Modern Slavery Act 2015 (Transparency in Supply Chains) Regulations 2015

Baroness Hamwee Excerpts

Monday 19th October 2015 Lords Chamber

[The Earl of Sandwich (CB)]

My Lords, I supported my noble friend’s original amendment on the question of monitoring, and I will return to that in a moment. Whether we should go as far as the website and central information, I still am not certain in my own mind.

Having looked through the original consultation and the Government’s response, I am very impressed by the detailed work that has been done on this issue. It is rather a contrast with the Energy Bill, where the Government were castigated for bringing everything in at the last minute. I think that the whole process of pre-legislative scrutiny and consultation on the Modern Slavery Bill has been a model. I believe that the Government are genuinely behind this legislation, especially the Minister, who has shown commitment over many years, including his Nike research in China, his links with Gateshead and Traidcraft and his promise to consult widely following the Bill. This is where my noble friend’s amendment is very relevant. We are delighted that he has come up with the regulation, and I warmly welcome the decision to go for the lower threshold. This was the clear view of the respondents and I am glad to see also that companies will be given some flexibility on the form of the statement. So we are proceeding gradually in the right direction.

This does not mean that I have no misgivings. The first one is about monitoring. I notice that under section J of the impact assessment, the Government undertake to engage with businesses for a further 12 months after commencement. However, it seems that this will be only a limited assessment about reporting requirements and whether organisations have any difficulty in providing information. What about the monitoring of performance by the companies themselves after 12 months? Who is going to assess whether the companies have adequately researched their own supply chains to the point where they can revise earlier statements? I suspect that much of the monitoring will fall to civil society.

I remember the discussion under Section 54 on 10 December, when the noble Lord, Lord Rosser, questioned the Minister very closely on the amount of information that would be required from a company to enable civil society, for example, to make a judgment. This is an important point because it might be easy for a company to make very brief statements with so little content that the Government and NGOs would hardly be able to question them.

Presumably the Government will be involved after the 12-month period. Will they create a forum involving the NGOs, or will the anti-slavery commissioner, Mr Hyland, be involved in the process? I see that he has just published his impressive strategic plan: his workload is formidable. I know that he works with the NGOs a lot but surely he will have to stick primarily to policing and law enforcement and will not have the extra time that is required.

If the aim of the regulations and the Act is to,

“ensure there is no modern slavery in … supply chains”,

and to,

“aid the detection and elimination of modern slavery”,

surely a lot more needs to be done in the direction that my noble friend has mentioned than publishing what could be very limited information.

Finally, I ask the Minister whether charities are covered by the regulations. Section 54 of the Act refers to a “commercial organisation”, but the Explanatory Memorandum to the regulations says at paragraph 10.1:

“The impact on ... charities or voluntary bodies is small”.

Perhaps he could clarify this point, because there are charities with substantial overseas trading interests.

[Baroness Hamwee (LD)]

My Lords, this is indeed a significant statutory instrument. Whether it will fulfil its potential depends on its implementation and the practice that is adopted by organisations, as well as the response by the public. Like other speakers, I think that the content of the statements is more important than the process, and inevitably the statutory instrument is focused on the process.

Actions beyond the legislation—the statute and the statutory instrument—will be important. Like other noble Lords, the first point that I wrote down related to monitoring and whether there would be a central repository and a website to cover what may be, according to the impact assessment, 17,000 or 11,000 companies—a number of figures are given. It seems to me that the demand for that was reflected in the responses to the consultation, as reported on the Home Office website. This is not just for citizens, NGOs, civil society or indeed government to check and to hold companies to account; surely the repository, or depository, also has a function in spreading good practice and disseminating information about methodologies. The responses to the consultation seemed to show a need on the part of companies for assistance in how to identify slavery. The section on supply chains in the commissioner’s strategy, to which the noble Earl has just referred, under the heading “How will we know that the response is improving?”, says:

“Best-practice models of business and supply chain transparency to be established and widely adopted”.

Clearly there is a lot of work to be done in this area, so the guidance on how to do it is important. We are told that this is to be,

“published to coincide with the duty coming into force”,

which, I understand, will be in October. Can the Minister help the House as to whether the guidance will be published before then? Surely if a duty is in effect, one needs to know beforehand how to comply with that duty in the way that, I hope, the guidance will cover.

I note, too, that transitional provisions are to be developed, and I wonder whether the Minister can explain what that means. The first point that occurred to me on this was that the duty comes into effect in October, but how does that relate to any given company’s financial year? Presumably that will be a basis for making a statement and an assessment. The Government must have thought through whether, for instance, the duty will apply to a report only after there has been a full financial year of experience. I may be barking up the wrong tree here but if the Minister can help the House on what is anticipated in the transitional arrangements, it would be useful.

