Oral evidence: Draft Modern Slavery Bill, HC [1019], Tuesday 4 February 2014
Oral evidence, 4 February 2014.
Witnesses
David Camp, Director and Stronger Together Co-ordinator, Association of Labour Providers, Catherine Pazderka, Sustainability Policy Adviser, British Retail Consortium, and Dr Karen Jochelson, Director of Economy and Employment Programme, Equality and Human Rights Commission, examined.
Chairman
Might you identify yourselves for the record?
David Camp
Good morning. My name is David Camp. I am a director of the Association of Labour Providers. I am the programme co‑ordinator for an initiative called Stronger Together, and I have been a member of the board of the Gangmasters Licensing Authority since way back in 2005-2006.
Catherine Pazderka
Catherine Pazderka from the British Retail Consortium. I am a sustainability policy adviser there, and I have been a member of the GLA board for two years now.
Chairman
Thank you. Fiona?
Fiona Bruce
Thank you very much, Chairman, and welcome. My first question is a very straightforward one. How do you think businesses view the GLA?
Catherine Pazderka
Businesses view the GLA really positively. We have been working with the GLA for a number of years now, and for the BRC and its members we have seen them really accomplish quite a bit in terms of delivering on addressing issues of worker exploitation, working with the retailers and with businesses. We have argued quite extensively on behalf of the GLA for a while now; we strongly support them and we encourage them as much as we can.
David Camp
In all the surveys that I have seen and that we have done ourselves, it almost always comes out to about 80% of licensed labour providers support licensing in our sector. Those legitimate businesses that want to operate properly see it as enabling more of a level playing field than existed prior to the GLA and compared with what exists in sectors outside the GLA. That is not just with regard to the treatment of workers and the savings that can be made by not paying workers all the rights that they are entitled to, but it is also in terms of the tax avoidance systems that are more prolific in sectors outside the licensed sector. As to food production companies and agricultural companies, there is almost universal support for the GLA. However, some agricultural companies I know have said, seeing all this press because it is only in this sector that we get the stories about exploitation into the press—well, let’s say much more commonly in this sector—that that has a side‑effect of creating a more negative impression of the food and agricultural sector, whereas I strongly believe that we are a lot, lot better than many, many other sectors.
Fiona Bruce
Thank you. You mentioned the Stronger Together initiative, Mr Camp. Could you update the Committee on it, and do you think it will lead to closer working with the GLA?
David Camp
It was one of those good ideas one day that grew. It really was looking to fill a gap in supporting industry with the tools, the knowledge, the guidance and the resources, so that they could take practical steps to deter trafficking and forced labour in their businesses and supply chains, and to engage with their workers—predominantly migrant workers—in tackling this issue. It grew into a very collaborative exercise, working together with the Gangmasters Licensing Authority, with Migrant Help, representing different interests, with the sponsorship from the retailers who have that power to encourage their supply chains to engage with such initiatives, and then with lots of supporting partners. So, yes, it was very much a collaborative exercise. The British Retail Consortium, Anti‑Slavery International and the Salvation Army have come in, and so on and so on. It has been a great project in terms of collaboration, and now that we are rolling it out to industry it is really being taken up very positively.
Chairman
Fiona, before Michael comes in, might you probe a little further on that?
Fiona Mactaggart
There is quite a lot of cynicism about these voluntary initiatives in business—that auditing processes are designed to get the right answer, as it were, and so forth. How can we be confident that things like the Stronger Together initiative actually are making a difference in the practice of companies?
Chairman
Could we put that question to you, Catherine?
Catherine Pazderka
Sure. Companies don’t want this in their supply chains. It is a huge reputational issue; it is a huge ethical issue for them. The CEOs stand behind their ethical labour programmes. Nobody wants this in their supply chains, and retailers have been working really hard to try and root it out. With Stronger Together, it shows that retailers are really trying as well as the other people involved in the Stronger Together campaign to be as open as possible about it. It is about finding the hidden exploitation. They are really trying as many things as they can to root out the exploitation. Retailers have had ethical audit programmes for 20-plus years. There was a recognition that those don’t always find the issues such as trafficking and modern slavery. With the GLA, we are getting a lot closer with that. They bring in the enforcement. Retailers don’t have that enforcement capacity, so the licensing system has again helped to level the playing field. With this, we are one step further and it is about collaboration. Businesses alone can’t do it. That is why there are NGOs involved; that is why the GLA is involved, and along the supply chain it has tremendous uptake. There is a sincere attempt to try and root it out. It is a difficult and very complex issue; that is the problem. Organised crime is not easy to root out.
