14
Examination of witnesses
Dr Roger Barker, Craig Melson and Scott Steedman.
Q25 The Chair: It is my pleasure now to welcome our next three witnesses to today’s hearing of the Joint Committee on Human Rights. Anyone who may have joined us online or some of the people who have now come to the Strangers’ Gallery may wonder what this is all about. It is part of our work, the remit of this committee, which comprises Members of both Houses of Parliament, to look at the impact of legislation and policies on, as the name suggests, human rights. That is the day job of the committee. We are doing a number of inquiries at the moment and one of them is focusing on the use of modern slavery, as it is often described, or forced labour, in our supply chains and what more we can do about that.
This second panel today comprises three business leaders, all of whom work with companies of differing sizes across the United Kingdom, from large corporations to SMEs. We will be hearing from the national trade association, the British Standards Institution and a directors’ membership community. Our experts will speak to business perspectives on the issue of forced labour in supply chains and provide us with examples of best practice and how they have been developed. The session will provide us with an opportunity to direct challenges to the business community, in addition to hearing examples of innovative solutions that are being developed to identify forced labour and modern slavery in supply chains, some of which were referred to in the penultimate part of the last session, which I know our witnesses were able to watch and listen to.
We are very glad that you have been able to join us. I will give brief biographical details so that we know who is speaking to us. Mr Scott Steedman CBE is director-general standards of the British Standards Institution and a member of the board of the BSI Group. He has primary responsibility for BSI’s standards policy and strategy, its appointment as the national standards body, its role in the UK national quality infrastructure, UK membership of the international standards organisations ISO, IEC, CEN, CENELEC and ETSI, and BSI’s relations with counterparts around the world, particularly other government‑appointed NSBs. He is on the boards of ISO, IEC and CEN. I will leave you to work out what all the acronyms mean. He is also with the Royal Academy of Engineering and the Institution of Civil Engineers.
We have Dr Roger Barker, who is director of policy and corporate governance at the Institute of Directors. He has been the IoD’s director of policy and corporate governance since 2020. He also served as director of corporate governance and professional standards at the IoD from 2008 to 2016. He is honorary associate at the Centre for Ethics and Law at University College London. He is also the author of numerous books and articles on corporate governance and board effectiveness. He is a former investment banker. He spent almost 15 years in equity research and senior management roles at UBS and Bank Vontobel in the UK and Switzerland. Until January 2020, he served as a UK member of the European Economic and Social Committee in Brussels.
We also have Mr Craig Melson, who is the associate director of climate, environment and sustainability at the UK trade body techUK, where he heads up the organisation’s work on climate change, environmental, social and governance disclosures and due diligence through to circular economy, business and human rights, conflicts around minerals and post-Brexit regulation. Prior to joining techUK, Mr Melson worked in public affairs and policy. He has an avid interest in emerging technology.
Gentlemen, you are all very welcome to join us today. I will start with Mr Steedman and then move on to your colleagues. In your view, what is the biggest obstacle to businesses when it comes to forced labour-free supply chains?
Scott Steedman: Good afternoon, ladies and gentlemen. The biggest obstacle that we perceive is the lack of a systemic approach to the implementation of the Act in the United Kingdom and through global supply chains, and a lack of guidance and promotion of international standards that can support the delivery of regulatory requirements, as we heard in the last session. I believe that there is a great opportunity to strengthen the Act and its implementation in the United Kingdom through the delivery of a system-led approach to the standards that industry uses to support its understanding and delivery of effective mitigation actions, and to understand the risk and the measures it needs to take, aligned with international action at the ISO global level, and in the European space with the CSDDD.
The Chair: Would your colleagues like to add to that as well?
Dr Roger Barker: The use of products that involve forced labour is anathema to any responsible business leader. There are some bad apples that exist within any walk of life, including in business, and they may be tempted by acquiring intermediate goods or final goods at low cost so they can benefit financially.
Even for responsible business leaders, there are still some obstacles to getting to the bottom of this. One of them is the sheer complexity and lack of transparency and traceability that exists in supply chains, with the best will in the world. If you think of an iPhone, that probably has about 1,500 suppliers across 30 countries involved in creating it. Many other products are similar to that. There is huge complexity and lack of transparency.
