Consideration of Bill, as amended in the Public Bill Committee
New Clause 11
“Transparency in supply chains etc
‘(1) A commercial organisation within subsection (2) must prepare a slavery and human trafficking statement for each financial year of the organisation.
(2) A commercial organisation is within this subsection if it—
(a) supplies goods or services, and
(b) has a total turnover of not less than an amount prescribed by regulations made by the Secretary of State.
(3) For the purposes of subsection (2)(b), an organisation’s total turnover is to be determined in accordance with regulations made by the Secretary of State.
(4) A slavery and human trafficking statement for a financial year is—
(a) a statement of the steps the organisation has taken during the financial year to ensure that slavery and human trafficking is not taking place—
(i) in any of its supply chains, and
(ii) in any part of its own business, or
(b) a statement that the organisation has taken no such steps.
(5) If the organisation has a website, it must—
(a) publish the slavery and human trafficking statement on that website, and
(b) include a link to the slavery and human trafficking statement in a prominent place on that website’s homepage.
(6) If the organisation does not have a website, it must provide a copy of the slavery and human trafficking statement to anyone who makes a written request for one, and must do so before the end of the period of 30 days beginning with the day on which the request is received.
(7) The Secretary of State—
(a) may issue guidance about the duties imposed on commercial organisations by this section;
(b) must publish any such guidance in a way the Secretary of State considers appropriate.
(8) The guidance may in particular include guidance about the kind of information which may be included in a slavery and human trafficking statement.
(9) The duties imposed on commercial organisations by this section are enforceable by the Secretary of State bringing civil proceedings in the High Court for an injunction or, in Scotland, for specific performance of a statutory duty under section 45 of the Court of Session Act 1988.
(10) For the purposes of this section—
“commercial organisation” means—
(a) a body corporate (wherever incorporated) which carries on a business, or part of a business, in any part of the United Kingdom, or(b) a partnership (wherever formed) which carries on a business, or part of a business, in any part of the United Kingdom,and for this purpose “business” includes a trade or profession;
(a) a partnership within the Partnership Act 1890,(b) a limited partnership registered under the Limited Partnerships Act 1907, or(c) a firm, or an entity of a similar character, formed under the law of a country outside the United Kingdom;
“slavery and human trafficking” means—
(a) conduct which constitutes an offence under any of the following—(b) conduct which would constitute an offence in a part of the United Kingdom under any of those provisions if the conduct took place in that part of the United Kingdom.”
Brought up, and read the First time.
This New Clause requires businesses over a certain size to disclose annually what steps they have taken to ensure that slavery or human trafficking is not taking place in any of their supply chains or their own business through a statement published on their website, if they have one
With this it will be convenient to discuss the following:
(a) make regulations under section 416(4) of the Companies Act 2006 (c. 46) requiring the directors’ report of a company to contain such information as may be specified in the regulations about modern slavery and forced labour in the supply chain for which the company is responsible, or
(b) lay before Parliament a report explaining why no such regulations have been made.
(2) Regulations made under section (1)(a) must be in force in relation to quoted companies by
(3) Subsection (1)(a) is complied with if regulations are made containing provision in relation to the company’s reporting of work in the following areas—
(a) accountability for tackling modern slavery and forced labour, including policy commitments, resourcing and actions to exercise due diligence;
(b) investigation, monitoring and auditing of modern slavery and forced labour risks in the UK and throughout their global supply chains;
(c) support and access to remedy for victims of forced labour and modern slavery; and
(d) training of staff and suppliers, access to expertise and advice.
(4) No regulations made under this section shall apply to small companies as defined by section 381 of the Companies Act 2006 (c. 46).”
New clause 15—Legal liability for the beneficiaries of slavery—
‘(1) The Secretary of State shall within six months of this Act coming into force bring forward regulations to ensure that a person benefiting from an offence under section 1 or 2 of this Act committed by a third party shall have committed an offence where—
(a) the third party acted for that person’s benefit; and
(b) their lack of supervision or control made possible for committing of the offence by the third party.
(2) Regulations under subsection (1) shall not be made unless a draft has been laid before and approved by both Houses of Parliament.”
This new Clause requires the Secretary of State to bring forward measures along the lines set out in EU Directive 2011/36/EU on preventing trafficking in human beings.
New clause 14—Ban on importation of goods produced by slavery or forced labour—
‘(1) The Secretary of State shall have the power to prohibit the import at any point of entry to the United Kingdom of any good, ware, article, or product mined, produced, or manufactured wholly or in part in any foreign country that can be demonstrably shown to have been produced by slavery, forced labour, child labour or with the involvement of human trafficking.
(2) The Secretary of State shall—
(a) prescribe such regulations as may be necessary for the enforcement of this provision;
(b) co-ordinate with and issue guidance to the Treasury, HMRC, devolved authorities and any other relevant public authority in relation to the exercise by them of their powers and responsibilities under this Clause; and
(c) have a duty to publish and maintain information on banned goods including a publicly available list of products which there is a reasonable basis to believe might have been mined, produced, or manufactured in the circumstances described in section (1).
(3) The Secretary of State shall establish a process whereby a petition can be made by any person, public authority or organisation who has reason to believe that goods produced in the circumstances in section (1) are being or are likely to be imported into the UK to communicate theses concerns to the relevant authority. Every such communication shall contain—
(a) a full statement of reasons for the claim;
(b) a detailed description or example of the product; and
(c) all relevant information regarding the production of the good.”
This would allow for the banning of the import of any product produced by slavery, convict, forced or indentured labour, including child labour.
Government amendment 62.
It is a pleasure to open this important debate. Modern slavery in supply chains is an issue that this Government take extremely seriously and have been considering very closely for some time. Tackling modern slavery is not only about catching the perpetrators; it is about making sure that we as consumers and businesses do not inadvertently fuel the demand for slave labour. We do not want businesses in the UK to have any connection to these abhorrent crimes, and UK consumers should not be put in the position where they inadvertently buy goods that could have been produced by individuals who are abused and enslaved.