Chairman
I know you are in the early stages of this voluntary agreement, but how many companies have found slaves in their supply chains?
David Camp
Stronger Together does not measure the number of slaves that have been found in the supply chain. Really, the only figures that we can take with any assuredness are the figures within the National Referral Mechanism, which report, in the latest figures that we have, that 29% of the cases reported—that is 144 individuals in 2012—were determined to be potential victims of trafficking within the food and agricultural sector. That is getting to be one in three.
Chairman
When we come to meetings, we all like to say that we are doing well. How many of your members have said, “Thanks to the efforts we are now making, we have actually found slaves in our supply chain and are taking action”—any?
David Camp
No. None have said that they found slaves, but 90-plus per cent who have come on the workshops have said, “Yes, we are going to implement the actions. We are going to put up the posters. We are going to put the stuff into inductions. We are going to do the training of our work force. We are going to engage with our trade unions to implement this through our workplaces.” I don’t say this is a replacement for something like the California Bill in this Modern Slavery Bill. It isn’t, because this only takes those who want to engage with it.
Fiona Mactaggart
Would you welcome something like the California Bill?
David Camp
Speaking on behalf of my trade association, yes, I would.
Chairman
Catherine, do you have anything to add to that?
Catherine Pazderka
I guess I would just add that the workshops only just started in December, so it is quite early days. Depending on what you are defining as slavery—
Chairman
Karen, we do have some special questions for you. Don’t feel you have to come into all of it.
Mrs Spelman
Catherine, could I just press you on this view as a GLA member, but also from the British Retail Consortium, that businesses want to stamp forced labour out of their supply chain? DEFRA is your sponsoring Department, but have you made that view of business known to BIS and more widely across Whitehall?
Catherine Pazderka
We have tried to be as clear as we can be. We are happy to vocalise that more strongly, but for UK retailers it is reputationally—it is extreme and people are really trying to get this out. I am happy to discuss that further with you, but, yes, we are trying to be as clear as we can.
Lord Warner
I was a bit puzzled by something you said about businesses welcoming the GLA because they did not have any enforcement mechanisms. Don’t they have an enforcement mechanism, which is don’t use the suppliers who are actually behaving badly? I am a bit puzzled by your remark that, somehow, this was the responsibility of the GLA and not the responsibility of the retailers.
Catherine Pazderka
Depending on what the issue is and what the non‑compliance has found, there are different ways that you can work. You can work with the supplier to build up their education and awareness to keep sourcing from them, the aim being that you want to improve their practices. Of course, if you reach a certain point, and if there are non‑compliances that are considered to be a zero-tolerance issue like forced labour, then, yes, you can stop buying from them, but what happens to the workers? What happens is they just get shipped off somewhere else. In terms of enforcement, there is also an issue about right to entry. You can show up as an ethical auditor for a retailer, but if the supplier does not want to let you in you can’t get in. You have no right to demand entry. The GLA has the right to go in there. They have the right to look at things. Retailers don’t have that.
Lord Warner
I am still pretty puzzled that you can’t stop using someone where there is evidence that they are behaving extraordinarily badly, verging on criminality.
Catherine Pazderka
Of course you can, but where does that leave the workers? That is not an enforcement mechanism; that is a purchasing decision. If we are looking at rooting out exploitation across the supply chain throughout the UK, those workers are still there. If you stop buying from them, yes, of course, that is one message, and retailers do that, but, ultimately, we are trying to come to work together to figure out different ways that we can work through this. The purpose of the GLA is to license. They set that entry point into the market, so they indicate to retailers that the suppliers are at a certain point and they meet the licensing standards. That is why we trade with them. It has been beneficial because they do checks that we can’t, and in terms of the right to entry that is a very important one. They can take people to court; they can prosecute; they can collect evidence. That is not within the remit of retailers.
Baroness Butler-Sloss
David, you have talked about 29% going through the NRM. Have you identified the firms who were employing the victims?
David Camp
We don’t have access to that information. The information where the individuals worked isn’t, as far as I am aware, publicly available anywhere. That would be reported by the various first responders, who have actually reported that into the UK Human Tracking Centre. That is confidential. We do know some cases where it has happened, and the video that we have made is based on real life examples. One of the places we filmed it was a food production company that discovered that this was happening. It happens under the radar; it happens by organised criminal gangs feeding—there is a new model now. It has moved on since the GLA was first set up. When there was no licensing it was a free‑for‑all. Now that you have these regulated licensed businesses, the criminality has moved a stage below that, feeding workers either into the labour providers or directly into the employment businesses, keeping under the cover, not regulated at all, completely in the black market. Those are difficult to uncover, and that is what Stronger Together is trying to do.
