Skip to main content

Investment Industry Exposure to Modern Slavery

Volume 702: debated on Tuesday 26 October 2021

Before we begin, I encourage Members to wear masks when they are not speaking, in line with current Government guidance and that of the House of Commons Commission, and to also give each other and members of staff space when seated and when entering and leaving the room.

I beg to move,

That this House has considered investment industry exposure to modern slavery.

Modern slavery is one of the most prevalent and egregious violations of human rights in the world today.

It is great to see you in the chair, Mr Robertson, for what is my first ever Westminster Hall debate. Hopefully my performance will not mean that it is my last. I welcome the Minister to her new, important role. I know she will carry out her brief superbly in one of the most important jobs in Government—safeguarding our most vulnerable people.

I think we can all agree that the shameful existence of modern slavery has no place in a civilised world. It is an issue that should concern every person who believes in the integrity of common humanity, and should be a concern for every business, because it distorts markets and undermines ethical business practices. As an international community, we have rightly taken collective responsibility for defending human rights around the world. Organisations, such as the United Nations working group on contemporary slavery, have drawn increased attention to the issue and made significant strides in defining and identifying this covert and highly complex crime.

That being said, there is a great deal more work to do. Human exploitation continues to pervade every major nation on earth. Almost half the countries in the world have yet to criminalise slavery. In the UK alone, it is estimated that 136,000 people are currently victims of this awful crime. However, we are here today to specifically discuss the role that the investment industry can play in tackling modern slavery because, as it currently stands, financial services are not considered part of the solution in public policy. I want to do my little bit to try to change that.

We must first acknowledge the great work that this Government, and previous Conservative Governments, have done in tackling this issue, thanks to the leadership of my right hon. Friend the Member for Staffordshire Moorlands (Karen Bradley), together with, of course, our late friend and colleague James Brokenshire, the Security Minister at the time, who passed the Modern Slavery Act 2015. The vision for that legislation was truly world-leading, and the UK became the first country in the world to require businesses to identify and address modern slavery risks in their operations and supply chains. It is an Act that we, in this country, should be incredibly proud of, for it has highlighted that modern slavery exists in the private economy. It has also paved the way for legislation in other countries—in Australia, France and the Netherlands.

However, while we reflect on what the 2015 Act has achieved, we must also acknowledge the need for evolution. All legislation requires continual review to keep pace with developing risks, and the Government have therefore, rightly, announced that they plan to strengthen the Act in response to consultation in 2019.

I congratulate the hon. Gentleman on bringing this forward. I spoke to him outside, so he knows what my thoughts are. Does he not agree that it is important that for girls in particular, we need to understand that investment portfolios should show mindfulness on human slavery? It is not enough to say that if we do not use modern slavery in our businesses, our hands are clean. Would the hon. Member agree that we must be cognisant of how investment portfolios gain interest? This can only be done, as the hon. Gentleman says, through legislation and legislative change.

I am grateful to the hon. Gentleman for his intervention, which is a great honour. That is another first for me, so I feel like I am really making it now. I completely agree that young girls and young people—all people, actually—who have investments, savings or a retirement pot, need to know and have confidence that those who invest that money on their behalf are doing so prudently and are putting in place the checks to ensure that there is no inadvertent risk of modern slavery. The Government should do everything they can, as I will come on to in a minute.

The Government’s commitment to amend section 54(5) is intended to make it more prescriptive for investment funds. I completely agree with that, but even with those changes, that section would remain entirely focused on internal business structures and supply chains, not where their investments are made. The good news is that an increasing number of responsible companies are holding themselves to a higher standard. Many investors are already assessing modern slavery risks as part of their robust environmental, social and governance strategies or choosing to report their alignment with the United Nations’ guiding principles on business and human rights.

