My Lords, we have made some good progress in the area of reporting and transparency. Like other noble Lords, I pay tribute to the Minister for holding meetings outside the Chamber and getting us to talk through with him some of the issues that we have with this part of the Bill. I am pleased to say that I support government Amendment 97, which gives quite a bit more clarity than we had previously on what should be included in the slavery and human trafficking statement.
However, there are still some areas around the subject where we could do with a little more improvement, hence a number of amendments to Clause 52 have been proposed, most of which I broadly support. Although it is not specifically addressed in any of the amendments tabled today, I still struggle with the prospect of a company deciding to face down criticism and continually submitting a statement declaring that it has decided not to examine its supply chain for trafficking and/or slavery. I wish I could say that it is unlikely that any company would do that and that all will swept along by the strong support that so many companies and organisations have demonstrated with regard to Clause 52, but I am afraid that time and again, recently and over a period of time, we have read in the press and seen on our screens too much evidence to the contrary.
I shall make my remarks fairly brief, because the amendments that I am speaking to, Amendments 93 and 94, are largely self-explanatory. Amendment 93 would ensure that government departments and agencies were subject to the same laws as commercial organisations with regard to declaring their actions to support transparency in their supply chains. The amendment is supported both by the British Retail Consortium and by the British Medical Association.
Just to give your Lordships a glimpse of the scale of procurement that is under discussion here, the Government spent a total of £238 billion on the procurement of goods and services in 2013-14. This sum represents approximately one-third of all public spending. Even breaking that down into departments produces substantial figures. For example, if we look at the Ministry of Defence, we see that the Defence Clothing Team, which is part of Defence Equipment and Support spent a total of £64.7 million on uniform and clothing in the financial year 2013-14, which would have put it well within the scope of the £60 million which was one of the figures that have been bandied around as a suggestion for a threshold figure that companies might need to meet to be covered by this clause. That is just spending on clothing.
There is no doubt that the Government have huge buying power and thus are implicated in any number of supply chains which extend around the world. For several years, various campaigners have argued that government should set an example when it comes to good practice in ethical and sustainable sourcing, and we now have an excellent opportunity to make considerable progress.
The social impact of decisions taken by government departments and agencies is no less than that of commercial organisations. Surely it would be difficult to argue that government should be exempt from the laws that it seeks to impose on other organisations similarly involved in the provision of goods and services. It is estimated that the NHS spends in excess of £40 billion per annum on the procurement of goods and services. I mention that specifically because I was struck by the British Medical Association’s briefing, which pointed to,
“an uncomfortable paradox in providing healthcare in the NHS at the expense of workers’ health in its supply chains. There is a risk to the reputation of the NHS through inaction, but conversely the importance and spending power of the NHS presents a real opportunity for it to take a lead in ethical procurement”.
As in other commercial organisations, the supply chains that provide commodities and services to government departments and agencies are global and employ hundreds of thousands of people world wide. If major suppliers of healthcare goods, for example—of uniforms and so on—strove to ensure fair and ethical practices in the manufacture of their products, the potential impact on global supply chains could be substantial.
I would be interested to know from the Minister whether there has been anydiscussion about government procurement in the context of transparency in supply chains. Or perhaps the Government are so confident that they implement sufficiently robust ethical procurement frameworks that they feel they should not be subject to reporting on their supply chains. While giving overall support to transparency in the supply chain legislation, particularly as it applies to supply chains in UK medical goods and imports, the British Medical Association believes that more can be done to ensure that public sector organisations and the small and medium-sized enterprises that supply them take adequate measures to ensure fair and ethical practice in supply chains.
This last point takes me to Amendment 94. By not specifying a threshold for companies included in this provision, Amendment 94 opens up the number and types of organisation which would have to provide information about the steps taken to address the issue of trafficking and slavery in their companies. It also avoids the pitfall of introducing a specific figure, referring instead to established criteria for the measurement of company size. Here I thank the British Retail Consortium which has lent its advice and support to this amendment. I also thank a group of research students from King’s College—Olivia Rosentröm, Helin Laufer, Tim Segessemann and Elisabeth Kömives—who performed a very valuable exercise comparing the California Act on transparency in the supply chain, amendments tabled in the House of Lords in Committee, EU directives and proposed federal legislation in the US. One of the issues that arose was the effectiveness or otherwise of fixing a threshold sum which appears to be somewhat arbitrary.
Amendment 94 provides clarity on the size of business covered and links this to existing and well understood definitions of business sizes, rather than referring arbitrarily to a specific amount, as in the Californian legislation which cites $100 million. Reference to the Companies Act in the amendment provides a clear framework for reporting, based on widely understood due diligence principles which can then be fleshed out in regulation as required. Amendment 94 seeks to include existing definitions of medium and large companies. However, although it supports this amendment, the BMA makes the point that including small and medium-sized companies would ensure that the legislation covers all the companies that supply the NHS, which includes a number of SMEs. The BMA believes that extending the definition of a commercial organisation to SMEs presents an opportunity with the introduction of the public contract regulations which make procurement opportunities within the UK more accessible to smaller businesses.
Another area that would benefit from extending the provision to medium-sized businesses is the fashion industry. There are many companies operating in this sector, as I am sure we are all particularly aware this week with the highly successful London Fashion Week. Yesterday the All-Party Parliamentary Group on Ethics and Sustainability in Fashion held a very interesting and insightful event involving young people, encouraging them to participate in politics by talking about politics through fashion. Time and again participants raised the issue of labour exploitation in the industry and, of course, referred back to the appalling disasters which became all too familiar a year or so ago, particularly in Bangladesh but not exclusively. The supply chain in the fashion industry is particularly long and complex and involves a number of different agencies and actors and there are real concerns that too little is being done to address the problems that evidently exist in the sector. Those young people with whom we have spoken, not only yesterday but over the years, want to know how politicians intend to address this situation. How can the Government make it easier for them to make informed choices about the companies from which they buy their clothes, many of which are in the SME sector?
As I have said, Amendments 93 and 94 both have the backing of the British retail industry and those businesses think that inserting these changes to the Bill would not only make the Bill stronger and more effective but also make it easier for business to comply. They do not see it as more regulation; they see it as smart regulation. The BMA also believes that the definition of a commercial organisation should be extended, as I have already said. If the Minister does not feel able to accept either of these amendments, at the very least it would make sense for the Government to pledge to monitor the effectiveness of Clause 52’s operation in these respects and to undertake to review the size of businesses to be included under the legislation on a regular basis. Of course, there is a consultation exercise already in motion, specifically with regard to the threshold for companies to be included under Clause 52, and I look forward to seeing what the business sector has to say about this in May and beyond that when it reports back. I cannot help but feel that we already have a ready-made measure on the statute book which is clearly understood and deployed. I beg to move.