A second issue is a lack of digitisation of supply chains currently. A lot of people in the supply chain still operate in a relatively old-fashioned way. It would be enormously helpful to traceability if there was digitisation and the use of technologies such as artificial intelligence and blockchain to give immutable records of goods as they move down a supply chain. Those are obstacles.
Finally, on the regulatory point, I agree with a lot of what has been said. Although leading edge when it was introduced, the Modern Slavery Act has many defects. There is not good enforcement. There is a lot of poor disclosure in Modern Slavery Act statements. That does need to be looked at and is now starting to become an obstacle.
The Chair: I can speak for the whole committee in saying that we were all fans of the 2015 legislation, which was landmark legislation and ahead of the game. It is 10 years later, so it would be odd if it did not need some reappraisal and review.
Craig Melson: Thank you for giving us the opportunity to provide evidence. I would echo what Scott and Roger said. Data is key. These are huge and complex integrated supply chains. People think of an automotive supply chain, an electronics products supply chain, or maybe even apparel or construction. There are a lot of interconnections there, and your leverage and visibility disappear very quickly, some would argue, at about tier 2. Some of the more advanced companies would say that, just after tier 2, your visibility of what is happening, who is providing what and where it comes from really disappears, especially if it is from certain sourcing regions. Data is key and digitalisation of supply chains is going to be absolutely fundamental. We have already seen some efforts to get there, but there is still a hell of a long way to go.
Our members are facing a regulatory tsunami. Some dramatic changes have happened in Europe in the last week. There are rules popping up all over the world. The practitioners—the people who are meant to be doing stuff—are also having to report on stuff and comply with everything. That takes away resources and focus from the implementation of proper due diligence and proper processes, because you have to meet some very scary timelines for some very complex new laws emerging around the world.
You will have heard this at the conference this morning from the Minister and from the Independent Anti-Slavery Commissioner. You will hear it from us; you will hear it from lots of people. The UK did lead the way, the Modern Slavery Act did turn heads, and companies did start taking this issue very seriously. However, it is now time to move on to due diligence. I am sure that lots of people will have said that to you, and that you are going to hear it from lots of other people as well, but it is increasingly the global norm and the UK risks being left behind.
I would echo and support comments from the Business and Trade Committee, which said that the UK risks becoming a dumping ground. I see that as a real risk, if we do not keep up. Our only caveat is that we should align, where possible, with other jurisdictions, because asking global companies to do 25 versions of almost the same thing is very complicated and expensive, and it diverts resources from what really matters.
The Chair: That is a very good curtain raiser, thank you, and I know that my colleagues will want to drill deeper as we proceed.
Q26 Lord Dholakia: Mr Barker, what can the Government do effectively on issues such as this and forced labour in global supply chains? What recommendations should we be making on this particular matter?
Dr Roger Barker: There are different levels of response that can be considered by Governments. The first level of response is simply to improve the enforcement of the existing arrangements and regulatory framework. There is very little enforcement, in respect of modern slavery statements, for either non-compliance or providing something that is boilerplate, misleading or just not useful. In other jurisdictions, there are similar disclosure requirements and they do have enforcement. Fines are imposed, for example. There are naming and shaming arrangements in some countries. That would be a good first step.
The second step would be to move to more of a mandatory due diligence requirement. Especially when you place forced labour alongside some other things that we were talking about in the previous panel, such as anti-bribery and the Bribery Act or tax evasion, there is, in both of those cases, a requirement for companies to show that they have reasonable processes in place to prevent those offences occurring.
It would seem to me that to have something similar in respect of not using forced labour in supply chains would be reasonable. The question is then what would be appropriate the procedures to prevent forced labour in supply chains. There, it would be important to work very closely with business and to have a proportionate approach, depending on the size and complexity of the company.
Thirdly, I would like to encourage government to ask directors of state-owned enterprises to use this code of conduct for directors, which the Institute of Directors launched last year following a commission headed up by Lord McNicol of West Kilbride. One of the principles of director conduct within this is to think about the responsible management of the supply chain. That would put this right at the forefront of directors’ minds within boardroom discussions.