Michael Connarty
Can I just ask a side question? When the freedom chickens, I think it was called—whatever the egg name was—during the Olympics were discovered, I wrote to all of the companies that were named as being the recipients of these tainted goods, basically. I have a letter here from Sainsbury’s chief executive, Big Mac, McDonald’s and Tesco. All of them seem to say they rely on the GLA to do this work for them, to basically audit the supply chain. Of course, if you look at the powers of the GLA, it has no powers to do any of this. But they do say in regard to the Noble Foods case, and this is from the chief executive of Sainsbury’s: “Even companies with close links with the GLA and auditors have some confined cases of criminality in their supply chain.” I had them come in to speak to me. As long as somebody has signed a document, they took that as a bona fide agreement that that would not then allow exploitation down the line. Clearly, that is not the case.
David Camp
That is not the case. The current chair of the GLA, Margaret McKinlay, has expressed it very clearly that it is not the GLA’s job to police the supply chain.
Michael Connarty
I am glad we got that on the record, Chairman. Can I ask which industrial sector you think the GLA could cover or should cover? At the moment they are limited to a very small sector.
David Camp
This is a complicated question. Really, we have ends of the spectrum: we have nothing and we have a labour inspectorate that looks at all businesses. There aren’t the resources for this and nothing I don’t think is right. So where do we put that in the middle? Currently, it is in food and agriculture. There are talks of spreading it into sectors, so we could go by sector. That is one model. Type of worker would be another model or type of exploitation is another model. I can’t give a perfect answer. The sector-based model does not feel right, but to move it into other sectors is better than what we have now. Do we remain with the recruitment industry and exclude other ordinary businesses that subject their workers to forced labour? I don’t know if that quite feels right. I haven’t got an answer. I’ve got the problems, I am afraid, and maybe a small panel that really could work this out is what is needed. But it is difficult because at the moment the resources—the money—aren’t there for the GLA to do what it needs to do, even in the sector.
Chairman
Karen, do you want to add to that?
Dr Jochelson
Yes.
Chairman
Might you just identify yourself for the record and then address Michael’s question?
Dr Jochelson
Okay. I am Karen Jochelson. I am the director of economy and employment for the Equality and Human Rights Commission. We are a regulator for equality law and also have responsibilities around improving awareness and understanding of human rights in the UK or England.
Chairman
I thought you wanted to come in on that question, Karen.
Dr Jochelson
Yes, I did.
Chairman
Please do.
Dr Jochelson
We have undertaken several inquiries. We did one on the meat and processing industry between 2008 and 2010, and then a review between 2011 and 2012. We did an inquiry into trafficking in Scotland in 2010 and 2011. One of the issues we looked at was the remit of the GLA. I would think we would have similar issues that David has raised, but one of the things we suggested was consideration into the remit being extended. One way we thought about doing it was looking at the kind of worker. We thought it was low pay, low skill sectors that had high numbers of migrant workers or high numbers of agency workers who were likely to experience the same kinds of problems that we had identified when we did the work on the meat and poultry industry. I would be happy to talk more about that if it comes up later.
Chairman
On that, though, are you saying, that, if we were choosing where to concentrate efforts on inspection, one should go for industries with those characteristics rather than just deciding we’ll blanket here, there and everywhere?
Dr Jochelson
It would probably come down to the issue of resources, so it is weighing up the outcomes you are looking for and the amount of resource you may have, and then trying to decide where you are best likely to have most effect. If the Committee is trying to decide how to reshape those powers, the type of worker that may be more vulnerable to the exploitation should be one of the things that should be considered in trying to define a new agreement.
Michael Connarty
I have a question that comes out of that. It seems from what I have seen in terms of reports—particularly television and radio reports— that, when you have a direct employer with a farm getting the produce, everyone seems to be very happy and well paid. Have we created a monster in basically saying that gangmasters are the way to get employment in this industry? 1.6 million people come here to work in agriculture. How many of them now go through gangmasters, because we have created this system where people don’t think they can get direct employment with a farm any more? Would the retailer be much happier or would everybody be much happier if your supplier was a direct supplier? We use a system that seems to be open to abuse. Should we just use a system of direct suppliers?
