89.The Modern Slavery Act 2015 became law in March 2015, building on the previous Government’s legislation on exploitation and creation of the Gangmasters Licensing Authority, under the Gangmasters (Licensing) Act 2004. Among other provisions, the Modern Slavery Act toughened penalties to allow a maximum sentence of life imprisonment for serious human trafficking and modern slavery offences, and provided safeguards for victims. Companies covered by the provision must produce a “slavery and human trafficking” statement for each financial year, which may set out steps they have taken to make sure that such practices are not present in their business and supply chains and in the absence of this must state that it has taken no such steps. The Act also created an Independent Anti-Slavery Commissioner.
90.Following passage of the Modern Slavery Act, the Government issued ‘Transparency in Supply Chains etc.: A Practical Guide’, to help businesses meet these new obligations.
91.While it is still too early to evaluate the full effect of the Act, anecdotal evidence from some businesses suggests it is already having some beneficial effects. Marks and Spencer told us that the legislation had prompted them to “look even further into our business, and we have identified things that we need to do even better … that piece of regulation has been helpful. It has driven consistency in the marketplace.” NEXT said the same, and told us that the Act had given businesses “clarity and leverage”.
92.The Modern Slavery Act suffers from a number of shortcomings. Two studies published in early 2016 examined the early modern slavery statements made by companies under the Act. They found that many reports failed to meet basic requirements, such as being signed off by the company director, and that “35% of statements say nothing on the question of their risk assessment processes, which is surprising for statements that are intended to be based around a due diligence approach. Two-thirds do not identify priority risks, whether in terms of countries, supply chains or business areas.”
93.Moreover, analysis by Ergon Associates, a consultancy firm specialising in business and human rights, has uncovered suspicious uniformity between many of the statements:
“We have identified a number of longer statements that contain nearly identical wording in some of their paragraphs. Some of these even have the same KPIs [key performance indicators] and outline the same training actions. These statements are mostly from the UK and come from a range of different sectors, suggesting that they may be [using] the same advisers or template.”
94.Witnesses suggested that the varying quality of modern slavery statements was a result of the weak requirement in the Act, which says only that companies “may” include a number of details in their statements, and weak guidance from the Government, which has not been prescriptive enough in its guidance on statements. The Equality and Human Rights Commission told us: “Home Office guidance is not prescriptive about the content of the annual slavery and human trafficking statement … companies are disclosing information about their policies and processes rather than detailed explanations of their human rights risks and the steps taken to manage those risks.”
95.One consequence is that many statements do not reveal much, if anything, about the practical steps being taken to tackle modern slavery. In the words of the Institute for Human Rights and Business: “Many statements have taken a very cautious, legalistic approach and as such fail to reveal much about operational human rights risks.” UNICEF UK agreed: “While the TISC [transparency in supply chains] requirement under the Modern Slavery Act requires companies to report on the due diligence they are undertaking with respect to slavery in their supply chains, it does not require companies to actually undertake due diligence.” We note that, under the terms of the Modern Slavery Act, a statement may be either a statement of the steps taken or “a statement that the organisation has taken no such steps”.
96.Sarah Newton MP, Parliamentary Under-Secretary of State at the Home Office, responded to such criticisms as follows:
“The Prime Minister, the Home Secretary and I have made it very clear that we expect all businesses with a high turnover to produce a statement about what they are doing … Obviously, once we see the results from the whole first year and we see the statements, if we find that there are significant problems, including the one you are alluding to, we will take further action.”
97.We note also that other reporting obligations for companies exist in the form of the EU Non-Financial Reporting Directive and s.172 of the Companies Act 2006. But, as Anti-Slavery International told us, “Neither the EU’s non-financial reporting directive nor the UK’s Companies Act (both mentioned in the UK NAP) provide sufficient specificity about the substance of what companies are supposed to report on, or the methods by which they are supposed to report.”
98.Another shortcoming of the Modern Slavery Act is that there is no list of companies that are required to report , and no requirement for businesses to upload their statements onto a central database. Anti-Slavery International explained why this was important: “At present, it is not clear which businesses … are covered by the provision. Without clarity on who is required to report, the public, investors, parliamentarians and the Government itself cannot effectively monitor compliance with the Modern Slavery Act requirements.”