Scott Steedman: Just to build on Roger’s point, and speaking from my responsibility for the national standards body, we have a world-leading national standard to support companies to do exactly what Roger describes. What I would be keen to recommend is that government uses its global power through the FCDO to promote that standard globally. I am very pleased that the International Organization for Standardization and national standards bodies around the world appointed by their Governments are likely to adopt that standard to support business. That now gives us two of the tools—regulation and the national standard—to support industry to understand how to approach this problem and to put that in place. The same will be true at the European regional level.
There are tools here that we can recommend should be used, and that will support more improved implementation, but the design of that implementation and how the national standard is used along with national regulation is a matter for the Home Office, which should be adopting this standard itself and promoting it as a tool for business and industry across the UK. It could do that simply by promoting it. It could do it through earned recognition. It could do it through co-regulation. There is a range of tools that government has at its disposal to see this international standard used and promoted globally.
Q27 Peter Swallow: It is really insightful to hear the discussion around making sure that we have got the regulation and the standard right. Of course, the third part of that is enforcement and making sure that it is appropriate and proportionate, but strong enough to ensure that we can tackle this issue. I wonder whether you could say a bit about how you see enforcement as the third arm in that strategy.
Scott Steedman: As I suggested earlier, when we take a systems approach to the outcome that we want in the United Kingdom, we start to understand the relationship between the standard, the regulation, the redress and the policing of issues. That needs to be seen in the round, so we have a virtuous loop of improvement.
Depending on how the standard is used by government to support UK industry at the head of its supply chains, there are different means of enforcement. The trading standards bodies in local authorities are the boots on the ground. They are not talked about nearly enough, but their resourcing is a way to identify local issues.
We will publish the new British standard on human rights due diligence at the end of this year. That will be a requirement standard. If companies are using that standard as a national standard, and are certified against it, they may receive earned recognition against that from government, which would reduce the burden of policing, and allow policing and enforcement to focus on those who are not using the national standard, for example. This is a well-known technique that is used in environmental management as well.
There are multiple ways to try to encourage a focus away from limited government resources and on to the really serious rule breakers by having a combined approach of regulation, supported by a national standard, which is, itself, identical to that in other countries.
Craig Melson: On enforcement, I would completely echo what Scott said. Trading standards and OPSS are being told to do more and more but have been given less and less. It is not just around forced labour. Until there is a forced labour end product ban, there is not really a piece of legislation that trading standards could enforce, so you need that first. We are seeing the need for trading standards to get non-compliant, counterfeit and unsafe goods, as well as those that have been brought over illegally or on which the right taxes have not been paid, off the streets. They are the guys who are going to do it.
On wider support from businesses, updating the legislative basis for this is going to be the biggest one. It will also be about in-country support for companies entering new markets. A lot of the time, UK Export Finance, DBT and UKTI, as it was, did a great job, and still do, of helping companies understand the marketplace that they are entering, but they do not necessarily do that for supply chain partners.
How can FCDO and DBT resources in key sourcing markets signpost companies, “These are the relevant trade unions to speak to. These are the best NGOs. These are the best survivor voice organisations”? Survivor voices need to be integrated into everything that companies and Governments do on this issue, so how can the Government use their resources and networks in-country to help companies, when they are sourcing from those regions, understand this world a bit more?
It is very easy to secure manufacturing deals with key sourcing markets, particularly in Asia, but really hard to find the right NGOs and the right people to speak to. They are out there. Maybe government can play a role in helping connect those two sets of people.
The Chair: If you want to develop the thinking around the role that the Government might play, do feel free, after the committee hearing is over, to write to us further with any specific suggestions that we might then make in our recommendations. That would be helpful to our work.
Q28 Afzal Khan: Mr Melson, how have your organisations attempted to address forced labour in your own international supply chains? How do you encourage your members to take a responsible approach to this issue?
Craig Melson: TechUK is a small organisation and our risk profile is that of a small SME operating in any serviced office in any town or city in the UK. We probably assess ourselves to have a low risk. We have a modern slavery policy and we use assured suppliers. We reuse a lot of our own equipment, which is one way of mitigating that risk. In all honesty, we do not proactively monitor this. It would not be a proportionate thing to do, because we are not very many people in one floor of a serviced office. We do have a modern slavery policy that we apply to those we buy from.
