In 2017, the UK government handed out contracts and frameworks to private companies worth £220 billion in lifetime value. That’s around 10% of GDP. In 2016, local government alone spent almost £60 billion on goods and services. Huge sums of money are paid from the state each year to buy the goods and services we need. Public procurement is, therefore, a powerful tool for shifting company behaviour. The requirements government can make of companies which wish to bid for, or which win, contracts, can shape and improve business practices to reduce risks of modern slavery. It is for this reason that I believe public procurement has a crucial role to play in the fight against modern day slavery and human trafficking.
Public procurement has not been used enough to tackle slavery
To date, however, this potential role has not been used to the extent it should. A considerable amount of research has been published in the past few months which demonstrates this. In March 2018, Sancroft and Tussell published their report, Eliminating Modern Slavery in Public Procurement, which analysed the extent to which the government’s top 100 contractors (by lifetime contract value) had complied with the Modern Slavery Act. They found that over 40% had failed to meet the basic legal requirements of Section 54 and, furthermore, that there was a lack of understanding about modern slavery and how it might affect businesses. This is simply unacceptable: the government should not be awarding contracts to companies which fail to comply with UK law. Baseline legal compliance with Section 54 is not hard to achieve; it requires the company in question to publish an annual statement, linked to from its homepage, signed by a director and approved by the board. For businesses to fail on these simple requirements and the government itself to turn a blind eye is deeply concerning.
Some positive examples of action do exist
Some positive action is being taken to begin addressing this situation. The government has recently been piloting a risk assessment tool with suppliers of some departments and is currently revising this tool. I hope that it will be rolled out across all government departments in due course. The Welsh government has produced a code of practice, Ethical Employment in Supply Chains, which encourages public buying authorities to ensure that employment practices are considered as part of the procurement process. It suggests asking questions in tenders, such as how bidders can explain the impact that low costs might have on workers when an abnormally low quote is received. This is important: materials, travel and other non-labour costs tend to be more fixed, so labour cost is usually the first area which is squeezed in the name of competition, particularly in sectors where workers are not unionised. Low costs may also signify a lack of due diligence processes on how labour is sourced.
Government must take action to strengthen section 54
Whilst I welcome the Welsh Code and support these initial explorations by central government, we need much more comprehensive action. Firstly, we need the government to ensure that any business which falls within the scope of Section 54 but which has failed to comply with its requirements is excluded from winning any public contracts. This should be the baseline of government action to ensure British procurement is on the right side of the battle against slavery.
Secondly, Section 54 should be extended to include public procurement. Baroness Young of Hornsey has been promoting this idea with her Private Members’ Bill which I support. This extension of the remit of Section 54 would only mean that public bodies must do what the government already requires of businesses. This has challenges attached - namely training and resources to enable public procurement professionals to understand this work - but it should also be viewed as an opportunity: British public procurement can become a leading example in the world, helping to ensure workers are protected on our shores and throughout the global supply chains on which we rely.
Last year, the Joint Committee on Human Rights recommended that the government incorporate human rights into its procurement, stating that “if the Government expects businesses to take human rights issues in their supply chains seriously, it must demonstrate at least the same level of commitment in its own procurement supply chains.” Some public authorities have moved ahead of government and begun producing Section 54 statements despite it not being required by law. In their report, UK Modern Slavery Act: Transparency in Supply Chains: Reporting by Local Authorities, academics at the University of Greenwich found that 33 councils had produced such statements in 2016-17. Whilst the quality of them differed, it is a signal of the will and appetite of local authorities to work on this issue. A new report by Unison, Ethical Procurement in UK Local Authorities, examines the ethical procurement policies of 190 local authorities and finds some interesting examples of councils trying to do more, including several which explicitly reference International Labour Organisation standards in their procurement policies and two which reference the Ethical Trading Initiative’s respected Base Code. These examples show how leadership by public authorities can begin to reduce the risk of becoming a victim of this serious crime and of the potential positive impacts of extending the remit of Section 54.
Government could go further with new policy ideas
Exclusion on the grounds of section 54 non-compliance and extending its remit to include public bodies are clear and necessary moves forward, but the government could go even further in supporting the fight against slavery. For example, the UK could follow the USA’s example and prohibit public contractors from engaging in practices that relate to human trafficking, including confiscation of identification documents and charging of recruitment fees. Subcontracting can create the conditions for forced labour and trafficking by making due diligence of the workforce much more complex. In response, the Norwegian government has introduced regulations which limit the number of layers in supply chains for its cleaning and construction contracts. This kind of imaginative policy-making solves two issues at once: it lessens the burden on government by making the supply chain easier to manage and also removes an enabling factor of forced labour.
It is clear that public procurement could be a powerful tool in the fight against modern slavery. Used well, it can help to shape a private sector which protects the interests of all workers and ensures the goods and services we use as a nation are not facilitating slavery or human trafficking. There are clear steps which need to be taken to ensure this happens: I hope that in the coming months we will see more movement on this issue and, in time, have anti-slavery measures firmly embedded across all public buying.
Resources on public procurement and slavery
- Information from the Chartered Institute of Procurement and Supply can be found here
- E-learning and other information from the London Universities Purchasing Consortium can be found here
- Local Government Association aide memoire to support those drafting first statements can be found here
- The report, Modern Slavery: a Council Guide, by the Local Government Association with the Independent Anti-Slavery Commissioner discusses procurement on pages 39-43 and can be found here
- Information about ethical employment in supply chains from the Welsh government can be found here
- Information on the Ethical Trading Initiative, its base code and public procurement can be found here
- OSCE Model Guidelines on Government Measures to Prevent Trafficking for Labour Exploitation in Supply Chains are here
- OSCE Compendium of Resources on preventing trafficking in supply chains are here