99.Two NGOs have set up their own repositories. One is run by the Business & Human Rights Resource Centre, and at the time of publication, it listed 1,661 statements from businesses. The other, tiscreport.org, lists 23,156 statements. While these are important projects, and were rightly recognised by the Minister, without a central list of companies required to report under the terms of the Act, it is difficult to put pressure on companies that have not met their obligations.
100.Sarah Newton MP said that “because [the Act] involves a turnover of more than £36 million a year, [companies] will come in and out of the list. That is the complexity”. In response to further questioning, the Minister indicated that the Government would be doing further work: “I do not think that you will be waiting too much longer, and I do not think you will be disappointed when you see the outcome … I hope that by the end of the year you will be very pleased with the positive steps that we have taken.”
101.While the Modern Slavery Act is undeniably an important addition to the regulatory framework in the UK, it has been criticised for focusing only on transparency in relation to slavery, without requiring companies to address the many other human rights issues that may arise in their supply chains.
102.Professor Keith Ewing suggested that companies should be required to report not just on efforts to eradicate modern slavery, but on all four ILO core labour obligations:
“If we are going to have this duty to report, there should be a duty to report on all four core obligations; not just slavery and forced labour but particularly freedom of association and collective bargaining and the relationships that companies have with trade unions throughout their operations. That duty should be complied with in a way whereby trade unions are consulted about the content of the report in order to ensure that there is a level of veracity and reliability about the report.”
103.Lawyers from firms that represent victims in claims against businesses were also in favour of legislation to require “companies or any businesses over a certain size … to conduct and report on human rights due diligence”. They believed that this would help to create an evidence trail, which would in turn help to overcome barriers to justice. We explore this issue further in Chapter 6.
104.The large companies that gave evidence were well aware of the Modern Slavery Act and their duties under it. But Andrew Silvester, of the Institute of Directors, quoted research indicating that this was not the case across the board:
“In September this year we asked our members about the Modern Slavery Act and their awareness thereof. These are engaged business leaders who have joined the Institute of Directors and membership organisations … A third of them had no idea that the Modern Slavery Act exists. We have to be realistic about the fact that if the Government wants business to play a part, and business does want to play a part, it has to be a partner in this [process, rather than having regulation imposed on it].”
105.Finally, witnesses argued that the Government has missed an opportunity by not requiring public authorities, along with companies, to report on TISC. The International Learning Lab on Public Procurement and Human Rights noted: “While the Modern Slavery Act 2015 requires businesses to report on measures taken to address slavery and human trafficking, the Act does not establish analogous obligations for public authorities notwithstanding that the budgets of large numbers of public entities exceed the Act’s £36million annual turnover threshold.”
106.Witnesses suggested several ways in which the Modern Slavery Act could be improved to address some of these issues. In particular, many highlighted Baroness Young of Hornsey’s Private Member’s Bill, currently before Parliament, as the appropriate vehicle to bring about improvements.
107.On 23 May 2016 Baroness Young of Hornsey introduced a Private Member’s Bill; it had its Second Reading in the House of Lords on 8 July 2016. The Modern Slavery (Transparency in Supply Chains) Bill seeks to amend the Modern Slavery Act 2015 to:
108.At the time of publication, the Bill has been passed by the House of Lords, but has not received a Second Reading in the House of Commons.
109.All witnesses who mentioned Lady Young’s Bill thought that it would improve the Modern Slavery Act. Anti-Slavery International told us that they considered it “an essential next step in strengthening the Modern Slavery Act”.
110.Businesses that gave evidence to the Committee also supported the changes proposed by Lady Young, as a way to level the playing field between good businesses and those that are currently less compliant. Chris Grayer, of NEXT, stated:
“We have worked with Baroness Young on her Private Member’s Bill, which tries to extend some of the requirements of the Modern Slavery Act. We support that. Looking at the regulation against third-party labour providers would give us a further piece of authority to practice our diligence in a much more significant way.”