Dr Jochelson
On the basis of our inquiry findings, we surveyed labour agencies and the supermarkets as well, and they were quite in favour of the GLA and its remit. They felt it did two things. The first is that they felt it helped raise standards in work agencies and labour suppliers, and then they also felt that it created a more even playing field for businesses because there was some regulation that prevented cowboys who might undercut the market. Even given the controls that we still have, we still found examples in our inquiry where the GLA standards were being breached and they are things that many people would take for granted as part of their employment experience. It would be things like agencies refusing to register workers based on their nationality or the employer asking for a particular kind of worker based on some stereotype of nationality. We found examples of pregnant women being refused work on the basis of being pregnant; workers paying agencies to find work; workers not being given employment documents that they could understand so they had no idea of what they were signing up to do. Then there were examples of getting full payment from agencies, so workers were often denied holiday and sick pay. At the moment we are undertaking some work in a non‑regulated sector—that is the cleaning sector. Some of those issues are coming up again. We have not released our evidence yet, so what I am describing is really on the basis of interim findings. We did have examples of workers not receiving holiday and sick pay, and being forced to work outside the confines of the working day. They were required to come in early to set up work and at the end of the working day they had to put away equipment and were not being paid for that. That is an example of a regulated and a non‑regulated industry experiencing some similar issues.
Michael Connarty
What do you do in those situations? Who do you take it to to have redress? You have found these things. Is it the retailer that has the contract, because the point was made earlier that, for the retailer, it is a financial transaction and they don’t have enforcement rights? How do you deal with this research? How do you right that wrong?
Dr Jochelson
I have quite an interesting example at play now. I can explain what we did for the meat and poultry processing inquiry. After we released our inquiry report, we set up a taskforce and invited the trade associations, the supermarkets, the processing firms and unions, and we sat round a table. Part of the discussion that emerged over a year was agreeing what the problem was and then those sectors undertaking to make changes. In fact, when we went back a year later to see what had happened, we found a great deal of improvement. There were still some problems but it was nothing like the evidence that we collected at the start of the inquiry. This relates to an earlier question someone raised about whether businesses will do things voluntarily. This was an example where there was evidence provided and those businesses, partly because they were concerned about their reputation and also, I guess, the sustainability and effectiveness of their businesses, were keen to make sure their supply chain was well organised. Since last year we have begun work on the cleaning sector. That is not a formal inquiry. We have asked for a call for evidence, but there is no requirement on anybody to provide that evidence. What is quite interesting is that we have had a very different response. As of today, we have a total of about 460 pieces of work evidence and we have had a very poor response from the industry. We have had only 15 responses from firms in the industry, which clearly puts us in a much more difficult position. We would like people to come to the table voluntarily, have an open discussion about what problems there may be and agree a common industry approach, because everybody will be stronger as a result of it. We are going to have to decide how we manage that particular issue.
Michael Connarty
That seems to suggest to me that we do need some kind of mandatory auditing because it does not seem to work voluntarily.
Dr Jochelson
For us, this is an issue of what will bring parties to the table. We were keen to work with the private sector in a voluntary way; we are aware of concerns about burdens on business. One of the things we will have to consider is whether this is a reason to go down an inquiry route where the Commission does have some legal powers where it can compel organisations to give evidence, but that is a decision that will go before our senior management and board.
Baroness Hanham
The co‑operation that is more likely to come your way is from the big companies—the Sainsbury’s and Tescos. What about further down the SMEs—not the baby SMEs but the sort of middle-range people who are beginning to build up their businesses and who may find it quite uncomfortable to have to give evidence to you about how they are doing with their employment? Do you think there is more reluctance in that part of the market than there is in the ones with the big reputation?
Dr Jochelson
I probably couldn’t answer that until we have done a bit more work. I would imagine there are many business men, though, who are concerned about their reputation. The challenge for us is to understand how best to work with them. So if it is a matter of businesses not understanding what their obligations are or they don’t have the kinds of resources to invest in training or guidance, or whatever the bigger businesses are able to do, that is where we can play a role in bringing the right agencies around the table and providing that kind of help for them.
Baroness Hanham
Is this something you are thinking about?
Dr Jochelson
Once we have a clear definition of what we think the problems are, we would be looking for partners to work with.
Sir Andrew Stunell
For all the panel, really, what do you think the GLA’s current limitations in combating modern slavery are? You have mentioned the inability to get a supply chain, and some other things have come up, but perhaps you could just give us a review of that?
Dr Jochelson
My evidence comes from two areas of work. In Scotland, there is the trafficking inquiry. I would like to say at the outset that one of the issues we raised is that we recommended the GLA approach to regulation as a model approach. One of the things that that inquiry report praised was the fact that they felt the GLA had integrated trafficking indicators into their operational inspections and they also had good co‑operative relationships with the police, the HMRC and Migrant Help. They thought that was a good model that other regulators could consider. That inquiry also heard evidence about limitations on the GLA at the time. These were around regulatory scope, which we have already discussed. They also identified anomalies in the current powers in Scotland about not being able to arrest a suspected unlicensed gangmaster, issues around not being able to formally investigate offences of slavery, servitude, forced or compulsory labour, and issues around maximum penalties in Scotland being different from the penalties elsewhere in England and Wales. Those were quite particular issues related to the remit of the GLA and how it affected Scotland. The recommendations from our meat and poultry processing inquiry were around issues about having adequate financing to allow them to deal with widespread breaches of licensing. We also made recommendations about broadening the remit, and then we also made some recommendations about working together, which we have taken on board and we are working with other regulators. So it was kind of a mixture of how we work with others as well as recommendations made to the GLA.