Yesterday, I met a group of investors, and this year alone, I have met 24 separate financial services companies in preparation for today’s debate. I found that they already have robust measures in place to tackle modern slavery. On the whole, however, the sector has not integrated modern slavery risks into investment processes to the same extent that it has adopted environmental risks. Some 795 financial organisations published modern slavery statements under the Act last year, but of 79 asset managers who submitted a statement, only 27% disclosed that they had conducted due diligence on modern slavery risks.

That is clearly a problem, but I believe that there are three solutions. First, the Government could broaden section 54 of the Act and consult on including a requirement that investment portfolios are included, as they are in Australia. Secondly, the Government could issue specific statutory guidance on how investors can assess modern slavery risks—again, as they do in Australia—so they are equipped with knowledge on that assessment. Thirdly, as it is a global problem that needs a global solution, we should work with our global allies to establish a taskforce, modelled on the taskforce on climate-related disclosures. Although the issue is different, the approach can be the same.

As it stands, financial services firms are a £9 trillion lever that we are not yet pulling in our fight against modern slavery. The UK is the largest net exporter of financial services in the world and the law change that I have proposed could make a difference in eradicating that horrendous crime. It would also protect and promote our democratic values at home and abroad. British savers and investors should never be used to support profit from human slavery. It matters for global Britain, as our leadership in this space will create prosperity at home and help to promote our values abroad. The situation that we walk past is the situation that we accept. It is an issue hidden in plain sight. We need to pull every lever we can to end it once and for all.

It is a pleasure to serve under your chairmanship, Mr Robertson. I congratulate my hon. Friend the Member for Grantham and Stamford (Gareth Davies) on securing the debate. He and I have been discussing the issue for some time and he has led admirably on assessing the requirements that are needed to address it, bringing his background and experience in the private sector to this place. What a speech that was.

I also thank the Human Trafficking Foundation, with which I believe my right hon. Friend the Member for Staffordshire Moorlands (Karen Bradley) also has a relationship, whose work has been extraordinary in highlighting and identifying the issue around modern slavery and human trafficking. My predecessor Anthony Steen played a large role in that and continues to perform those duties in a meaningful and effective manner.

I am conscious that there is a limited amount of time, and I do not want to interrupt those Members who will follow me or the Minister’s response, but I want to make a few points about what we understand from the Modern Slavery Act 2015. It was a landmark piece of legislation. All too often in this place we say that a Bill is a landmark piece of legislation—this really was. It was unique in the world, and it has been followed by legislation in Australia, France and the Netherlands, as has already been said. In that Act we committed to bring perpetrators to justice, we ensured that businesses were brought in line with transparency reports, we enhanced protections for victims, we ensured that there were supply chain statements and we appointed the Independent Anti-Slavery Commissioner. Those were all integral and important points, but we also have to assess their effectiveness in delivering, and make sure that businesses are following suit and not just going through the rigamarole of ticking boxes to say that they have complied with the requirement to publish statements. The Act has to have teeth. This is where the opportunity comes. The UK shows global leadership and has global power in being able to set up initiatives like this.

I will go briefly off topic and talk about the illegal wildlife trade. In 2013-14 the UK launched a transportation taskforce in which we brought together private, public and charitable organisations to disrupt the illegal wildlife trade network. We then began to bring in financial networks to look at data analysis and see where we could disrupt those chains across the world. This is what we should be doing in this area. There is huge potential for doing it, and there are similar models that we can replicate in this country.

My last point is what was raised in the Independent Anti-Slavery Commissioner’s report at the end of this year. It said there were two points we needed to look at. The first one relates to data analysis. It is a huge benefit to be able to bring in financial institutions; to be able to pinpoint and identify beyond the supply chains and businesses’ internal structures; to look at where money is being transferred; to look at where money is being invested and to take account of that; and to make sure that we can be reassured about where our investments are being put. Secondly, slavery is generating somewhere in the region of $150 billion a year. The report goes on to encourage the exploration of opportunities to partner with financial institutions.