111.The Government is to be applauded for the passing of the Modern Slavery Act 2015, which built on the previous Government’s creation of the Gangmasters Licensing Authority, under the Gangmasters (Licensing) Act 2004. The Government has shown genuine leadership, and the issue of modern slavery has been raised in the boardrooms of large companies.
112.However, the legislation has shortcomings. In particular, here is no central list of companies required to report. This, coupled with the fact that the reporting requirements on transparency in supply chains are weak, makes it very difficult to hold companies to account.
113.We therefore urge the Government to facilitate the passage of Baroness Young of Hornsey’s Modern Slavery (Transparency in Supply Chains) Bill, which would rectify some of these problems, and which is supported by a number of large UK companies. If that bill fails to be enacted in the present parliamentary session, we recommend that the Government bring forward its own legislation in the next session to achieve a similar objective.
114.We also recommend that the Government bring forward legislative proposals to make reporting on due diligence for all other relevant human rights, not just the prohibition of modern slavery, compulsory for large businesses, with a monitoring mechanism and an enforcement procedure.
115.The Gangmasters Licensing Authority (GLA) is a non-departmental public body (NDPB), which is governed by an independent board and works in partnership to protect vulnerable and exploited workers.
116.The GLA licensing scheme regulates businesses that provide workers to the fresh produce supply chain and horticulture industry, to make sure they meet the employment standards required by law. Employment agencies, labour providers or ‘gangmasters’ who provide workers to agriculture, horticulture, shellfish gathering and any associated processing and packaging businesses need to have a GLA licence. This requirement has existed since 1 October 2006.
117.In 2004 20 undocumented Chinese cockle pickers died in Morecambe Bay. In that year the Gangmasters (Licensing) Act was enacted, which also created the offences of acting as an unlicensed gangmaster and using an unlicensed gangmaster.
118.In May 2016, Parliament passed the Immigration Act 2016, which reformed and renamed the GLA to become the Gangmasters and Labour Abuse Authority (GLAA), sitting under a new post of Director of Labour Market Enforcement. Under the provisions of this Act the remit and powers of the GLA are to be extended. The GLA is expected to be given these additional powers in April 2017, at which time it will formally change its name to the GLAA. The additional powers are as follows:
119.On 5 January 2017 the Government announced the first appointment to the new position of Director of Labour Market Enforcement. The new Director, Sir David Metcalf, will set the strategic priorities for all employment enforcement bodies, in order to stamp out exploitation. The new Director will also oversee the GLAA and will work alongside the Independent Anti-Slavery Commissioner, to better tackle exploitation and slavery in the labour market.
120.The Ethical Trading Initiative, while very supportive of the work of the GLA, highlighted the recent decrease in inspections and enforcement action:
“Home Office data setting out the number of investigations and prosecutions initiated by the GLA demonstrates that investigations into illegal activities of gangmasters dropped from 134 in 2011 to 68 in 2014 and prosecutions were down from 19 in 2010 to three in 2014.”
121.This is a worrying trend, and we were keen to understand the reasons underlying it. Margaret Beels, Chair of the GLA, attributed the decrease in actions taken to a number of factors, including the following: “the fact that we are doing more joint working and how that gets counted in the statistics”; “cases are more complicated so take more effort”; and “because we are getting new powers we have had to take some people offline to train them so that they know how to use the new powers.”
122.The coming year will see an increase of both resources and remit for the new GLAA, and we will take an active interest in discovering whether this results in an increase in inspections and enforcement actions against the worst gangmasters.
123.While the new GLAA will be given expanded investigation and enforcement powers, the Immigration Act did not extend its licensing powers, which will remain confined to the agricultural industry, shellfish and certain processing and packaging industries. There was a feeling among businesses that the failure to extend licensing to the garment industry was a missed opportunity. Mike Barry from Marks and Spencer told us:
“The Gangmasters and Labour Abuse Authority has made such a difference in the food industry by driving a level playing field across the whole industry on a very complex issue that is fundamentally about criminality driven by abuse outside the workplace. The gangmasters start work on the other side of the world, to bring migrants here to abuse them. Our audit system could never track and follow that. What the GLAA has done on food could be brought across proportionately into the world of clothing.”
