identifying and addressing slavery in their supply chains. Subsection (5)(f) provides flexibility and allows for further measures to be specified by order as required.
Subsection (6) addresses this by requiring companies to publish statements on their website and, crucially, to include within their directors’ report the name of the responsible director and a fair summary and the web address of the full statement. Subsection (6)(c) will help to propel responsibility for tackling slavery in supply chains into the boardroom, so that it is not just delegated to an employee charged with the remit of corporate social responsibility. Subsection (7) makes provision for organisations that do not have websites.
Subsection (8) proposes a centrally maintained website which will assist with monitoring of compliance and public accountability, with reduced costs to government through self-uploading of statements by companies. Subsection (11) is important and relates to enforcement of the requirement. As we heard during the debate on Amendments 67ZC and 68ZA, in the name of my noble and learned friend Lady Butler-Sloss, there is a strong feeling that the commissioner should have an oversight and monitoring role in relation to supply chains. In fact, the commissioner-designate himself has already said as much, as reported in the Financial Times on 17 November. He said:
“Once they know they are being monitored … they will want to have clean supply chains … If they fail they will be exposed—and no company in the world wants to be shown as employing slaves”.
Last Sunday, 7 December, the Sunday Times reported that Nigerian boys are being lured to England with promises of riches from playing football in the Premier League but are being forced into slavery once they arrive. The commissioner-designate immediately said that he would travel to Nigeria to investigate the claim. The issue was raised by John Onaiyekan, the Archbishop of Abuja, at an anti-trafficking conference in London hosted by Cardinal Vincent Nichols, the head of the Catholic Church in England and Wales. It is clear that each of the specified organisations in Clause 11 may come across modern slavery issues, and it is important for there to be a direct enforcement route for any of them.
Clause 12 proposes a new criminal offence without which the measure would be completely toothless. Clause 15 provides for the requirement to produce slavery and trafficking statements to be reviewed three years after it comes into force, an issue that we will return to a little later in terms of post-legislative scrutiny. In Clause 16, there are a number of necessary definitions, most of which are existing government definitions. The definition of supply chains is new and would certainly benefit from discussion in your Lordships’ House.
Amendment 98 has the support of the business community. The Ethical Trading Initiative and the British Retail Consortium, which between them represent many of the companies that would be caught by the requirement, have published a briefing note on the Bill. At Second Reading, I mentioned the support of Rathbones, which holds £96 billion-worth of investments. It wants an amendment like this in the Bill because it says that it would better safeguard its investors and mean that it would be far easier to effectively enforce the sentiments in the Bill. In calling for the anti-slavery commissioner to be responsible for monitoring compliance with the reporting requirement, the legislation would set clear minimum criteria for reporting and specify the penalty for non-compliance, among other things.
The amendment also has the support of a wide coalition of civil society organisations that have been working on this issue and which include corporate accountability, fair trade, development and anti-slavery groups, as shown by their letter to the Daily Telegraph on Saturday. Finally, it also commands support from all sides of the House. I therefore hope that the Minister is able to listen to and reflect on this consensus, and that between now and Report there will be a chance to consider this part of the Bill further, as the noble Lord, Lord Rosser, was pressing in an earlier group of amendments. I have already spoken to the Leader of the Opposition, the noble Baroness, Lady Royall, and we have agreed that we will bring back the coalition of groups which came into the first meeting here. I hope that that may be an opportunity for the Minister to meet them and hear their arguments. I beg to move.