We set up the Independent Anti-Slavery Commissioner to make sure that we listen to these recommendations. These recommendations have come out in the report; we would do very well to listen to them. As my hon. Friend the Member for Grantham and Stamford has said, it is the situation that one walks past and cannot ignore. We cannot, in this day and age, look at the crisis and the egregious crime that is human trafficking. We cannot accept it in the 21st century. We have the opportunity to bring those financial institutions together—with the City of London and the power we have as the fifth biggest economy in the world—and it is time for us to take the action, take the lead and provide that leadership. I hope the Minister will listen to these words, and the words of my hon. Friend the Member for Grantham and Stamford, and take the appropriate action.

It is a pleasure to serve under your chairmanship, Mr Robertson. If I can refer to my entry in the register of interests, the Human Trafficking Foundation appears as I am a trustee. I welcome the Minister; this is the first time that I have participated in a debate that she is responding to in her new role. I can assure her, as someone who fulfilled that role for over two years, that it is a fantastic place to be; the change you can make to people’s lives as a Minister in the Home Office with responsibility for this area is absolutely breath taking. It is a difficult job, it is a tough job, but it is also one of the most rewarding jobs in Government. I welcome her to the role and know she will do a fantastic job. I also congratulate my hon. Friend the Member for Grantham and Stamford (Gareth Davies) on securing this debate and delivering what I know will not be the last contribution he makes to a Westminster Hall debate. It was an excellent contribution, and it set out so succinctly and well the point that he is campaigning hard on. I am also grateful for his willingness to accept contributions from other Members in this very short, half-hour debate.

My hon. Friend raised, very well, the risks and the opportunities there are for investment businesses in ensuring they are making the ethical investments their customers and consumers want. People want to know that their money is being invested in a way that is not funding crime—be that drug crime, gang-related crime or, in particular, the economic crime against people that is human trafficking and modern slavery. Let us be clear: this is an economic crime. It is so often confused with crimes of immigration, but it is not an immigration crime. It is an economic crime: one human being is prepared to make financial gain from another human being. We must all work to stamp that out.

The numbers are shocking. The latest estimate is that around 40 million people globally are victims of modern slavery, of which 25 million are victims of forced labour and 15 million are involved in forced marriage or other forms of exploitation. Some 25 million people globally are victims of forced labour. We must remember that number and work hard to do what we can.

My hon. Friend the Member for Grantham and Stamford is right. My hon. Friend the Member for Totnes (Anthony Mangnall) made the point as well. My hon. Friend the Member for Totnes has big shoes to fill in taking over from the wonderful Anthony Steen, who is an absolute hero; without him, we simply would not be where we are today with the Modern Slavery Act 2015.

When I took the Modern Slavery Bill through Parliament, the hon. Member for Strangford (Jim Shannon) was very involved on Report, and tabled amendments constantly, including on supply chains. Section 54 was not in the Bill when we started. The Bill had gone through prelegislative scrutiny by a Committee chaired by Frank Field, now of the other place. I am going to call him by name. I know that we would normally refer to him as the noble Lord Field, but everyone will have seen the news that he made public last week, and our thoughts go to him. He is another of the founding fathers of the Act. Without Frank, and without the noble Baroness Butler-Sloss, Anthony Steen, the noble Lord Randall and many others, we simply would not have achieved it. That prelegislative scrutiny Committee wanted to see transparency measures for supply chains, but Government do not always listen to everything that prelegislative scrutiny Committees or others suggest. A lot of work was needed to persuade Government of what those of us in the Home Office could see was a very good idea, but about which others in Government had not been so convinced.

Section 54 was undoubtedly revolutionary, but that does not mean that it is not evolutionary. It does need to evolve. Now, six years along, there are undoubtedly things that can be improved, and I welcome what the Home Office has said about changes that must be made. It does need to be strengthened. It must be expanded to more businesses. The points that my hon. Friend the Member for Grantham and Stamford made about what we could do on investments are really interesting, and I urge the Minister to take those points to her colleagues in Government at the earliest opportunity so that they can remove their reasons for opposing them as quickly as possible. This is something that customers want. Consumers want to know that their money is properly invested.