Sir Andrew Stunell
Is it your judgment and the judgment of members of the panel that the GLA does in fact get to all the significant cases in the sector? In other words, how effective is it at actually penetrating the areas of abuse?
Dr Jochelson
I don’t think you could ever expect a regulator to be 100% effective. The labour market is enormous. The question is how effective they are in maybe identifying areas and being able to make enough of an impact that it also draws some of the laggards into line because those businesses become more aware of the dangers that they are facing. I am afraid I was not party to our meat and poultry inquiry at the outset, so I am not quite sure what knowledge the GLA may have had of problems in that industry, but they were certainly very collaborative and worked with us through that process.
Sir Andrew Stunell
To David and Catherine as members of the board, does the GLA feel frustrated that it is not getting to cases, or does it believe it is, in general, dealing with all the cases that are there to be dealt with?
David Camp
There is a challenge which has come out of the budgetary constraints. The GLA is trying hard not to cut its front-line services. Its back office seems to be as lean as it can be—certainly as lean as I have seen it in my time on the board. The amount of compliance inspections it has been able to do for the last two or three years has been quite reduced. Compliance inspection means a visit to a licensed business. It visits maybe 8% to 10% of licensed businesses a year, so it can only see a very small percentage of those businesses. There are businesses that we will have seen, even in the latter part of last year, whose licences were revoked, which had held licences for a number of years. They were revoked with quite serious non‑conformance—non‑compliances—with the licensing standards, which indicates they had been doing that for a number of years. So there are, without doubt, a proportion of licensed businesses that are still operating non‑compliantly but have somehow managed to keep that under the radar and the intelligence does not come out. If you come across an issue, if you are a victim or if you discover something, it is quite difficult to know who to tell this information to. Do you tell it to your local police force? Do you ring the GLA? The GLA is only food and agriculture. Do you ring the Pay and Work Rights Helpline? It is quite difficult to find where you get that number from. Who do you ring and what do you say? This idea of a single point of contact for these serious issues of labour abuse is one certainly that I hope you will be able to explore more fully in your review for the Act.
Sir Andrew Stunell
Would you say it was resources or powers that are the missing ingredient?
David Camp
It is a combination. There was a consultation on the powers. The GLA has teeth. The GLA can stop a business from trading with immediate effect. That is a pretty strong civil power, but what it does not have are some of the more subtle powers, which is the power to apply restorative penalties as the national minimum wage compliance team can do. The GLA can’t do that. They don’t have the ability to apply punitive fines where a business has deliberately sought to evade licensing over a period of time, for example. Those powers weren’t available in the consultation. There has been a ministerial statement that it should not apply to businesses with fewer than 250 employees. We believe that a special case should be made for the GLA. However, that did not receive ministerial favour. The GLA does have real powers, but to have more weapons in its armoury would assist it in achieving its objectives more effectively and sometimes with reduced resources.
Chair
Catherine, do you have anything to add?
Catherine Pazderka
I would just like to support what David said. Looking at the issue of restoration, most gangmasters would deal with employees of fewer than 250. David can correct me, but you are looking at an industry that really needs to have those fines and penalties applicable to them because that is how they operate. They are all small players in the grand scheme of things. I would say, along the lines of what David has said, that additional tools and abilities available to the GLA would be helpful, particularly if they can then be directed into victim compensation. That is something that we are aware of—that victims don’t have the adequate remit to have compensation. David mentioned the minimum wage, but often these people come in for a job for a short season, and they can leave the UK and never see the money they were actually entitled to. Then I would just reiterate that the resource issue is really important for the GLA. Again, the reduction in compliance inspections is of great concern to us and we have had a lot of conversations with the GLA about that. They follow their inspection process based on intelligence and they are following a risk-based protocol, so, hopefully, as more intelligence is made available to them, if they were adequately resourced, I would hope that they could follow up on those inspections.
Sir Andrew Stunell
Do you think that if those things happened you would be changing the complete nature of the GLA if you are investigating and prosecuting, and going for restorative justice—a whole list of things there?
