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Public procurement – key for addressing modern slavery in supply chains?

Legislation on public procurement in the UK is upcoming. We need evidence on how effective it potentially could be, blogs Olivia Hesketh.

Published: 29th June 2022

Interest in how “taxpayers’ money” is being spent is something we hear about frequently in the media. This reflects an expectation that governments have a duty to spend public money responsibly to deliver priorities in a way that represents value for money.

In recent years, the notion of ‘social value’ has crept up the agenda in the UK. This is the expectation that as well as value for money, public sector buyers should also carefully consider how their spending impacts on economic, social and environmental wellbeing.

Public procurement – the process by which the public sector purchases goods, services and works from the private sector – has huge potential as a lever to address modern slavery in supply chains. It typically represents on average 13%-20% of a country’s GDP, according to the World Bank. In the UK alone, public procurement represents more than £300 billion spending per year.

Public procurement spending is often high in sectors with an increased risk of forced labour in supply chains. For example, Modern Slavery PEC research evidenced how indicators of forced labour worsened in the Malaysian medical gloves sector during the Covid-19 pandemic, as demand for PPE increased fourfold, with the Department of Health and Social Care spending upwards of £12 billion on PPE since the pandemic began.

Public sector bodies in the UK and several other countries have already implemented a range of public procurement laws, policies and practices to address modern slavery risks. These include things like training procurement officials, setting out specific procurement policies in relation to modern slavery, and publication of transparency statements about activities. The UK Government has introduced the Modern Slavery Assessment Tool to help identify and manage modern slavery risks among suppliers to the public sector.

"In the UK alone, public procurement represents more than £300 billion spending per year."

Olivia Hesketh

While several examples of best practice have been identified, we need more evidence on the effectiveness of these public procurement measures. That is why the Modern Slavery PEC is currently analysing the existing evidence on effectiveness of public procurement laws, policies and practices in relation to modern slavery. How well are these measures being implemented in practice? What difference are they making to the decisions that public sector bodies make, and the behaviour of their suppliers? How do these measures ultimately prevent, remediate or mitigate the risk of modern slavery in supply chains?

Understanding what the evidence shows is especially timely and important, because there are three key developments happening in this space over the next year in the UK.

Firstly, the Procurement Bill is expected to create a new, post-Brexit public procurement regime. The UK Government intends to enable public sector bodies to have more freedom and flexibility in how they go about their procurements, as well as making processes more streamlined for suppliers, for example by enabling suppliers to provide their credentials once on a single platform instead of providing the same information to multiple public sector buyers. It is important to consider how this platform captures information about business’ practices to address modern slavery. The Bill will also create a ‘mandatory exclusion ground’ for modern slavery and human trafficking offences, excluding those convicted of these offences from procurements.

Secondly, a new Modern Slavery Bill is expected to extend section 54 of the Modern Slavery Act 2015 from businesses to public sector organisations with an annual budget of more than £36m. This would legally require organisations such as Government departments (which are already voluntarily publishing statements), Arms-Length Bodies, local authorities and police forces, to publish an annual modern slavery statement setting out the steps they are taking to address modern slavery risks in their operations and supply chains. It will be important to ensure public sector organisations have appropriate resources, tools and guidance to support them in fulfilling these new duties, and to consider how they can learn from evidence of good practices taken by businesses, and how citizens can scrutinise the action taken.

"Understanding what the evidence shows is especially timely and important, because there are three key developments happening in this space over the next year in the UK."

Olivia Hesketh

Thirdly, the Health and Care Act 2022, which was passed by Parliament earlier this year, requires the Department of Health and Social Care (DHSC) to carry out a review into slavery and human trafficking risk in NHS supply chains. The Act also sets out powers to create regulations containing provisions “with a view to eradicating the use in the health service in England of goods or services that are tainted by slavery and human trafficking.” We look forward to seeing further details about how these regulations build on the existing modern slavery guidance for public buyers and interact with already-established processes such as the NHS Supply Chain human rights and labour standards. The regulations will be restricted to the healthcare sector, and it is important to have a joined-up approach across different sectors, especially given the UK Government’s own Modern Slavery Statement identified areas, such as ICT hardware and electronics, construction and catering and cleaning staff, where modern slavery risks were highest for Ministerial departments.

We will publish the findings in a policy brief, similar to the policy briefs we’ve already published on the effectiveness of forced labour import bans and mandatory human rights due diligence legislation. We will use the results from our analysis of effectiveness to inform the development and implementation of these laws and policies as they are playing out.

Olivia Hesketh is Director of Policy Impact at the Modern Slavery and Human Rights Policy and Evidence Centre.