I will make two very quick points before I sit down. The first is that I have tabled a private Member’s Bill that replicates section 54 on climate change. My hon. Friend the Member for Grantham and Stamford said that this was something that people wanted to see. I would like to see that transparency in supply chains on climate change as well, and I hope that hon. Members will support the Bill. Second, I join my hon. Friend in pleading that we ask the United Nations to make human trafficking and modern slavery a focus of the next General Assembly in September 2022. If we could work together to do that and to get global recognition of this issue, we would go a long way to tackling this heinous crime.

It is a huge pleasure to be here serving under your chairmanship, Mr Robertson. I very much thank my hon. Friend the Member for Grantham and Stamford (Gareth Davies) for securing this vital debate and for bringing with him a wealth of experience from his distinguished career in the investment industry, which informs us all and helps us all to move further.

I also thank my predecessor, my right hon. Friend the Member for Staffordshire Moorlands (Karen Bradley). I really do feel that I have very big footsteps to follow in. I thank her for all her work in bringing the world-leading and groundbreaking Modern Slavery Act 2015 on to the statue book. Without her work, I certainly would not be here today talking about this subject, and it is absolutely right that we are. Thanks to her work, and that of others, last week we were able to mark Anti-Slavery Day and reflect on the trauma that victims suffer, the cruelty of those who exploit them and the bravery of survivors attempting to rebuild their lives. That was also a moment to reaffirm our commitment to confronting the evils of modern slavery, wherever and whenever they occur. They are utterly appalling crimes that have no place in our society. I very much welcome the interest shown by my friends today, including the hon. Member for Strangford (Jim Shannon), so that we can stamp out these crimes.

It is nice to pause and reflect on what we have already done as a Government. We have taken some very important strides forward in recent years, but of course there is more to do. These crimes continue to evolve and we must continue to evolve. As my friends have said, modern slavery is a global problem. We continue to provide global leadership to tackle it. During our G7 presidency, G7 members agreed to joint action on forced labour in global supply chains, and reaffirmed their commitment to upholding human rights and international labour standards. That is why we continue to invest heavily in tackling modern slavery. We have funded a new five-year modern slavery victim care contract to support victims to rebuild their lives. That new contract is worth £379 million over five years and will deliver a much-needed service that is based on need and better aligned to the requirements of individual victims. As we know, victims present with incredibly complex needs, and it is right that we have the support tailored for them.

The Home Office has invested a further £1.4 million this year to support the police’s response to modern slavery, bringing the total investment in policing to £15 million since 2016. That funding in the round has helped us to pursue perpetrators and drive an increase in modern slavery investigations and operations. Following our recognition that the nature of modern slavery has evolved over the years, the Home Secretary announced a review of the 2014 modern slavery strategy, which builds on the considerable progress, by adapting our approach and maintaining our position as an international leader in this area.

We will publish a new strategy next spring, which will set the strategic direction for years to come. Through the Modern Slavery Act 2015, the UK became the first country in the world to require businesses to report on the action they were taking to address modern slavery risk in their operations and supply chains. That legislation acts as a call to action for businesses, investors and the international human rights community—no doubt the businesses that my hon. Friends were involved in before they brought their expertise to this place.

Following the recommendations of the independent review of the Modern Slavery Act and a consultation, the Government committed to introduce an ambitious package of measures to strengthen our world-leading legislation on transparency in supply chains. We will extend the reporting requirements to public bodies, to leverage public procurement and address risks in public supply chains.

We will mandate specific reporting topics that statements must cover, set a single deadline for reporting, require organisations to publish their statements to a new Government registry for modern slavery statements, and introduce financial penalties for organisations that fail to meet their reporting obligations. Those changes require legislation, but I want to reassure colleagues that this Government remain committed to legislating on modern slavery and will implement the measures as soon as parliamentary time allows.