Catherine Pazderka
Maybe it is an issue of better co‑ordination with other agencies that are already doing that. I am not able to comment on that, but it is worth further investigation, perhaps, to think about how that can be better addressed. I am not sure if we have really gone through it.
David Camp
There is an argument for the national minimum wage compliance unit, the GLA, the Employment Agency Standards Inspectorate and the Pay and Work Rights Helpline maybe to come together, at least sharing intelligence to achieve the most effective use of resources. Maybe one combined unit would be more effective than lots of different separate bodies.
Sir Andrew Stunell
And perhaps working with the Commission and some of the investigatory work that has just been described to us.
Dr Jochelson
We are in the process of signing a memorandum of understanding with the GLA, so that is largely about sharing information to the limits that we can. When we undertake an inquiry, there are some legal limits on what we are allowed to share. So we need to do it within the confines of how we are set up. Also, as part of the project on cleaning at the moment, we have met several times with the GLA and they are taking a keen interest in the project because it is an unregulated area, so there is something that they may learn.
The Lord Bishop of Derby
We have talked about supply chains and vital resources and powers and things. I want to ask you, in relation to UK supply chains, to be specific about two things or for some specifics. From your experience through the GLA, what would be the two most serious flaws in the way the supply chain system works? Secondly, could the GLA have any regulatory powers that would enable it to require retailers to up their game, really, in the way they relate to the supply chains? In those two areas, do you have any specific suggestions for either of those things?
David Camp
There are a couple of pieces of work going on at the moment. There are flaws in the auditing system, and there is a piece of work taking place with a couple of the retailers, some of the large auditing bodies and an organisation called Sedex, which holds all the ethical audit information, to look at protocols and a process for auditing of labour providers. There don’t seem to be those best practice processes at the moment. So they should take a greater responsibility to do down in the supply chain. The further you get down the supply chain and the further you get away from the end user is where the murky stuff is. That is where you will see it, as in that Houghton case, which was a small chicken-catching company where he had outsourced the running of his business to another guy. It is down there, really, where the worst things happen. It is two things. Really getting down your supply chain in terms of labour standards is the first thing. The second thing is more of a formal process of auditing in the supply chain of labour providers to deal with, let’s say, the not-so-serious areas, if I can put it like that, of labour exploitation so that the resources of the GLA can be focused on those worst cases. Those are the two points.
Chairman
Tesco has said it is not just getting down there but shortening the supply chain so that they know much more what is going on. Shouldn’t that be part of a company’s strategy?
David Camp
It depends whether you are one of those people in the supply chain who is not going to be there any more in a shorter supply chain.
Chairman
That’s quite good if you are employing slaves, is it not?
David Camp
Certainly, the retailers are looking to shorten their supply chains. Some of them now run manufacturing sites themselves. You see the Morrisons model, where they produce and pack, and they sell, and the Co‑operative model where they grow. So, yes, that is a shorter supply chain. Certainly, in labour supply, where you have an agent in another country who supplies into a recruitment business in another company, who supplies on to another agent, who then supplies on to a large labour provider in this country, the labour provider in this country can say, “Workers don’t pay anything,” but, if you go further down that labour supply chain, yes, the worker is paying right down there. That enables, let’s say, a low-cost recruitment model. In those situations certainly, yes, shorter chains if possible; if not possible, clarity.
The Lord Bishop of Derby
Catherine, if the GLA had a regulatory role in relation to challenging retailers about how the supply chain operates in terms of their corporate responsibility and good practice, could you see the GLA having a role and powers that would help put your members on the spot and raise the ante in terms of standards and expectations?
Catherine Pazderka
Do you mean in addition to GSCOP?
The Lord Bishop of Derby
Yes. Do you see any other ways of strengthening the feedback from the research and the grass roots coming into the culture?
Catherine Pazderka
There is also a missing piece—that the retailers are engaged. The retailers have very good relationships with the GLA and the GLA challenges them, and, likewise, back. There is a really good discussion, of which David is part as well as other organisations, but I would challenge that we need to look beyond the retailers and look at other people in the supply chain. It is quite easy to pick off the top 10 because they are very visible, but it is other brands, manufacturers operating in the UK, everyone else, that needs to come to the table because we are always there. Why isn’t there more progress in tackling these issues? Again, David mentioned that there are some issues with the ethical auditing and I don’t think anybody would deny that is the case. We are really trying to improve that because, again, it is not in our best interest to have that in our supply chains, but it would be helpful to have other people who are in those supply chains to be engaged and to be more co‑operative.