124.The Chief Executives of ASOS and New Look also recognised the benefits of the GLAA having a role in the garment industry: “We welcome the expansion of the GLAA remit to include [investigation of] the UK clothing and textile industry and would like to see this become a priority sector.”
125.Margaret Beels explained that the Government had not extended licensing powers because it sought “to reach a balance in relation to burdens on business, and there is a school of thought that having to have a licence in order to be in a business creates a burden on business”. When asked which sector would most benefit from licensing, she said: “I think that construction is a real issue, but construction means so many different things. On the whole, I am less concerned about large, well-run construction sites than small-scale renovations of terraced houses or driveways—the smaller scale.”
126.Witnesses were clear that in order to cover its expanded remit adequately, the GLAA would need to be properly resourced. The Institute for Human Rights and Business told us:
“The reformulated and renamed Gangmasters and Labour Abuse Authority, with expanded powers and a remit extended across all industry sectors, can play an important part in preventing slavery and exploitation. This is contingent however on adequate resources being allocated to enable it to operate effectively.”
127.When asked about the funding the GLA has received and will receive in the future, Margaret Beels said:
“Our budget this year is £4.96 million and our budget next year is £7.78million. We are talking about what is a big increase for us but is still quite a modest amount of resources. We accept that our job is to make the best use of those resources. Do we have enough? We could make good use of more resources.”
128.Our witnesses acknowledged the improvements the Gangmasters Licensing Authority has made in its sectors. While we welcome the extended powers that will be given to the Gangmasters and Labour Abuse Authority, we urge the Government to ensure that the new body is properly resourced.
129.Further consideration should be given to extending the Authority’s licensing powers to other sectors. In particular, we see merit in introducing a licensing system for the construction industry. UK businesses selling clothes have also expressed support for licensing in the garment sector, which would help them to have confidence in their UK supply chains, and we support this proposal.
130.Kevin Hyland OBE was appointed as the first Independent Anti-Slavery Commissioner in March 2015, leading efforts to tackle slavery and human trafficking. In his first strategic plan, he listed the following priorities:
131.The Joint Committee on Human Rights in the previous Parliament was critical of the proposed mandate of the new Anti-Slavery Commissioner when it conducted legislative scrutiny of the Modern Slavery Bill, and the Government made some concessions as a result. However, the then Joint Committee still felt that the mandate was weak, the office could not be described as fully independent, and were disappointed that the office would not be seen to be part of the national human rights machinery.
132.While acknowledging that it is early to be assessing the work of the Anti-Slavery Commissioner, Owen Tudor emphasised the importance of partnership building if the Commissioner is to succeed: “A large part of how we should test the performance of the Commissioner relates to one of the priorities that the Commissioner has set out, which is about developing partnerships to make sure that the work is done effectively … I have certainly not been approached yet—I do not think any of my staff at the TUC have been approached—about being partners in that process.”
133.The Equality and Human Rights Commission raised concerns about the resourcing of the Anti-Slavery Commissioner: “There are … weaknesses in the powers of the Anti-Slavery Commissioner and the resources available to them.”
134.On appointment, the Anti-Slavery Commissioner was allocated a budget of £500,000. The Office of the Commissioner explained the limitations this imposed:
“Currently the Commissioner does not have the resource for a dedicated lead to work on engagement with the private sector and on labour market exploitation issues, as well as other priorities. He is therefore not able to maintain the sustained engagement with the business sector that he would hope for in order to develop projects and partnerships to reduce labour exploitation in the UK and internationally.”
135.Engagement with the business sector must be a priority for the Anti-Slavery Commissioner if he is to reduce labour exploitation. We encourage the Commissioner to make this his top priority, and we urge the Government to provide further resources to enable this.
136.During our visit to Leicester, we met representatives of Leicester City Council, and discussed what more they could do to clamp down on poor practices in local factories. We noted that local authorities currently have power to close down certain types of premises where anti-social behaviour is occurring, such as nightclubs and drug-dens, and discussed the feasibility of giving the local council powers to close down factories which have been found to breach employment standards. Council representatives, buyers and suppliers were generally in favour of the idea, but pointed out that the council would need extra resourcing to use such a power. Workers also noted that any closure of non-compliant factories would need to be accompanied by some remediation mechanism, so that employees would not be out of pocket.