The Government have been listening carefully to the views of NGOs, businesses and parliamentarians on this issue. I know that many right hon. and hon. Members here today have been campaigning on it for a long time, and their contributions and insight have been invaluable in developing our thinking. I would particularly like to thank the pre-legislative scrutiny Committee on the draft Modern Slavery Bill, who collected such valuable evidence, and the chair of the Committee, Mr Field, for his leadership. I would also like to thank the hon. Members for Slough
The Government have always been committed to encouraging businesses to take action on modern slavery, but I and the Home Secretary wanted to make sure that any further legislative changes were of real value and would not confuse existing arrangements. Having considered carefully the evidence and calls for change, I believe that we can improve the legislative framework further to encourage business to take action. That is why I am extremely pleased that we have brought forward new clause 11, which will require organisations carrying on a business in the UK above a certain size threshold to disclose each year what they have done to ensure that there is no modern slavery in their supply chains or their organisation. Once businesses are required to disclose what they are doing to tackle modern slavery, consumers, shareholders and campaigners will have a better understanding of what action each business is taking, and can call for more action if they think more is needed.
I thank the right hon. Gentleman for his questions. Later in my remarks I will come to how we envisage the provision working. I hope that will address his concerns.
Many businesses are already taking steps to eliminate modern slavery. Once it is clear what activity major businesses are undertaking, we expect that public pressure and competition between businesses will encourage those who have not taken decisive steps to do so. Introducing this measure is an important step, and that is why we want to get it right. The provision does not specify the size of business on the face of the Bill. That is because we genuinely want to listen to businesses and stakeholders about the best possible approach and we will formally consult on the threshold level.
Our thoughts are that this provision should apply to large companies in the first instance. We will consult fully on the threshold and then set the threshold through regulations subject to the affirmative procedure, which will ensure that Parliament has the final say on the initial threshold, and can subsequently review and amend it over time, if required. We will also produce statutory guidance to accompany this provision, setting out the kinds of information that might be included in a disclosure, so that companies understand and have the support they need to comply. Again, we will consult on what information should be in the guidance, working with businesses and other interested parties so that they have a good understanding of what information might be used to comply with the disclosure requirement.
Like Mr Field, I am grateful that the measure is being included in the Bill. Can my hon. Friend give us an idea of the time scale involved in the consultations and when we might see the resulting legislation?
My right hon. Friend deserves credit for campaigning tirelessly on this and other issues related to modern slavery. I will come on later to how we envisage the process working. We are considering an appropriate timetable. As he will appreciate, we have to get the balance right between letting both Houses have their say and the need to make progress.
I look forward to hearing further details. We are all aware that over the weekend, for example, there was a furore about T-shirts. That emphasises that many companies think they are free of slavery, but they are not. We must sure that we get on with the measure, because it is important.
I take my right hon. Friend’s comments and will ensure that they are considered in the process. He is right that one of the difficulties and one of the reasons that we have considered the matter carefully is that many businesses are trying hard to comply, but we need to help them and support them to do so. That is why it was vital that we spent time consulting businesses to make sure that we came up with an effective approach that would make a difference.
The Minister has not spelled out any dates. The matter has gone through the Joint Committee, it has been debated and there have been various hearings. New clause 11 says that the Secretary of State “may issue guidance”. What we are not getting is any sense of the operational requirements on a company such as Tesco, which was benefiting from slave labour in the fishing industry in Thailand. What would companies be required to do operationally under this guidance?
I will come, as I said, to how we envisage the measure working. My hon. Friend reflects exactly the balance that we are trying to achieve between getting on as quickly as possible and letting Parliament have its say to make sure that we reflect what Parliament wishes in this respect.
The statutory guidance will only be guidance. We will not tell businesses what a disclosure must include, and we fully expect disclosures to differ from company to company, which is why the Bill does not specify what information a disclosure must contain. Businesses will be at different levels of maturity and will work in very different sectors, so what is applicable to one might not be applicable to others. We therefore believe that well-constructed guidance is the best approach.
In developing that provision, we looked carefully at the California Transparency in Supply Chains Act 2010, which is often cited as the first Act to address transparency issues. We recognised that any measure seeking to address the issue must create a level playing field, which is why we decided not to follow the amendment to the Companies Act 2006 proposed by the pre-legislative scrutiny Committee. The duty in that Act applies only to public limited companies. Our measure will require all companies over a certain size to disclose what they are doing to ensure that there is no slavery in their supply chains.
My hon. Friend refers to the proposed amendment to the Companies Act. Does she accept that when Parliament put forward a human rights disclosure requirement, it was plainly the intention that it should also include supply chains?
My hon. Friend, who was such a committed member of the Public Bill Committee, makes an important point. The Government have already legislated to require companies to disclose in their annual reports under the Companies Act that they respect human rights throughout their business. We wanted to ensure that there was a further requirement on slavery, so we ensured that there was full transparency on slavery in supply chains in addition to the requirement that we have already included in the Companies Act.
I take the Minister’s point about the Government’s approach being superior to our proposal to amend the Companies Act. One of the advantages of her approach is that the proposed legislation will cover those companies that are large but are owned offshore. We want to bring them within the ambit of the Act, because they are really important traders in this country.
The right hon. Gentleman makes exactly the right point. This is about ensuring that any company doing business in the UK makes transparent disclosures on the action it has taken on slavery in its supply chains. We want UK consumers to understand what actions have been taken by the businesses they transact with so that they can then put pressure on them if they feel that not enough is being doing. The Government will be able to help those companies through the guidance we issue on the action they may take that would give consumers the reassurance they need. We have also improved on the California model by capturing any commercial organisation that produces not only goods but services.
We are also looking at public sector procurement, recognising that modern slavery could happen anywhere. All public sector suppliers are already required to comply with relevant human rights and employment law, and EU procurement rules require contracting authorities to exclude suppliers that have been convicted of certain offences. Social responsibility information is also sought annually from Government suppliers, including details of the steps taken and planned by suppliers in the areas of ethical procurement and supply chain management.
I will now turn to new clause 5, tabled by Opposition Front Benchers, which would require the Secretary of State to make regulations under section 416(4) of the Companies Act 2006 so that quoted companies and certain large private companies are required to include in their directors’ reports information relating to modern slavery and forced labour in the supply chain. It is fair to say that we are all trying to achieve the same aim—ensuring that the supply chains of UK businesses are free from slave labour—but the ways in which we are seeking to do that may well differ. In considering this important issue, we have looked at a number of approaches, including amending the Companies Act and, in particular, the Companies Act amendment proposed by the pre-legislative scrutiny Committee.