Lord Warner
We have heard quite a lot, really, about the difficulties that the GLA is having on its compliance work. For a series of resource reasons, that seems to be a shrinking pattern of work. You are now trying to figure out whether getting closer to the detail of the supply chain with companies might actually plug some of that gap, as I understood the argument. What more should we really be expecting of companies off their own bat trying to remove exploitation, and, very specifically, how much do we know about whether companies do go down and see the working conditions of the people who are supplying the goods to them? Do they go there? I don’t just mean the retailers; I mean the people in the middle. Should we be strengthening the obligations on the companies, really, particularly if the licensing body is itself unable to do all this job? There seems to be a bit of a cosy expectation that the GLA will solve these problems, but, really, the obligations ought to be much stronger on the companies, oughtn’t they?
David Camp
Yes.
Chairman
That’s a good answer.
Dr Jochelson
Can I start with a more general comment? As part of our human rights remit, we have been looking at the Ruggie principles for business and trying to understand what that might mean in a domestic context. The FCO launched an action plan around human rights in business late last year. Over the next year—so the next financial year for us—we will be looking at ways of identifying human rights issues in particular sectors and deciding, with that sector, what kind of guidance or toolkits might be helpful. That is looking at the very meta-level almost, trying to help a sector understand the potential challenges they may face within it and give them some tools for understanding what due diligence might look like. We have also tried to do this as part of our cleaning sector inquiry. On our website we have set out what we think human rights issues in relation to business are, so we have taken the human rights principle and put it in very clear language. I can’t quite remember the term, but with regard to a right to fair remuneration, for example, we will set out that that means being paid the minimum wage and a whole series of other issues that are relevant and are already within the law. In a sense, what we are trying to do is begin to create a framework with which many businesses are very compliant already and trying to give them a sense of where their responsibilities lie. In some cases, where you breach the law, there already are some kinds of penalties. That would be the meta-level, and I would leave it to my two colleagues to talk about it in relation directly to the GLA.
David Camp
Of course, very large businesses have more resources. I have certainly worked with a number of retailers and they do very, very good, committed hard work trying to drive improvements and actually driving improvements, setting high expectations down their supply chains. But, of course, the further you get away from that top, the harder it gets. You get to smaller businesses who don’t have the compliance managers, the corporate social responsibility managers, who may have a very overworked human resources manager. As a human resources manager, you deal with employing people and you look after your work force. You now have this whole new area of corporate social responsibility, trying to get your head around what the Ruggie principles mean. What do these guiding principles on human rights mean? How do I actually put that into place in my own business, let alone have a responsibility for making sure that all the companies that supply me, beneath me, are doing the same? If you get your head around the Ruggie principles and what they mean, it is not too tricky. It is tricky when you start reading it, but it is not that complicated. We have a big job to make it easier for all businesses at levels down the supply chain to know what to do, to know what is reasonable to do and to help them put this in place. These are my thoughts on the matter.
Lord Warner
I am still getting a sense, though, that this is a kind of paper exercise. Where is the grit in the machine? Where is the stuff where somebody senior actually goes down and sees some of these working conditions and looks at the recruitment arrangements? Some of us have been in regulated industries and it takes senior people to do something which wakes people up. This sounds very paper-driven.
David Camp
Can I just make one point? Moving this from a corporate social responsibility into public accounts moves it from the CSR teams to the board teams. So making a case for transparency in supply chains being in this Bill is a really important consideration.
Dr Jochelson
On that, I guess there is also the new Corporate Governance Code, where a list of companies has to comply or explain their approach to human rights. That is very new, and it will be interesting to see what happens when there are discussions at board level. There is more public transparency around it, which is a way of holding companies to account. That might then begin to have the kind of more hands‑on auditing that you are describing. Certainly, as part of our meat and processing work, the supermarkets we worked with developed a monitoring format for themselves that they work with, where they monitored some of the activities of their processing firms. That did begin to create a more hands‑on relationship between them and their suppliers, but we would need to ask them what the benefits, difficulties or challenges were of doing that.
Fiona Mactaggart
That is exactly the point at which I want to come in because I want to ask David and Catherine about the recommendations which came out of your review of the supermarkets’ auditing processes. You will have noticed that I am a little cynical, potentially, about these voluntary codes. I am willing to be convinced, but one of the recommendations of the review of the meat and processing thing was that the independent ethical audit could be more effective if they collect information directly from workers when managers are not there and did not always give firms time to prepare for known inspections. Is that happening in practice?
David Camp
There are tools coming out trying to get workers’ input without use of auditors. That is very important. That is where we can release the workers’ voice and have that information. That is something, I would say. I am not sure it always comes out, but certainly there was the point made just now. You have to get in there. You have to talk to workers; you have to see what is going on in practice to know what is happening. That would be the first point.