What we are more active in is helping our members. Arnold Schwarzenegger has a line for this, which is “Be useful”. How can we be useful to our members? We ask them what they want from us and try to provide that support. That can mean sessions on how to write good statements. We have not done one for the last year, but we generally do an annual exercise where members can critique each other’s modern slavery statements to drive up the quality of reporting.
We engage in dialogues between our member companies and the NGO community to understand the risks better. We do conferences and webinars. We have a working group on this issue. We try to educate and inform our members and have written guidance for SMEs. We have worked with the Home Office around a document called PPN 02/23, which is, basically, the Government’s expectations of people they buy from in regard to modern slavery. We sit on numerous forums to try to educate the Government on what is happening in businesses, and also try to translate government-speak back into operational things that companies can do.
There are other areas as well, such as sitting on the BSI’s excellent committees on the HRD standard and BS 25700, and trying to help develop these standards in a way that makes sense and can be operationalised by companies large and small. We have a very active human rights programme.
Lastly, we helped set up an organisation called Tech Against Trafficking back in 2017 or 2018, which is going very strongly, to try to build solutions and get them in the hands of people who need them, whether they are local authorities, police forces or other companies. In the last two to three years, the big focus has been on law enforcement moving towards supply chain transparency. So we are trying to build those networks.
Q29 Lord Murray of Blidworth: Mr Melson, as part of your work, have you done any analysis of the price differential for products sourced through a supply chain that has been improved and one that is unimproved? Can you show retailers here, for example, what the price differential is?
Craig Melson: We have not for our sector, because our sector tends to be high-value items.
Lord Murray of Blidworth: That is partially why I asked, because you might see it more markedly in your sector.
Craig Melson: There is an inbuilt cost to being a responsible business. If you look at some of the key products that our members make, whether it is smartphones, games consoles, televisions, fridge freezers or servers, there is a lot of integration with their own supply chains. Company A might also supply company B. Even though they are direct competitors, they are supplying to each other. They also tend to be members of the Responsible Business Alliance and the Responsible Minerals Initiative.
There is no price differential that we can see. There are instances of companies that are perhaps not our members but are more direct to consumer and unbranded, where it is very obvious that they have cut corners, because you cannot deliver a product of that specification for that price, unless some very bad things have happened. Our members tend to be brands that have all taken roughly the same steps, so using the UNGPs, joining the right organisations and spending the right money on auditing, intelligence and risk-mitigation programmes. There is not really a differential that we can see.
Dr Roger Barker: The Institute of Directors is in a very similar position to TechUK. We are a small organisation. We have fewer than 100 employees. We do not meet the Section 54 threshold to produce a modern slavery statement. We see our role as with our members. It is about convening our members to inform them and to disseminate best practice. We have an education programme for directors: the chartered director qualification. The board’s role in supply chain management is part of that education programme, so that is important.
We also have a service for members called the information and advisory service. Any member can call up and obtain information about how to create a modern slavery statement, and how they might apply best practice or standards to manage their supply chain. Certainly, with the introduction of Mr Steedman’s standard, we would love to work together to disseminate that to Institute of Directors members.
The Chair: That sounds like an offer that you should not refuse. Do you want to add to that?
Scott Steedman: I just wanted to make a quick point to Lord Murray. While it is easy to tackle a lot of things when they are visible and on the shelves or in your hand, the area of online sales and purchases is particularly exposed, due to the ease with which companies that wish to manipulate the system can distribute substandard or counterfeit products that use forced labour.
Q30 Alex Sobel: We have already heard from Dr Barker about the number of components that there are even in the smallest technology items, and about the recent strides that we have had in computer power, utilisation of data, open data and artificial intelligence, particularly in areas of machine learning. Mr Melson, can these advances in machine learning and data help us address the challenge of forced labour in identifying where supply chains are? Particularly on open data and other areas, we have had evidence to the committee, for instance, from Tony’s Chocolonely, which uses open chain software that can track ingredients right back to source. Are these same efforts being made in the tech sector?
Craig Melson: The answer is yes. There have been huge efforts to digitalise key parts of different companies’ supply chains. Some of that is through open‑source programmes such as Open Supply Hub and Supply Trace, which are doing amazing work to try to bridge that data. There are some proprietary pieces of software that can identify phoenix companies, as they are called. They can identify companies and beneficial owners, which will then highlight red flags when someone who has been associated with a company that has manufactured these products before is now entering this one. There is a lot of work going on to build awareness.