I believe that introducing a specific provision in the Modern Slavery Bill, rather than in the Companies Act, sends out a clear signal that the UK will not tolerate any form of modern slavery. It also explicitly raises the profile of the issue by ensuring that the provisions are front and centre of what the Bill and this Government are trying to achieve: to stamp out modern slavery in all its forms. I think that all of us in this House are trying to achieve that. Those who disclose little or no action risk their reputation and, ultimately, their profits.
New clause 14, tabled by Mark Durkan—he, too, served on the Public Bill Committee—would ban the import of any product produced by slavery, forced or child labour or human trafficking. As I have said, I believe that slavery in all its forms is abhorrent. The provisions we have brought forward to increase transparency in supply chains are both effective and proportionate. It would simply not be feasible for UK agencies to police the import of goods on the basis of whether they had been produced using slave labour. We need those trading with companies in other jurisdictions to apply due diligence and take decisive action where they believe that slave labour is being used. Waiting until the point when products are being imported into the UK is simply too late. That is why it is for businesses to take action to check their supply chains and for the Government to influence and encourage other Governments to do more, such as by improving the application of their employment laws or their approach to human rights issues.
I thank the Minister for working so hard to introduce new clause 11, which I very much welcome. Will she cover the point raised in an earlier intervention about the role of the anti-slavery commissioner? As she will know, the terms of reference were discussed in Committee. It would be useful to know whether the Government think that the commissioner’s remit will include looking at company reports and assessing how effective they are.
I thank my right hon. Friend for his comments and for all his work, not only in the Public Bill Committee but in the pre-legislative scrutiny Committee—he has truly lived this issue for most of this year, so I know how committed he is. I think that policing the measure is a matter for us all. In particular, the non-governmental organisations that work on victim protection—I discussed this with them last week—have such an important role to play in bringing to our attention those companies that they believe are not doing the compliance and disclosure that we all expect. We will move on to the specifics of the anti-slavery commissioner’s role later in the debate. My emphasis for the commissioner is on identifying victims and then ensuring that we get prosecutions in order to protect victims. The role is not so much about policing the supply chain measure. Obviously, as the commissioner’s role develops, we may see new issues come to the fore.
I commend my hon. Friend for listening to Members on both sides of the House regarding the supply chain issue and bringing forward this new clause. Does she agree that the strongest policing of the issue will come from the large companies at the head of supply chains, because they have the infrastructure really to do due diligence and stamp out slavery down the line? The proportionate way in which she is introducing this, with company size being a factor, is one of the strongest signals we could possibly send to the wider world that we want no part of it in our supply chains.
I thank my right hon. Friend for her comments. She, too, was a member of the pre-legislative scrutiny Committee—there is definitely great experience and knowledge of the issue in the Chamber today. Her work on the issue has been of great help to the Government. She is right that this is about the large businesses. When the Government discussed how best to secure this, it was the large businesses that were keen to see the level playing field, with everyone crossing the line together. She is absolutely right.
The Minister is being very generous in giving way. This whole measure can be seen not as a burden for businesses, but as an empowering measure, because all responsible businesses will be able to see how they can root out and eradicate slavery. Is there a way in which we could move on in the timing of this measure and on enforcement by ensuring that everyone can see those businesses that are disclosing and complying, and by shaming those that are not? We could do that straight away on the website. Perhaps the anti-slavery commissioner could have their own portal to allow that to be communicated so that we could name and shame in an easy and accountable way.
My hon. Friend is right to say that this process does not need to wait for the legislation to come in. Businesses can start to make these disclosures now; there is nothing to stop them doing that. The point of the Bill is to make sure that there is a level playing field and that all are crossing the line together. He makes some very interesting suggestions that I will reflect on.
Will not successful disclosures involve some companies that, having found they are guilty of having slavery in the supply chain, rather than just sacking the suppliers, work with them on paying the workers proper wages? I would not want this measure to perpetuate poverty by pushing slavery further underground. If the public are to take a really rounded view on these reports, they should praise companies that find they are using slave labour and then go on to say what they are doing about it.
The right hon. Gentleman is absolutely right. This is about getting transparency in supply chains. On the very first day I started as a Minister, the first thing I was lobbied on was transparency in supply chains, and it became clear that this is all about finding out what is going on—shining a light. As he says, there may well be slavery within these supply chains, and if so action can be taken to deal with that.
I would add that in my experience of meeting Governments overseas where there may be concerns about human rights abuses, one of the strongest and most powerful tools to convince those Governments that they need to take action is that their businesses will not be able to trade with businesses here in Britain because we expect to be sure that there is no slavery in the supply chain, that human rights are not being abused through the supply chain, and that when consumers buy goods in Britain they can be confident that all action that possibly can have been taken has been taken to eradicate these practices from the supply chain. That is what transparency does—it shines that light and gives that clarity to the consumer.
New clause 15, tabled by the hon. Member for Foyle, seeks to require the Secretary of State to lay regulations to ensure that individuals who have benefited from modern slavery that has been perpetrated by a third party are criminally liable where their lack of supervision made the modern slavery offence possible. We do of course want business to take action to eliminate modern slavery from supply chains, and, as we have discussed, the Government are bringing forward a legislative measure to achieve this. However, I am not persuaded that a potentially very broad criminal liability in this area is the best approach. I want these provisions to drive a change in behaviour. That is why I firmly believe that the Government’s amendment to introduce a bespoke provision into the Bill is the right one. As I said, it goes much wider than the provisions in the California Act by including all sectors, not just retail and manufacturing, and the provision of services, as well as goods, but it does so in a way that does not create undue burdens for business.
I fully acknowledge the good intentions behind right hon. and hon. Members’ amendments. However, in the light of discussions and the work that the Government have undertaken in this area, and the effective provision that we are proposing today, I hope that they will feel able to withdraw them.
I rise to welcome the Government’s new clause 11 and to speak to new clause 5, which stands in my name and the names of other right hon. and hon. Members. It is very good news that the Government have finally moved on this matter in the final stages of the Bill. Not including supply chains was the single biggest omission from the draft Bill and the Bill introduced to this House, and it is good to see that this important concession has been secured from the Government.