137.We recommend that the Government should bring forward legislative proposals to grant powers to local authorities to close down premises which are found to exploit workers through underpayment of wages, lack of employment contracts or significant disregard of health and safety regulations. These new powers must be fully resourced and should be drawn up in consultation with the Gangmasters and Labour Abuse Authority, the Local Government Association and HMRC. In the event of a closure order, the local authority should also be given powers to compel the employer to compensate workers in the premises.
138.While the scope of our inquiry encompassed different sectors, we looked in most detail at businesses in the garment industry. While in Turkey and Leicester, we had the opportunity to visit factories supplying large UK businesses with clothing, and we asked representatives of a number of brands about their approach to preventing human rights abuses in their supply chains.
139.All the companies we spoke to relied on audits to monitor conditions in factories that supply garments. Most conduct semi-announced audits, where they give the supplier a window of a few weeks or months, during which the audit will take place. Marks and Spencer told us:
“Each year, we say to a supplier, ‘We will come within a three-month window’. A supplier cannot run a factory badly and hide all the bad practice for three months hoping that the audit turns up on the right day. That gives confidence to the good guys. Remember, we have confidence in 99% of our suppliers. We do not want to treat the good guys who pass our screening audits like naughty children. That three months shows them respect, but it means that the bad guys who might creep in cannot keep hiding.”
140.We were also told of a level of collaboration between UK companies regarding audits, as many use the same suppliers and the same factories. Some companies, like Marks and Spencer, upload their audit reports to a website, where they can then be accessed by other participating companies.
141.Mulberry told us that it was through their independent audit system that they first heard about issues in a leather factory in Turkey:
“Back in March 2015 we as Mulberry were informed through one of our audit partners that some members of the SF workforce had notified them that there was an issue about dismissals. Interestingly, we found out about the issue through our audit partner. When we do audits, the audit partner hands out cards to the employees so that they can anonymously and without prejudice flag issues through the audit company directly to us.”
142.The TUC and the Ethical Trading Initiative, however, believed that auditing was not always an effective way of diagnosing issues in supply chains. They argued that requiring suppliers to recognise a trade union in their factories would give the companies a much more realistic picture of what was happening in practice. To illustrate this point, Owen Tudor gave the example of Rana Plaza, the factory in Bangladesh in which over 1,000 people were killed in 2013. He said that the factory “had been audited by several companies and found to be perfectly okay”. Despite this, he said, “we have also seen a major increase in the amount of industry auditing that is going on. Multinational companies are spending enormous amounts of money on auditing. They accept that it does not work, but it persuades some of their customers that they are doing something about it.”
143.The difficulties faced by companies overseeing operations are further exacerbated lower down the supply chain, as explained by Debbie Coulter, of the Ethical Trading Initiative:
“The problems for business are further down the supply chain. The situation our members often face is that the further down the supply chain, the less influence, leverage and oversight they have. Quite often it is further down the supply chain where there are severe labour rights violations. We see that in the UK in the form of modern slavery and we see it in global supply chains in the fields, farms and factories of companies that put goods, services and garments on the shelves and clothing rails of the high street.”
144.During our visit to Leicester, suppliers claimed that it was not difficult for buyers to discern when unscrupulous suppliers were cutting corners. We were told that buyers could assess what garments cost in terms of materials and worker time, and that they should know if the price being quoted was so low as to suggest that the supplier was not paying the minimum wage to workers.
145.Both buyers and manufacturers are in favour of developing open costing mechanisms, which would lay out all production costs to buyers prior to negotiating contracts. Buyers agree that it is necessary to know all the costs of their suppliers, in order to give them a better deal and help to improve working conditions in the industry, while suppliers are in favour of making open costing systems the norm, and believe that greater transparency could help in negotiating fairer and more realistic contracts.
146.On 13 March 2017, the results of the first Corporate Human Rights Benchmark were launched. The initiative, coordinated by the Business & Human Rights Resource Centre, with funding from the UK Government, is the first-ever ranking of the world’s largest publicly listed companies on their human rights performance.