On enterprise reporting software, all these companies have started building solutions that they are offering out on a commercial basis. On the open data side, you can look at the work of the Counter Trafficking Data Collaborative, which Tech Against Trafficking runs with the International Organization for Migration, to drill down into where and when people are being trafficked and for what purpose.
The World Economic Forum has just announced a data partnership on forced labour, the idea being that that will be an open data thing that other sectors can use. We are seeing that in construction and elsewhere.
For tech specifically, the Responsible Business Alliance collects and shares data on auditing and intelligence. We are also seeing it being used for other sectors as well. The opportunities are vast. We are very early into the AI revolution, and this is going to be really exciting but relatively unknown. The key is to make sure that these amazing new technologies that are being developed and deployed can be utilised by people who need them.
There are some amazing examples of where the best tech is delivered but it does not have the right underpinning of skills, training and building the right use cases. “All of this stuff is amazing, but it’s telling us what we already knew”. There have to be some sensible deployments. We have seen examples in the UK and elsewhere where amazing stuff has happened but no one is using that technology to its potential, because they have not been trained.
The short answer is that there are lots of proprietary and open-source data platforms, some with an intelligence layer, some with more traditional data science, and some that are, indeed, on blockchains, such as smart contracts. Some of the amazing work that Provenance was doing on agriculture and the fishing trade can easily be replicated by any other supply chain.
Scott Steedman: Just to build on that and to introduce the global testing inspection and certification industry—or the TIC sector—there are leading providers that have already developed, through Covid, techniques for remote auditing and all sorts of tools around digital product passports that will be introduced shortly. This is a sector that needs to be used as part of the global solution to identify issues in supply chains. There are interesting and important industry initiatives. There is a trade association called SCAN, as well as other bodies such SMETA and SLCP, which do this at an industrial sector level. What is really important is to try to build, on top of that, the governmental imperative on the industries to deliver.
Alex Sobel: Mr Steedman, the issue of critical minerals is very high up the agenda. Many critical minerals are in conflict zones where forced labour and child labour are common, because of the nature of what is happening in those zones. We are currently seeing, once again, conflict in the eastern DRC. How can the supply of critical minerals best be managed to reduce the risk of exposure to forced labour?
Scott Steedman: It is a really important subject area, and you will not be surprised that there is a lot of international interest in this. In the ISO system—the International Organization for Standardization—there are two workshop agreements that are standards-type documents on ESG principles and sustainable critical mineral supply chains. They will be useful in this area, along with the new international standard that has built on the British standard, which will be delivered soon and which will support that. There are techniques to use in the critical minerals area, deploying existing international standards and standards work, to see results.
Craig Melson: I would like to highlight some points on minerals. The tech sector helped set up and fund the European Partnership for Responsible Minerals, which is a multisector and intergovernmental organisation. The FCDO put in a fair amount of funding, although we are very concerned that the cuts to ODA could see EPRM-funded projects suddenly get less money and have to be pulled.
The Chair: Can you keep us posted on that specifically?
Craig Melson: Yes. I am trying to find out from the FCDO where exactly that is going to fall. How things are classified as ODA is somewhat of a mystery to me. The tech sector also set up the Responsible Minerals Initiative, which is trying to operate a whitelist of smelters. Rather than a blacklisting approach of saying, “You cannot use these”, it has a whitelist to say, “These are approved”—and I believe that they conform to numerous standards—“and that is who you source your minerals from”.
We have also had some legislation. The Dodd-Frank Act in the States has been transformational for the way that corporates have responded to assessing risk in mineral supply chains, and the EU conflict minerals regulation took that forward. There has been a lot of confusion about how it applies in Northern Ireland under the Windsor Framework. The UK brought it in, but we have not seen much enforcement of that yet. This not only covers the DRC, as the old regulation did, but takes a conflict and high-risk approach globally. It takes 3TG—tin, tantalum, tungsten and gold—and makes you worry about it on a global level. That was very powerful, but enforcement has been lax and there has been a lot of confusion from the UK Government about how it works in practice.