I congratulate all those who have campaigned on this issue, including my hon. Friends the Members for Linlithgow and East Falkirk (Michael Connarty), for Slough (Fiona Mactaggart) and for Birkenhead (Mr Field), and, on the Government Benches, the right hon. Members for Uxbridge and South Ruislip (Sir John Randall) and for Meriden (Mrs Spelman). Mark Durkan has tabled two new clauses that seek to extend the responsibilities of UK companies towards those who work in the supply chains, including compensation for victims and a ban on the importation of products produced using slavery.
Outside this House, a huge number of groups have also campaigned on the issue. I pay particular tribute to the Walk Free Foundation, the Ethical Trading Initiative, and the British Retail Consortium. I would like personally to thank all the groups and companies that I have met in order to inform Labour’s position, including Next, Primark, the Co-operative Group, Focus On Labour Exploitation, and Amnesty International.
Including supply chains in this Bill is the right thing to do. We cannot be serious about tackling slavery in the United Kingdom if we are prepared to accept products made using slave labour being sold on our high streets or commissioned by our companies. There has been an increasing awareness that slavery and forced labour are increasingly linked to the production of goods for major UK companies. We saw the collapse of the Rana Plaza factory where, sadly, 1,200 people lost their lives, many of whom were making clothes for UK stores. We saw the newspaper story by Felicity Lawrence—she won awards for it—about the prawn fishermen who were held in a lifetime of slavery reinforced by routine murder, having to watch individuals being tied to masts between boats and torn apart. We know that those prawns were being sold to Tesco, the Co-op and Aldi in the United Kingdom. We also know of small children who have been paid pennies a day to sew sequins on to children’s clothes.
The strength of feeling about dealing with such examples is very high. Eighty-four per cent. of the UK public want legislation on this, and so do the overwhelming majority of companies. For far too long, it was just the Government who were holding up progress. While most large retailers are implementing policies to tackle the issue, it is hard to see tangible progress, and hard for consumers to judge between companies. We want to introduce mandatory standards for reporting to force companies to adopt standard procedures. It is important to stress that we want to support British businesses that are acting to create the level playing field that the Minister mentioned. This is not just about forcing companies to act, but helping them to act.
One thing that has become clear to me in looking at this issue is how complicated the supply chains for UK companies are. It is hugely complex for UK companies to inspect their suppliers. Even the best practice in auditing is not foolproof. As the right hon. Member for Uxbridge and South Ruislip said, we saw at the weekend the story about Whistles and the Fawcett Society T-shirts. I very much hope that The Mail on Sunday, which took such an interest in this area, will be campaigning hard to make sure that it talks about getting supply chains into the Bill and supports it as a very important piece of legislation.
The Bill is about changing market conditions and creating market incentives for suppliers to show themselves to be fair. That would mean suppliers being able to show that they are meeting International Labour Organisation standards, backed up by kite-marking and an inspection regime. This is hard for UK companies to implement individually, but collective action could make it the norm. The Bribery Act 2010 has been hailed for reducing the burden on businesses by creating consistent standards and an industry to audit what is happening.
The Opposition’s proposal in new clause 5 builds on the recommendations of the Joint Committee and is modelled on section 85 of the Climate Change Act 2008. It does not bring in regulations directly; rather, it requires the Secretary of State to do so using an enabling power in the Companies Act 2006. While the regulations are in secondary legislation, the new clause lays out the framework for how they should work. I want to emphasise how our new clause addresses the three key issues in making a workable change to the Bill.
The first issue is coverage. Our new clause 5 is explicit that this must cover large private companies and quoted companies. Of course, that may exclude some international firms working in the UK, but it is important to know that most will have UK subsidiaries that will be covered by the law.
The second issue is comparability. I am concerned that the Minister seemed to say that she did not think that this issue is particularly important. Consumers, non-governmental organisations and investors must be able to look at two reports and make direct comparisons between companies. Any large company could write a report laying out work in this area, but we need regulation to be specific enough to ensure that we can compare like with like.
Our new clause demands regulation under four headings, which were drafted in coalition with the Ethical Trading Initiative. The first is
“accountability for tackling modern slavery and forced labour, including policy commitments, resourcing and actions to exercise due diligence”.
The second is
“investigation, monitoring and auditing of modern slavery and forced labour risks in the UK and throughout their global supply chains”.
The third is
“support and access to remedy for victims of forced labour and modern slavery”.
The fourth heading, which fits in with what my right hon. Friend the Member for Birkenhead has said, centres on
“training of staff and suppliers,” giving them access to expertise and advice.
Finally, our new clause deals with the issue of enforcement by placing the regulations within the framework of the Companies Act 2006. That is absolutely key, because if we look at what has happened in California—the Minister referred to the Californian model—we will note that it has been very hard to see which companies have complied and how they have done so. Proper enforcement is not just about companies writing a report; it is about companies complying with the reporting requirements. As we have seen in California, without an enforcement procedure, companies are able to interpret the reporting requirements however they see fit.
Placing the reporting requirement in the Companies Act deals with that. There is already a range of personal and corporate enforcement procedures. Directors would have individual fiduciary duties to ensure the accuracy of the report and those involved in the compiling of the report, including accountants and lawyers, would also be under a professional duty to ensure the report is not misleading.
Moreover, this is a report that would be used by investors, not just consumers, so it could put pressure on companies from both sides. If firm x produces a report saying it has done a and b to eradicate slavery and then a newspaper shows that to be incorrect, investors would have the right to take action against the firm for the resulting fall in share prices. That seems to me to be one of the biggest incentives we could provide in pursuing this objective.
We support the Government’s new clause 11, but the details of the three points I have just set out are to be left to secondary legislation.
The hon. Lady is making powerful points about what teeth the guidance will have. Does she think that there are lessons to be drawn from when this House debated the Financial Services and Markets Act 2000, when it was believed that the behaviour of the banks would be influenced by reputational damage, a belief that was found to be false in the light of their future conduct? There seems to be a reliance on the idea that guidance in itself will have a deterrent effect on major corporations, but that has to be backed up with some teeth.
I could not agree more. That is why it was important that I set out why new clause 5 deals in detail with the kind of issues that need to be clearly addressed in secondary legislation. I am grateful for the hon. Gentleman’s intervention.