147.This approach was supported by David Isaac, the Chair of the Equality and Human Rights Commission: “I have seen … that identifying exemplars can drive huge change. I am thinking in particular about the corporate benchmark for human rights, which I understand is going to be introduced in March … I advocate a mixed-economy approach in relation to rewards but also penalties.”
148.The companies that gave evidence to this inquiry have recognised some of the issues in their supply chains and have shown a willingness to improve standards. These companies would also welcome more regulation by the Government, so as to improve the practices of all companies.
149.There is still a tendency by many companies to rely on audits, which, the evidence suggests, are not always effective. The Government must provide clearer and more specific guidance to companies about the risks that may present themselves in different supply chains. It should also oblige UK-owned companies to require the recognition of trade union membership of employees as a condition of contracts with suppliers.
150.We support the introduction of the Corporate Human Rights Benchmark, which recognises businesses who are taking human rights due diligence seriously.
117 These are companies that supply goods or services and have a total turnover of not less than £36 million (as determined by the Modern Slavery Act 2015 (Transparency in Supply Chains) Regulations 2015 made by the Secretary of State).
118 Home Office, Transparency in Supply Chains etc.: A practical guide (October 2015): [accessed 16 February 2017]
119 (Mike Barry, Marks and Spencer)
120 (Chris Grayer, NEXT)
121 Business & Human Rights Resource Centre and CORE, Register of slavery & human trafficking corporate statements released to date to comply with UK Modern Slavery Act (March 2016): [accessed 16 February 2017]; and Ergon Associates, Reporting on Modern Slavery: The current state of disclosure (May 2016): [accessed 16 February 2017]
122 Ergon Associates, Reporting on Modern Slavery: The current state of disclosure (May 2016) p 1: [accessed 16 February 2017]
123 Ibid. p 3
124 Written evidence from Equality and Human Rights Commission (EHRC) ()
125 Written evidence from Institute for Human Rights and Business (IHRB) ()
126 Written evidence from UNICEF UK ()
127 Modern Slavery Act 2015,
128 (Sarah Newton MP, Home Office)
129 Written evidence from Centre for Human Rights in Practice, University of Warwick ()
130 Written evidence from Anti-Slavery International ()
131 Figure correct at the time of publication
132 [accessed 16 February 2017]
133 Figure correct at the time of publication
134 (Sarah Newton MP, Home Office)
136 Freedom of association and the effective recognition of the right to collective bargaining; the elimination of forced or compulsory labour; the abolition of child labour; and the elimination of discrimination in respect of employment and occupation.
137 (Professor Keith Ewing, King’s College London and Institute of Employment Rights)
138 See, for example, (Shanta Martin, Leigh Day)
139 (Andrew Silvester, Institute of Directors)
140 Written evidence from International Learning Lab on Public Procurement and Human Rights ()
142 Written evidence from Anti-Slavery International ()
143 (Chris Grayer, NEXT)
144 Written evidence from The Ethical Trading Initiative (ETI) ()
145 (Margaret Beels, Gangmasters Licensing Authority)
146 (Mike Barry, Marks and Spencer)
147 Written evidence from New Look and ASOS ()
148 (Margaret Beels, Gangmasters Licensing Authority)
150 Written evidence from Institute for Human Rights and Business (IHRB) ()
151 (Margaret Beels, Gangmasters Licensing Authority)
152 HL Paper 62, HC 779, Legislative Scrutiny: (1) Modern Slavery Bill and (2) Social Action, Responsibility and Heroism Bill, Third Report of 2014–15 Session by the Joint Committee on Human Rights, paras 1.43–1.56
153 (Owen Tudor, Trades Union Congress)
154 Written evidence from Equality and Human Rights Commission (EHRC) ()
155 Written evidence from the Office of the Independent Anti-Slavery Commissioner ()
156 (Mike Barry, Marks and Spencer)
157 [accessed 21 February 2017]
158 SF Leather, the factory referred to by Mulberry.
159 (Rob Billington, Mulberry)
160 (Owen Tudor, Trades Union Congress)
161 (Debbie Coulter, Ethical Trading Initiative)
162 [accessed 13 March 2017]
163 (David Isaac, Equality and Human Rights Commission)
4 April 2017