Ultimately, if you are in any industry, the best way of improving your minerals supply chain is to be more circular, taking the stuff that is in your products, remanufacturing it and refurbishing it. Recycling used to be the gold standard. Now it is just above waste. If you have to recycle, recycle. Get those materials. That is the way to have critical minerals supplied in a sustainable and the most ethical way. Reuse, refurb and remanufacture stuff. The regulatory approach needs to change to facilitate that. At the moment, the regulations incentivise everyone to take stuff, chop it up and sell those materials. Let us reuse it.
The Chair: That is a very interesting reply. In parentheses, you mentioned the situation in Northern Ireland and how that did not fall within the same scope as the other regulations, because of the Windsor agreement. If you are able to brief us in writing about that, we would be able to pick that up in the context of our report.
Q31 Sir Desmond Swayne: There are the UN principles, the OECD guidance, and now the BSI. How do we know that those firms that claim to have adopted these standards are doing so? What incentives are there for them to do so?
Scott Steedman: What an excellent question. The ISO work is based on national delegations. The UK is a leading player in the ISO international system, and our own experts participate in that work. It will use UN and OECD terminology, so it will ensure that the international standard for business is supporting and linked to the UN and other global requirements.
When it comes to implementation, the first step I would encourage is understanding and awareness. The guidelines that we have now introduced through the British standard to become the ISO standard are the first step on that journey. In the next step, the human rights due diligence international standard will be a requirement standard, and that is then auditable by audit companies globally.
In my opening remarks, I made the comment about looking at this as a system. It is very important to design in this system how these relate and what the incentives are for companies to use them and become certified within their supply chains. There might be a risk of threat of prosecution, of course, but at least there is the opportunity here to know what they might be expected to do.
The biggest incentive to drive behavioural change is procurement, as we heard in the last session, and the new government chief commercial officer might be very interested in advising us on how to do that. Certainly, through the procurement route—through the tier 1 companies, retailers and large corporates, but particularly through government—there is a big opportunity to drive an incentive for companies to use and be certified against appropriate due diligence standards and, in fact, the wider well-being standards that already exist, in order to get better behaviours. That will trickle down into their supply chain pretty quickly, once they start reporting adequately.
The critical advantage of using the national standards system, and the international standards system where the UK plays a leading role, including in Europe, is that countries will adopt the same standard everywhere, so there is a massive advantage to exploiting that global TIC industry to get the outcome.
Sir Desmond Swayne: On that issue, how does your BSI standard relate to the incoming EU standard? If you had adopted your standard, would you be compliant with the EU?
Scott Steedman: It is not my standard. It is a national standard that has been developed and drafted by national stakeholders, so over 50 experts in the BS 25700 standard. I have 1,000 standards committees, and they are all made up of people from around the country. Neither BSI itself, nor my team, write standards. We encourage stakeholders to write them. It belongs to the nation in that sense.
The opportunity that we have delivered through BS 25700 is to promote that into the global space. As the European Commission brings in its CSDDD, and if it is looking for a harmonised European standard to support that directive, it is extremely likely that it will use the international standard that is based on the British standard. In any event, British experts will participate in any standards development work in the European area as part of the European system—so the CEN organisation that you kindly referred to earlier, Lord Alton. There is a very strong chance that the wishes of our stakeholders are that an identical standard will exist at UK, European and global levels.
Q32 Lord Murray of Blidworth: Dr Barker, throughout the inquiry, we have heard about the importance of creating a level playing field. To what extent would you and your members welcome further measures or regulations such as import bans, mandatory human rights due diligence, or stronger reporting requirements to address forced labour in supply chains? How likely is it that such measures would impact on the cost of operations for businesses in the UK? We touched on that earlier with Mr Melson, but I am interested to hear your thoughts.
Dr Roger Barker: On the one hand, Institute of Directors members, as I say, find the use of forced labour abhorrent and want to eliminate it. On the other hand, though, any new regulatory requirement does, of course, come with costs and an increased compliance burden. It is about finding a good balance, so shifting the culture and raising awareness of this issue, but not imposing an anti-growth burden on the good guys who are doing the right thing anyway.
In terms of a due diligence requirement, the key would be what we determine to be an appropriate process to prevent the use of forced labour that would mitigate the risks that the company might face in respect of that issue. It would be important that that appropriate process is done in a business-friendly way, in consultation with business, so that it is manageable and feasible, but also meaningful. If the balance could be got right there, that would be useful.