Just to recap: we support the Government’s new clause 11. Obviously, we want to wait and see what happens with the secondary legislation as it is introduced. It is surprising that the Government have gone against the Joint Committee’s recommendation and the evidence presented by several large companies arguing against stand-alone regulation, although the Government have now seen fit to pursue that. That poses particular problems for enforcement. I am sure the Minister has seen the briefing from the coalition of groups campaigning for change, which states:
“Monitoring of compliance with the provision needs to be taken seriously as this will be central to its success in driving change. We are concerned that the provision is currently weak on how monitoring and enforcement will be undertaken. The Government’s approach relies on a civil enforcement procedure by the Secretary of State, which means that in reality the measure would be unlikely to deter any businesses other than those who would in any case seek to comply on a voluntary basis.”
I thank the hon. Lady for giving way—I hope she will be able to wet her whistle while I speak. Does she agree that the monitoring process could make a start through the anti-slavery commissioner taking a more active role in observing and supervising company reports?
The right hon. Gentleman makes a very important point. Time is limited this afternoon, but I hope there will more discussion in the other place about extending the role of the independent anti-slavery commissioner to do exactly what the right hon. Gentleman has said.
In the Minister’s closing remarks, I want assurances that whatever is proposed will apply to all large companies; that the regulations will be detailed enough to allow comparability; and that there will be a clear enforcement mechanism so that consumers, investors and NGOs can see who has complied and know that they can trust the report they have read.
It is a pleasure to contribute to this debate and, in particular, to support the principles in new clause 11. Some good points have also been made about new clause 5. As was evident on Second Reading, the House has coalesced around the principle of providing transparency of supply chains. It has taken a while to get there. I pay particular tribute to the Minister for the work she has done and the leadership she has shown in bringing together the Government in this way. That takes some doing.
The importance of the integrity of basic human rights in supply chains has not been recognised until now, unlike—shamefully, in some ways—the integrity of products in supply chains of hardwood, tobacco and pharma- ceuticals. Today represents a big and important step change in recognising the integrity of those human rights.
New clause 11 covers the principles of accountability and reporting, which are also addressed by new clause 5. We can deal with the qualms and queasiness surrounding burdens by saying that any responsible business will welcome new clause 11 as an empowering measure that can help them disclose any issues and root out slavery.
I accept the point made by Mr Field. When I said that we should name and shame, I did not mean that this is about good guys and bad guys. This is about disclosure. We should take a rounded approach. There needs to be full, transparent disclosure all the way along the chain so that everyone can shine a light to see what is happening and then deal with it appropriately. By shining that light all the way down and up, the most responsible businesses will expose some things that they are not happy about. They will then be able to say, robustly and confidently, “We’ve done that.” We should ensure disclosure by naming those who are disclosing in a proper and full way, and shaming those who are not disclosing, which is an issue of concern.
Once this measure is on the statute book, compliance and enforcement must be effective. From a light-touch point of view, I agree that transparency and accountability can happen through individual company websites, but we need to go further and enable all concerned to access information centrally. That is why I suggested in an intervention that the independent anti-slavery commissioner should have a portal. The responsibility for maintaining it would not be the commissioner’s alone, but people would be able to look at that independent website and see the names of those companies that have complied with the manner, spirit and intention of the statutory guidance. That is important and I think it would help. Given the timing involved with this measure and the need to get the office of the anti-slavery commissioner up and running, it is important that we make progress, possibly through the Home Office website, ahead of any parliamentary processes, including secondary legislation, and give people the opportunity to show that they are very much on the side of full disclosure.
I must say that I have one or two concerns. I am concerned about whether new clause 11 may be unduly complex, particularly in relation to enforcement via civil enforcement injunctions. Are such injunctions to expose the fact that a company is not up to speed on disclosure, or are they to get to the root problem of exposing its supply chain? The provision may be unduly bureaucratic and costly, and it may well not serve the purpose that everyone wants.
To deal with that concern, we need to consider encompassing the approach covered by the Companies Act 2006. That has been suggested as an alternative, but we should consider how to embrace it. Last autumn, Parliament’s intention was that quoted companies must report on human rights issues, and it was plainly our intention that those issues must include supply chains. In its response to the Joint Committee, the Home Office stated that
“there is no specific requirement, rather an expectation, that companies report on supply chains…under the current rules.”
We need to ensure that the expectation is made a requirement, so that that indeed happens.
One alternative, as the Joint Committee said, is to add supply chains as a reporting requirement, so let us at least make it clear that Parliament’s intention is to ensure that when public companies report on human rights issues, they include supply chains. Why would that be very useful? The Companies Act route is a top-down approach from public companies and does not cover the offshore issue—the Government have certainly embraced a much more comprehensive reporting obligation—but it imposes duties on directors and such reports are audited. The approach therefore already has independence or teeth at an early point. We cannot simply have companies reporting on their website; it is important to have auditable reporting. Companies Act processes ensure that directors, accountants or lawyers make sure that reports are up to speed, and we need to find a practical way to embrace that advantage.
We want to ensure that the Bill leads the way internationally and is world-class, as the Home Secretary has said. The Companies Act approach gives it portability across different legal systems. New clause 11 is important, but it relates to our country’s legal system in the relief that it provides through injunctions. The Companies Act approach would allow other corporate governance ways to ensure that our lead is followed internationally. At the very least, we now have consensus, and I appreciate the direction in which the Government have gone.
My hon. Friend has done valiant work on this topic. I agree with him that the enforcement angle needs more attention, but does he not agree with me that new clause 11 takes us a huge step forward? We should congratulate the Government on that, and now invite them to take the next step and get the enforcement right.
I do not want to understate my praise—this is a huge step forward—but we, as legislators, want to ensure that what we approve is really fit for purpose and has the necessary teeth. There are other elements that can be done without legislation: the issue of international corporate governance goes beyond legislation, and it can best be dealt with by sharing good practice internationally.
I will finish on a very positive note. Today, we can say that British law is no longer just concerned about the sustainability of the wood in our furniture, but is more concerned about the freedom and safety of the millions of men, women and children involved in making that furniture.
I, too, want to pursue the theme just followed by Mr Burrowes in congratulating the Government, but drawing attention to just how important new clause 11 is. The Home Secretary made it very plain in her first article in The Sunday Times that she wanted a clause on supply chains in the Bill. I therefore congratulate her, her very able Minister and the person in No. 10 who changed his mind at this very late stage in the Bill’s passage. Heaven rejoices at the sinner who repents even at the eleventh hour, and some credit should go to the Prime Minister for changing his mind on this matter.