The responses asked whether the provisions could apply to companies below the threshold. I assume that there is no reason why not. In our debates on the Bill, we talked about the reputational benefits of providing statements.

More widely—I do not know whether the Minister can answer this—what sense does the Home Office have of a buy-in of enthusiasm for this process, for instance among institutional investors? During the progress of the Bill, we talked about the position that shareholders have and the influence that they may have on companies, so the institutions, as the biggest shareholders generally, will be in an important position. I used a search engine to see what was being said about this subject and found that a number of City lawyers and accountants are including advice on the subject in their newsletters, but it will be the shareholders—and the concern not to upset shareholders—that will be central to the operation of this measure.

The noble Lord, Lord Alton, referred to the effectiveness of these arrangements. In that connection, I noted that the impact assessment seems to deal with the regulatory burden, not with the costs of the investigation leading to the content of the statement. Checking that there is no slavery in the chain is the objective, despite the get-out of the “no statement”, so it seemed to me that there was a danger that the impact assessment might be sending an inappropriate message.

I was interested, too, that quite a lot of respondents disagreed with providing key performance indicators—not a majority by any means, but the indicators are referred to in the legislation and they are important because they will show trends. We are talking here about not just snapshots but trends. I do not know whether the Minister can say anything about that.

Almost finally, we have heard about the requirements on the Home Secretary to report. Is there an intention to report more frequently than the statutory minimum? And finally—this matter was raised by the noble and learned Baroness, Lady Butler-Sloss, during the passage of the Bill—can the Minister tell us what the Government are doing to check on their own procurement?

[Lord Kennedy of Southwark (Lab)]

My Lords, first, I generally welcome these regulations but have a few concerns. I am delighted that they have appeared before your Lordships’ House as close as we could get to Anti-Slavery Day, which was yesterday. Slavery and human trafficking are appalling crimes. Estimates have suggested that anything up to 13,000 people who are victims of modern slavery could be living here in the UK, and the Walk Free Foundation has estimated that there are 35.8 million people in modern slavery throughout the world. Those are appalling figures.

During the passage of the then Modern Slavery Bill through your Lordships’ House, many examples were given of multinational businesses using very long and complicated supply chains across the world, which, due to their nature, can sometimes allow slavery to thrive. The regulations before us require companies with a turnover of £36 million or more to produce a statement that sets out the steps that the organisation has taken during the year to ensure that slavery and human trafficking are not taking place in any of its supply chains or in any of its own businesses, or a statement that the organisation has taken no steps at all. The statements must be published on the organisation’s website with a link in a prominent place on the home page of the website.

I am pleased that following the consultation the Government opted to include within this legislation companies with a minimum annual turnover of £36 million and that they did not go for a maximum threshold as a possible option. It was also clear from the consultation exercise that this figure was supported by most—more than 70%—of the people consulted. Like the noble Lord, Lord Alton, I noted that the Home Secretary has to produce a report. Regulation 4(2)(c) refers to “the extent to which” the objectives,

“could be achieved with a system that imposes less regulation”.

I would have preferred something that referred to more effective regulation rather than the word “less”. This is such an important issue that “less” lays the wrong emphasis on the regulation.

The Home Secretary is required to publish a report within five years of the regulations becoming law and thereafter every five years. Five years seems a terribly long time. We should have more frequent reporting—say every two or three years—which would enable us to more quickly identify issues that need to be addressed. This would ensure that the regulations are having their intended effect rather than to having to wait for just one chance in every Parliament.

--- Later in debate ---

[Lord Kennedy of Southwark]

The noble Lord is absolutely right. We will have the company statements on the company website, but the only issue with the central repository, of course, is that if you have 7,000 to 10,000 companies, it will be difficult if they are not all in one place. I think that there has been some movement from the Minister tonight, but can he explain why he thinks that this should not be done by government? Why should it be left to civil society or a third-party organisation? It is an important point and it seems to be the missing part in all this.

[Baroness Hamwee]

My Lords, I wonder if I could add to that, because it is part of the same question. I am sure that the Minister does not mean it in this way, but the more it is said that this is not a matter for government, the more one worries about how the Home Secretary is going to fulfil her duties in keeping the matter under review if she does not have that facility available to her. The information is very much a matter for government and therefore the Government must have an interest in ensuring that it is easily accessible.

[Lord Berkeley of Knighton (CB)]

In order to save the Minister from popping up and down like a jack-in-the-box, perhaps I may add one point which may help my noble friend Lord Alton. If by civil society one were able to define that by ruling out commercial interests, that would go a long way towards meeting the point being made.