This article by Debbie Wood,who is a member of the Fylde Coast Amnesty group, was published in the PublicFinance magazine (News & Insight for Public Finance Professionals).

Councils and NHS trusts need to start grappling with their responsibilities under the Modern Slavery Act and ensure transparency and integrity in their supply chains, says Debbie Wood.

The recent collapse of Carillion, with its reported impact on as many as 30,000 individual businesses, serves to highlight the complex ‘supply web’ that can surround public sector contracting.  The National Audit Office estimates that the public sector spends £187bn annually with third-party providers, with private companies increasingly involved in the delivery of services across health, education and social care.

Out of Contract, a report published last month by the Smith Institute, highlights a lack of transparency and information sharing around contracts. This makes it difficult to assess the full costs and benefits of outsourcing and indeed to performance manage contracts once they are operational. The report outlines, for example, how councils gather vast amounts of intelligence on contractors and their performance, which is not effectively shared across organisational boundaries.

As well as being necessary to secure optimal value in the delivery of public services, it is arguable that advances in transparency, information sharing and ultimately challenge are also required to fulfil other key obligations facing public bodies, such as reporting requirements under the Modern Slavery Act 2015.

Enacted by the coalition government, the landmark act defines modern slavery as encompassing slavery, servitude, forced or compulsory labour and human trafficking. By its nature, the scale of modern slavery is difficult to assess but the International Labour Organisation estimates that there are as many as 40 million victims of modern slavery globally, with 25 million of these held in forced labour. According to the ILO Forced Labour Convention, forced or compulsory labour is “all work or service which is exacted from any person under the threat of a penalty and for which the person has not offered himself or herself voluntarily”.

It is difficult to comprehend that there are more people in slavery today than at any time in human history and that such exploitation takes place in towns and cities across the UK. The government’s latest annual report on modern slavery, published in October 2017, indicates there are between 10,000 and 13,000 victims of modern slavery in the UK. 

Although much public sector focus has understandably been on Section 52 of the act, which refines a framework for identifying, referring and supporting victims of modern slavery in the form of the National Referral Mechanism, attention must also be given to the Section 54 of the Act, the Transparency in Supply Chains provision.

This section, along with accompanying guidance from the Home Office, requires any corporate body or partnership that engages in commercial activities and has a turnover of £36m to produce an annual statement, outlining steps that have been taken to ensure that its business and supply chains are free from slavery and human trafficking, even if it pursues purely public functions.

Arguably, a number of public sector bodies such as councils and NHS trusts are caught in the Section 54 definition, but a review of the Modern Slavery Registry, maintained by the Business & Human Rights Resource Centre, indicates that to date, very few have grappled with this responsibility. It is unlikely that this position can continue.

In April 2017, Parliament’s Joint Committee on Human Rights recommended that “If the government expects business 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” and a private members’ bill which was introduced in the House of Lords last year, seeks to amend Section 54 to remove any doubt as to its application to public authorities. 

Research conducted by the Ethical Trading Initiative and Hult International Business School in 2016 revealed that a key barrier to companies addressing modern slavery was supply chain complexity and in light of this, there is no doubt that Section 54 presents significant challenges to many public sector organisations.

The public sector must overcome these challenges. The principles of integrity and openness must always guide it. Increased transparency and collaboration between public bodies is crucial, not only to increase effective management and scrutiny of the value delivered by current contracting arrangements, but as stated by the anti-slavery commissioner to “show leadership in promoting a human rights approach to procurement”.

Further guidance on the detailed requirements of Section 54 can be found here.

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  Debbie Wood

  Debbie Wood CPFA is a lecturer in accounting and business law at the University of Central Lancashire School of Business and Enterprise.