My hon. Friend Diana Johnson has played a valiant role in spearheading our approach to the Bill and has borne all the heat of the day on it. However, I think we all accept, whatever efforts we have put in, that the legislation is the easy part of the process. The next part will be very hard—to get a genuinely mass consumer movement of people who do not buy goods if they are not kitemarked as being free of slavery.
As we draw stumps on this House’s proceedings on the Bill, it is important to commend it, as the hon. Member for Enfield, Southgate has just done—it will not just be a good Bill, but a world leader when it leaves the other place—but the real work will be on enforcement and on convincing consumers that they have the vital job of not buying goods that are tainted by slavery.
In following Mr Field, I want to acknowledge the Minister’s efforts in making good the serious deficit in the Bill, but also those of the right hon. Gentleman and many other colleagues during the pre-legislative scrutiny, on Second Reading and ever since. Those efforts by him and the many others who spoke on Second Reading and in Committee have reflected the very strong concern of some of the groups that have worked so hard to support and promote the Bill and that understand the issue so well.
I am one of those who can take yes for an answer, now that the Government have made good on this matter. However, I would say, “Yes, up to a point, but maybe it could be improved.” I believe that the Bill could go further. Diana Johnson, who tabled new clause 5, has shown that there are important issues. The headings given in subsection (3) are clear and useful, and it is right for them to be in primary legislation, rather than left to remote chance by way of secondary legislation.
New clause 5 is also important in what it would do with respect to the Companies Act. I understand what the Minister said about not only using that Act as the way to deal with the problem, but how it brings in that Act sets very clear corporate responsibilities. In that context, it also highlights relevant professional obligations, which would give real meaning to what the Government and others are trying to encourage in relation to ethical investment, and in relation to the understandings we should all have about any investments—all the new pension provision and everything else—for which we are the source of the money.
Stephen Barclay has referred to financial services legislation. We have said that more and more needs to be done to ensure full and due transparency in that context. We should complement such provisions in the Bill. I therefore hope that the Minister—I support her new clause 11—can see her way to accepting new clause 5 as well.
I tabled two of the new clauses in this group of amendments. The Minister has addressed new clause 15, but let me point out that throughout the gestation of the Bill, we have been told that it is meant to be world leading. New clause 15 is an attempt to bring in the clear standards in EU directive 2011/36/EU on preventing trafficking in human beings. If the Government are at pains to consolidate and codify much existing law in the Bill and to present it as world-leading legislation, the question arises whether we should not also use it to show that we are at least matching and adhering to international standards and obligations, including EU ones. My clause on the legal liability for the beneficiaries of slavery would be consistent with the EU directive, and I see no reason why we should not explicitly ensure that our legislation is up to that standard.
New clause 14 seeks to go further on questions of the supply chain and sourcing, and the possible use of slavery or exploited labour. We are meant to be discussing world-leading legislation, but the new clause reflects legislation that was introduced 84 years ago in the United States of America. We hear a lot about Californian legislation on supply chains, but the Tariff Act 1930 in America gave power to prohibit the importation of
“goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in any foreign country…by forced labour.”
The new clause is therefore hardly a radical view or innovation, and the Californian legislation—referred to often in debates on the Bill—exists in wider US legislation.
New clause 14 does not just rely on language in the 1930 legislation, which puts responsibility on the Secretary of State at the Treasury to prescribe the necessary regulations, but it also reflects the essence of the code of federal regulations in the United States, which establishes the process whereby anyone can petition the Department of Homeland Security. That explicitly provides for:
“Any person outside the Customs Service who has reason to believe that merchandise produced in the circumstances mentioned is being, or is likely to be, imported into the United States.”
The United States legislation does not guarantee that the state will fully police all those issues, but it indicates that it will respond to legitimate petitions or legitimately presented evidence that gives rise to concern, and that it will act. Legislators in the US have ensured that the state reserves that power to act to prohibit the import of a good.
In the Government’s new clause 11, the onus is—understandably—on companies, which have to be able to show what they are doing regarding their supply chains. We wanted supply chains included in the Bill not as a badge for companies, but as a shield for workers in developing countries and other places—including the UK—who could be exploited. The difference is between this measure being a corporate badge or a shield for human beings. If companies have only to present what they say they are doing, and consumers then make their judgment and choice, why—if we are legislating for company responsibility but also for consumer responsibility and activism—is there still no rule for the state or Government?
New clause 14 clearly states:
“The Secretary of State shall have the power to prohibit the import at any point of entry to the United Kingdom of any good, ware, article, or product mined, produced, or manufactured wholly or in part in any foreign country that can be demonstrably shown to have been produced by slavery, forced labour, child labour or with the involvement of human trafficking.”
By rejecting that new clause we are saying that even if exploitation can be demonstrably shown, we do not want the state or any Secretary of State to be able to act against that. Whether in relation to the t-shirts that were in the newspapers recently, or anything else, we are saying that when such issues are raised, we do not want anybody or any part of the state to have responsibility for saying, “The nature of those products in terms of the quality of the supply chain is clear, but it is nobody’s job to move to do anything other that what companies are inspired to do, or what consumers are mobilised to do.”
New clause 11(9) provides that:
“The duties imposed on commercial organisations are enforceable by the Secretary of State bringing civil proceedings in the High Court for an injunction or, in Scotland”.
Will the Minister clarify what provisions will be made in Northern Ireland? Other amendments that we will discuss later thankfully include measures to improve the scope and smooth interface of the legislation vis-à-vis Northern Ireland, which I was at pains to address in Committee. I notice, however, that reference to Northern Ireland is missing from new clause 11, although the reference to Scotland is clear.
It is a great pleasure to stand up on Report and commend the Government on the progress we have made, but let us be clear that we are a little way along the journey. It is not as if the exploiters of women and children—whether for cheap labour, slave labour or sexual exploitation—are going to quake at the knees because we are passing this Bill, so let us be honest about that. As we try to close the loopholes, increase vigilance, and impose discipline on the trade that the exploiters are involved in, they will change the way they run that trade.