It is important to note that the European Union has been somewhat reassessing the corporate sustainability due diligence directive. Last week, the European Commission introduced an omnibus regulation that, to some extent, will row back from some of the original requirements of the corporate sustainability due diligence directive. For example, there will be a requirement to conduct due diligence only of first-tier suppliers, not all suppliers. There will be a requirement to undertake a review of the supply chain only every five years, not every year.
This change that the European Commission is proposing is as a direct response to the Draghi report, which, in essence, said to the EU, “We’ve got problems with competitiveness and growth. We need to have something proportionate”.
Lord Murray of Blidworth: So you would say that the latest directive is less burdensome than its predecessor.
Dr Roger Barker: Yes. What is being proposed now by the European Commission has not gone through the approval process, but it would be more of a light touch than the directive as it currently stands.
Lord Murray of Blidworth: Would you see that any British regulations should be pared back in a similar way?
Dr Roger Barker: It is very beneficial, for reasons that have been mentioned, for the UK to be aligned with the EU on this and in many other areas. That does create a level playing field.
Craig Melson: The omnibus is brand new. We had a bit of a trail as to what to expect from it in the week preceding the publication. It represents a significant watering down of what was originally proposed. It was also subject to further watering down right before getting approved by the European Council last year.
It is worth mentioning that these are proposals. NGOs, business groups, member states and MEPs are going to have a lot to say about this, and they already are, so I would not be shocked if they moved those requirements up towards what was originally proposed.
There has been a lot of hoo-hah, but we need to see what comes out of the negotiations. The direction of travel is there. There is going to be a lot more reporting and due diligence. The best way to ensure a level playing field is that alignment on policy, although “harmonisation” is a better word. The UK signed two documents. One was with the Five Eyes partners on the need to align on a modern slavery policy. It signed an OECD ministerial declaration saying the same thing. We have not really seen any progress towards those two documents being enacted. I appreciate that Governments and priorities change, but we have not seen these two documents there. On paper, the Government are signed up to harmonising with other Governments, but we have not seen it.
Equally important are sensible compliance deadlines. Part of the Draghi paper was that too much regulation is hitting companies too soon, and we would agree with that. You are not seeing upskilling. You are not seeing education. You are seeing lots of money going to third parties to help them comply, and resource being taken away from action.
Scott Steedman: Just to add to that thought about the difference between regulation and standards, regardless of whether there are differences in the regulatory requirements, it is entirely feasible and quite normal that the standards are identical. Moving from reporting, which is difficult, to action and how companies perform is the ambition that we have. Requiring companies to make statements does not necessarily change anything on the ground, but changing the way that they work does. There is a difference between what they have to do and how they have to do it, and we have examples of that within the UK.
Q33 The Chair: Gentlemen, that brings us to the end of the session, except that I have one final question to you. It is the question that I asked the previous panel, which is about prioritisation. You were passionate earlier about digitalisation. You have talked a lot about due diligence. We have heard references to the inadequacy of Section 54. What would be the most important things that we, as a committee, should say to the Government when we finally come around to our own recommendations? Take it one at a time and I promise we will release you after that.
Scott Steedman: I would really stress the importance of government promoting its own national standards through procurement, adoption and promotion by the Home Office, FCDO and DBT to see change happening in the United Kingdom.
Dr Roger Barker: First, take a look at the regulatory framework and consider how that can be brought up to 2025 standards. Secondly, ask directors and boards of state-owned, regulated companies with a public interest to adopt the code of conduct for directors.
Craig Melson: The best thing that you can do is to align and harmonise on policy. Updating the Modern Slavery Act so that it is mandatory due diligence is the easiest thing that government could do. As a representative of the tech sector, we would want to see tech for slavery eradication, or something along those lines—so a strategy for where tech can make the biggest difference in helping local authorities and police forces in the UK, as well as international companies. Tech for slavery eradication would be a really good thing for government to promote, and people would back that.
The Chair: Gentlemen, thank you very much indeed for sharing your expertise with the committee this afternoon. We are all deeply appreciative and grateful to you. I hope that you will find that the report, when we come to write it, and the recommendations that we make add something further to the debate. Without further ado, I would like to close these proceedings.
