Slavery has no part in the supply chain

The vast majority of construction businesses need to make sure they and their suppliers comply with the new Modern Slavery Act, says Chris Blythe.

no one can condone the trafficking and exploitation of vulnerable people. However, the very structure of the construction industry, the casualisation of labour and the dependence on employment agencies mean that exploitation will happen. So it is important for construction businesses to grasp the implications of the Modern Slavery Act 2015, and to understand that the Act covers worldwide activity – what happens on a site in the Middle East is just as critical as on a site in Birmingham.

The Act seeks to consolidate a number of existing laws as well as bring in new penalties and reliefs. One of its most crucial aspects is the establishment of an independent anti-slavery commissioner to encourage good practice in the area to ensure the prevention of slavery and trafficking, as well as the identification of victims. The first person appointed is Kevin Hyland OBE, a former police officer with much experience in the field.

The Transparency in Supply Chains (TISC) provisions covered by Section 54 of the Act present the most obvious challenge for the industry. Under this, firms with a turnover in excess of £36m must publish an annual statement of the steps taken to assure their supply chain is slavery-free. The chain covers everything from agency workers (the most obvious place to start) to the PPE supplier. While there is a provision to publish a statement that no steps have been taken, anyone doing that is likely to be short of customers sooner or later.

The statement has to be published on the company’s website or, if there is no website, must be available on request. All statements will also be published on an independent website available to anyone.

Before firms with a turnover of less than £36m breathe a sigh of relief, they can think again. If you have a customer whose turnover is greater than £36m then they will be required to make a statement and will require you, as part of the supply chain, to make a statement that they can rely on. So it is likely that you are going to have to do the work on your supply chain as well.

In other words, while the threshold for making a statement is £36m, in practice all firms in the supply chain will be jointly obliged to report on the chain. It’s clever or devilish depending on your viewpoint.

Judging by the initial expectations from the Home Office, these statements should be as much about showing progress as giving a categorical assurance. But how they are interpreted in the court of public opinion will be another matter: common sense tells you that the firms that report issues and outline the steps being taken to resolve them will fare better than firms that either say they have done nothing or say they are fully satisfied – because that will be an invitation to be proved wrong.

The nature of the construction supply chain makes it difficult too. Hoping that these matters might be taken care of by writing them into contracts is naïve. If a labour supplier is breaking the law by supplying exploited labour – a law where they face life imprisonment – then contract compliance is not going to happen.

The top management of a company will have to sign off the statement, and should have a clear understanding of the Act and what it means for them. They should also understand that their own customers will want to use their statement as part of their customers’ assurance process.

They need to establish the processes necessary for developing the statement, which should be robust but in line with similar processes used in the business. Identify the risks in the supply chain, focus on the greatest ones, then move on to the less risky. It’s a process construction people do every day. While there is no obligation to put in due diligence processes, it will be near impossible to make a reasonable statement without something in place.

Given the current subcontracting model, this could be problematic. There are likely to be hundreds of companies in the supply chain. Firms might even find it prudent to slim down the chain to known and trusted suppliers once again. Finally, businesses must create a culture through training and good procedures that can enable those at the front line to identify the symptoms of exploitation or trafficking and feel fully supported when they take action.

Monitoring activities to ensure there are no breaches of the Act should be part of people’s day job, that of site managers and procurement managers, for instance. There is also clearly a role for the CIOB and other professional bodies in helping ensure this becomes common practice. 

Professional advisers will be also be affected. That tender that is too good to be true may be because exploited labour is involved. Rather than advising clients to discount the bid, further enquiry might help identify the exploiters. Turning a blind eye allows the wrongdoers another chance until they find a less scrupulous adviser.

When a brand becomes associated with malpractice, the brand suffers and profits fall. If a major brand’s supplier puts its brand at risk it will be ruthless, whether the supplier is providing £1 T-shirts or building a £20m store. So knowing who is in your supply chain is really important. You only have to look at the steps taken by the food industry to overcome its scandals to see how important proactive management of the supply chain has become.

Chris Blythe is chief executive of the Chartered Institute of Building