I spent time with the Serious Organised Crime Agency as part of the Government’s great police service parliamentary scheme. It showed us a model that it has drawn up of much of the trafficking that goes on throughout Europe and that it is trying to combat. It looked like a five-dimensional or 10-dimensional spaceship, and had been drawn up by the London School of Economics to show exactly how such organisations work. They are multinational and beyond any discipline; they have no morals and think only about the money at the end of the chain.
In reality, for many people at the “murky” end of the supply chain—that is how it was described by some of the witnesses from whom the Joint Committee took evidence—that is where the abuse takes place. To reach into that is very difficult as we get further and further from the first payment of money from a customer to a company, and the first payment from a company to its supplier, who supplies in a nice neat box with a nice label—it might be a nice t-shirt, for example, that costs £45 but is made by people who get paid 62p an hour and are locked in the factory and not allowed out in case, as the owner said, “They might come back hung-over and not able to work well the next day”. That is what we are dealing with.
We have made some strides, and many people were mentioned in the Joint Committee and the Bill Committee. Some, however, will not be mentioned—Mrs Spelman has unfortunately left her place, but she took an interest in this matter and went to see the Secretary of State for Business, Innovation and Skills to talk about the need to include this measure on the supply chain, at a time when we were getting the resistance referred to by my right hon. Friend Mr Field. People of good will saw that a Bill that did not refer to supply chains was not in the spirit of the efforts that have been made over the past 10 years by people such as Anthony Steen and the Human Trafficking Foundation, and the EU Parliamentarians against Human Trafficking, who were involved in trying to deal with an international, pan-European and pan-world trade.
When I saw new clause 11, which followed a generous promise by the Minister in the final Committee sitting to introduce a measure on supply chains, I was impressed. It is fairly thorough. There is a lot of bureaucratic writing that I would not necessarily have put into my Bill, not knowing how the mechanisms of the Government’s legislation works in all its depth, but part after part reflects the matters I referred to in my private Member’s Bill in 2012. I thank the Minister and all those who supported that measure for what has been done. We are on a journey and we have a long way to go, even if we pass the Bill and it is effective. We know that there are reservations. They will come up again in the other place to deal with the things that are not dealt with in the amendments and new clauses tabled here.
The hon. Gentleman makes a valid point that some people will seek to avoid the provisions, but does he accept that that is the case with all forms of criminality, and that the Bill gives us a platform, for the first time, to tackle some of the worst cases of modern-day slavery?
I have absolutely no reservation in supporting that as a principle. We are doing the right thing. We have set together a number of pieces of legislation in the Bill that will deal with those who will wish to avoid its provisions, and I will mention some of the measures in new clause 11 that I think are effective and welcome.
I am glad that Government amendment 62 says there will be an affirmative resolution for regulations, because it is right that we will go into a Statutory Instrument Committee with them, and that we are given the chance to debate them with the Minister. I will mention some of things I hope we will discuss when we get there.
New clause 5, which was tabled by my hon. Friends on the use of the Companies Act 2006, is something we should look at, because it is right. The hon. Member for
Enfield, Southgate (Mr Burrowes) made the point that we need as many tools as possible as well as the court of public and business displeasure when people do not act as we want. Therefore, we should look at how we can put some firmer things in the Bill, but I think that the big change in the Government’s thinking is to be welcomed, because they are using the principle of the California Act, which is much wider than the Companies Act.
By the way, I notice that the British Retail Consortium wants to include smaller companies. When I introduced my Bill, I used the figure of £100 million. In California, the figure was $100 million, and my amendment used £60 million, which is the equivalent. Clearly, quoted companies under the Companies Act are likely to be well outwith that in size. We want to respond to that and use the same reporting structures as the Act would use.
I tabled amendment (a) to new clause 11 because we should look at international standards. I have respect for the Secretary of State and the civil servants who advise her, but international organisations have looked at the issues again and again. In my Bill, I had a reference to the 1999 International Labour Organisation convention No. 182, which is about the definition of the worst form of child labour, because there can be difficulties with that in other countries.
I will tell a quick tale. When I was 10, I went out and found a job as a milk boy. I wanted to go out and become useful to my family. My brother had a job delivering rolls. I got 10 shillings—50p now—and about 1 shilling and sixpence in tips a week. I walked from the centre of town home and gave my mother 11 shillings and sixpence for the family budget. There were five of us and basically one labourer’s wage. It was not easy to survive. Was that child labour? I did not feel exploited. I loved it—I loved every bit of it. I am sure it is why I am so healthy now in my older age. I ran and ran, and perhaps built up the infrastructure for a long life. It was great and I loved it.
In other situations, people say, “If a woman takes a child with her when she is making bricks in India, at what age does that become a breach of child labour? When is that child able to contribute to a very low family budget and when do they want to do so?” The ILO has looked at those questions but we have not looked at them in great detail in the House. Hopefully, the ILO’s considerations will be used in the recommendations made under new clause 11(8), which is about giving guidance on the information that should be reported.
There is a bit missing from this Bill that was in my Bill: my clause 3 said that there should be some way of ensuring that the company that is found to use such labour provides assistance and protection for the victims of slavery. The guidance should continue that. It should say what a company should do as a benchmark. We should not just say, “We’ll not use that company any more,” but do something about it.
Mention was made of consumers. When I went around talking to people in supermarket networks—Mumdex is in many supermarkets in my area—they had a concern about slavery and the things that bothered their conscience, but they said, “If you’ve got four or five kids coming up to the summer, you buy the cheapest stuff you can get that is going to last the summer, because most of it’s going to be thrown in the bin by the end of the summer anyway. It is the company’s job to make sure I am not buying something that is contaminated by slave labour.” That is totally right. Perhaps some people who go up the high street and buy very highly priced goods ask themselves about that, but most people in my constituents’ environment will not.
I therefore welcome new clause 11(9). It is fantastic to see. If hon. Members read what is on the net about the Bill, they will see that people in Scotland think it has nothing to do with them. They think it is an English Bill. People should look at the new clauses to realise that it is a trans-border, transnational Bill. Subsection (9) states that people in Scotland can take an organisation to the Court of Session to enforce the fact that it is not carrying out the duty in the Bill. That will be very welcome.