Fiona Mactaggart
The other one was without notice.
David Camp
Without notice—ideally, yes. It can’t always happen because of practicalities. If you turn up and there is no manager there, there is no one to speak to. Sometimes it is announced—
Fiona Mactaggart
Even better when there is no manager there; you can talk to the people who are working on the production line frankly.
David Camp
There is a halfway house, which is semi‑announced, saying that you will turn up in this two-week, three-week or four-week period. That seems to be the practicality of merging that very good intention with just knowing the right people are there so you have turned up and there is no one to speak to. But, yes, unannounced audits certainly have their place.
Fiona Mactaggart
I wanted to ask you, Karen, whether you have investigated any companies whose recruitment practices narrow recruitment to a particular national or ethnic group, and what you have done about that.
Dr Jochelson
We are planning some work at the moment. There was an MP whose name I forget—forgive me—who wrote to us with a list of various recruiting firms that they felt were recruiting only east European workers of a particular nationality. My colleagues would be looking at those websites to check whether they are in fact discriminatory adverts or not. We are putting together a proposal for consideration by our board and then DCMS around whether we undertake further work explaining, at least the minimum, what a discriminatory advert is, why you shouldn’t do it and the risks to your business of doing that.
Fiona Mactaggart
You are planning to regulate this by being nice to people.
Dr Jochelson
As a start, you have to make sure that people understand what their obligations are. Obviously, as part of that work we would try and bring other relevant regulatory agencies around the table. When we undertake work like that, we will sometimes also go and look at employment tribunal records to try and identify whether there are any repeat offenders and, where the judgment may have made some kind of recommendation, we may follow up with the company to ask whether they have put that into practice or not. So, if that project goes ahead, it will be a combination of being nice and a combination of looking at how we could use regulatory powers to make sure that if there are wrongdoers they are being held accountable for what they are doing.
Baroness Hanham
I just really want to come back to the question I asked and Karen answered, which was probably more appropriate to David and Catherine. This is about getting hold of the smaller businesses rather than the bigger ones. Is it your experience, because you are probably now closer to the ground than she is, that you get all the co‑operation you get from all the companies who will see there is a huge reputational thing in this, but do you think it is more difficult to get to some of the smaller companies that are doing probably an awful lot of the work we are talking about, and is there anything more that we can do?
David Camp
What we are seeing at the moment is that large companies at the top of the supply chain are having memorandums of understanding with their suppliers to lay down expectations of them, to say that they must comply with the ETI Base Code, to say that they will expect them to put in place a number of processes, and that they will release audits further up the supply chain. It is that downward commercial pressure which is saying, “If you want to supply us, this is what you have to do,” because these businesses towards the top end of the supply chain—I use Noble Foods—know that they are the ones who are going to appear on the front page of the newspaper even if right at the bottom of the supply chain something has happened in a very small business. That reputational risk and that damage to brand and share value is driving that change of practice, and they are requiring and dragging up those people down at the bottom through these memorandums of understanding, through these contractual terms, to change that practice. I am seeing it happening in some sectors. Would I say it is common yet? No. Would I say it is just getting going? That is probably where I would put it.
Baroness Hanham
Are there any more powers that the GLA needs or any more regulatory power that would help? To answer that question, perhaps if you have some thoughts on it you could just drop us a note.
David Camp
It is just turning that supplier/retailer protocol into reality. It is an enabling agreement; it is a good enabling agreement; it is making it happen now. That is the work that needs to be put in place. I am not sure that needs any new powers.
Lord McColl of Dulwich
One of the reasons why the hospital service worked extremely well in the old days was that the matron would appear totally unannounced and they never knew when she was coming. Why don’t we have that system? Why do we have to give notice? It seems a crazy idea.
Catherine Pazderka
Because we can’t actually have access to another company’s facilities which is their private location, which is why the GLA can go in but an ethical auditor can’t force their way into an on‑site factory.
Lord McColl of Dulwich
Why not?
Catherine Pazderka
They don’t have any powers to do so.
Lord McColl of Dulwich
Shouldn’t they have?
Catherine Pazderka
Ethical auditors? I think that would be a difficult thing to suggest.
Lord McColl of Dulwich
It is easy to suggest. It is the principle of doing it.
Catherine Pazderka
That is the benefit of having the GLA—to have the enforcement. From an ethical auditor’s perspective, some of these factories are kind of scary places and a bit dangerous. I don’t think it would be appropriate to ask them to do that.
Chairman
Very good. Thank you very much. That was a good session and really helpful. Oral evidence: [Draft Modern Slavery Bill] 2