I do not know whether the section covers Northern Ireland—I had that question in mind because it does not mention Northern Ireland. Do people there go to the Court of Session? Where do they go? Do people in Northern Ireland go to the High Court in England if they feel that a company in Northern Ireland is not doing something they should be doing? I am grateful to the Minister for including Scotland. That is an important measure.
We are making progress and I welcome the proposals. I hope the Government are listening when the Bill goes to the other place because they could add other things to it.
I, too, was milk boy, and a butcher’s boy and a paper boy, in my younger days. My hon. Friend has raised the subject of tips many times over the years. My wife and I booked a cruise two years ago through a British travel agent company. The cruise sailed from Southampton. When we spoke to the staff on the cruise, they said they did not receive any wages, and that they only got tips. If that is not modern slavery, I do not know what is. I was not fortunate enough to be on the Joint Committee. Does the Bill cover that?
I could not quote the legal detail, but I would think that if a company based in the UK did things like that, it could be taken to the Court of Session in Scotland or the High Court in England and found not to be complying with the law.
As a Scot and as an economist, I read Adam Smith’s “Wealth of Nations”. It talks about comparative advantage, but before that, he wrote a document about the morals of competition. The good thing about the Bill is that it says, “We believe in competition.” We are not talking about pricing people out of the market entirely. We are saying that it must be morally justifiable as well as economically justifiable.
I want to finish with a response to one of my constituents, who, when it was reported that we were discussing the Bill, wrote in an e-mail blog: “What’s that got to do with creating employment in Scotland and your constituency?” The reality is that, if we can stop people using cheap labour, and particularly slave labour at the worst end, we give British companies the chance to compete better. That is why the BRC is behind the Bill. If there is a voluntary code, the bad companies just will not comply, whereas if there is a mandatory code and if we can take people to law to enforce it, everyone must do the right thing or be held to account.
I will not detain the House for long as we have other matters to come on to, but I want to make a few closing remarks.
This has been a very good debate and I am very grateful to all right hon. and hon. Members who have contributed to it. I think we can safely say that all those who have made contributions are great campaigners on this issue. They all deserve credit for getting us to this point, and they have changed the views of so many.
The Government have taken their position from the evidence in the discussions and debates we have had with business and others on the best way to tackle this issue. The point was made that the Companies Act 2006 has already been amended to ensure that human rights are respected in companies’ annual reports. We considered whether that, and measures coming forward from the EU, would be enough. We consulted fully with business to ensure we did not take action rashly that would have been ineffective. Many people have campaigned on this issue for many years, but we wanted to ensure that the measures would be effective, appropriate and proportionate. Representations have been made to me, particularly by smaller businesses. It has been important for us to consult properly and fully. We have listened to businesses and taken the point that the way to achieve the transparency we all want is to introduce the Bill. We want businesses to start to act as soon possible. They do not need to wait for the Bill—they can start now.
Mr Field referred to the mass consumer movement and he is absolutely right that Fairtrade is a model. We consulted the Fairtrade Foundation on how it approached this matter and how it managed to make the public aware of fair trade to the extent that Biddulph and Leek in my constituency are Fairtrade towns. That happened because people wanted it to happen. The Bill seeks to enhance that and to add to it.
Points were made about tougher enforcement. We do not expect companies to ignore the new disclosure duty, but rightly the injunction procedure is there so that if a company does fail to disclose as required, the courts can force it to do so.
I am sure the Minister is aware that one of the common tactics used by banks when subject to regulatory action is to get rid of middle management, settle with the regulator at the earliest opportunity and profit from the 30% discount as a way of mitigating the fact that they have been caught out by enforcement breaches without actually changing their culture. Is there not a risk of the same thing happening with these injunctions?
I hope that businesses will act in a way that deals with this problem. That is what businesses told us they want to do. They want to ensure there is no slavery in their supply chains, and consumers and others want to see that too. I hope that will be the case.
On consumer action, what are the Government’s intentions with regard to public procurement, because the public purse will be a significant consumer? On sourcing and supplying, will there be a Government public procurement standard for companies?
I addressed that point briefly in my opening comments, but I will come on to it again in a moment. I will just finish the point about enforcement.
The courts can force companies to disclose, but that is different from the issue that some companies may make disclosures that consumers, shareholders and campaigners feel show that inadequate steps are being taken to eliminate slavery from supply chains. The courts can act if no disclosure is made, but there is action that civil society can take if it feels that companies are not making appropriate disclosures. The Government believe it is for civil society to put pressure on businesses that are not doing enough to eliminate modern slavery from their supply chains. The Government’s new clause makes this as easy as possible by ensuring that disclosures are easily accessible. The link to disclosure must be in a prominent place on a business’s website home page.
Before coming on to public sector procurement, I would like to address the concerns expressed by Mark Durkan on the extent of the new clause. I can confirm that the new clause on supply chains will apply to England, Wales, Scotland and Northern Ireland. This is made plain by later amendments to be taken later. I want to put it on the record that I am grateful to the Northern Ireland Executive and all the devolved Administrations for the excellent work we have done together to ensure that this provision can extend to the entire UK. He will know, from our discussions in Committee, that there were points on which we needed agreement—not just on this matter, but on many others as well. I am pleased that we have made so much progress. It was important throughout that this was not Westminster imposing on the devolved Administrations. Action has been taken because the devolved Administrations wanted to take that action.
On public sector procurement, all public sector suppliers are required to comply with applicable law, including relevant human rights and employment rights law. UK public procurement policy is that social, environmental or ethical issues can be taken into account in the procurement process where that is relevant, proportionate and non-discriminatory. We expect public sector procurement to be as transparent as other procurement, which is covered elsewhere. We will consult on this matter, and I encourage people who are concerned to respond to the consultation. It should be noted that whatever action is taken will be taken only following the affirmative procedure to ensure that Parliament has its say. We will ensure that points are put forward.
The shadow Minister makes the point that perhaps that needs to be by the end of March, if the right hon. Gentleman is asking whether it will happen before the general election. I cannot answer that question at the moment. Perhaps I could write to him on the specifics.
I am delighted that new clause 11 will amend the Bill to include the measure on transparency in supply chains that so many have worked so tirelessly for, for so long. I hope right hon. and hon. Members will not press their amendments to a Division. I look forward to this measure being part of the world-class Bill we all wish to create.
Question put and agreed to.
New clause 11 accordingly read a Second time, and added to the Bill.