In addition to the changes we have already committed to make, we will consider our future approach to transparency in supply chains, as part of our modern slavery strategy review, including how we can best utilise the unique power—and pockets—of the financial sector, to tackle modern slavery.

Let me now turn to some of the specific points referenced in the debate. Individual organisations must focus on preventing harm in their practices. We do not believe that physical remoteness or being several steps away from the supply chain is an excuse. Investors do need to hold their organisations to account, as my hon. Friends so eloquently set out. People who are saving for their pensions or retirement should not be exposed to criminal activity.

I am grateful for all the work done by my hon. Friends the Member for Grantham and Stamford and for Totnes (Anthony Mangnall). Through their convening power, they have brought together financial institutions and organisations. I am also grateful for the work of the Independent Anti-slavery Commissioner, highlighting the role that the financial services sector has to play. It is clear that there is more to do, but investors can help to drive this change by fully harnessing their leverage. I highlighted that message this week at a meeting jointly hosted by the Home Office and CCLA, a fund manager, to discuss how Government, businesses and investors can work in partnership to tackle modern slavery. There are some really good examples of investor-led initiatives, with investors taking collective action, such as the CCLA-led Find It, Fix It, Prevent It and Rathbone’s Votes Against Slavery project.

However, we know that there is more to do here. While I am encouraged by the positive initiatives already under way, we need to make sure that we continue on the right track and that investors scrutinise their investment portfolios to engage and challenge companies on their response to modern slavery.

As hon. Members have said, when it comes to those environmental, social and governance issues, we know that businesses and investors have responded well to the environmental challenges they face. As we look to accelerate progress on tackling modern slavery, the Home Office is working with investors to understand what more we can do to encourage and incentivise businesses and investors to place the same emphasis on social issues. This issue is now, rightly, rising up the agenda.

I thank the Minister for her excellent response. Minister, last week in the press over a hundred MPs had signed a petition and a letter of concern about investment in Chinese companies, some of which are using Uyghur Muslims as slave labour. Is the hon. Lady able to give us any guidance on how we can take that further to try to make that stop?

I thank the hon. Gentleman for that. It is an egregious example of abuse of human rights; just because it is happening overseas does not mean that we should turn a blind eye to it. We in the Home Office are looking closely at all of these issues as part of our review of the modern slavery strategy. I would be very happy to continue in discussion with the hon. Gentleman to provide further reassurances on what can be done. However, I want to make very clear from this Dispatch Box that companies have a responsibility to their consumers and shareholders to do the right thing and not enable slavery in the pursuit of profit.

As we look to accelerate progress on tackling modern slavery, it does seem very challenging. However, we do know that the business and investor community has taken huge strides, and it has succeeded in making better, more informed green choices. We should hold and demand those same expectations for modern slavery. We should not walk by. We should not ignore the crimes that are hiding in plain sight.

My hon. Friend the Member for Grantham and Stamford called for the legislation to be extended to financial services so that they address modern slavery in their investment portfolios. I have taken close note of that. Legislation is important, but it is not the only factor driving responsible behaviour. Many organisations already report voluntarily under the Modern Slavery Act and publish modern slavery statements. I would strongly encourage any responsible organisation to do the same, and I would encourage shareholders and consumers to ask those questions about where they are putting their money and their investment.

I have noted very carefully the points that my right hon. Friend the Member for Staffordshire Moorlands and my hon. Friend the Member for Totnes made. I reassure them that we will consider extending the scope of section 54 as part of our strategy review.

In closing, let me once again express my thanks to my hon. Friend the Member for Grantham and Stamford for securing this debate on such an important subject. It is a real tribute to him to have brought forward a debate on a topic that is sometimes hidden, but should not be. I thank him for shining a light on all the work that the Government, many NGOs, my right hon. Friend the Member for Staffordshire Moorlands, the Anti-Slavery Commissioner and many others are doing. Modern slavery is utterly abhorrent, and I can assure hon. Members that this Government remain steadfast in our determination to root out such crimes, protect the vulnerable and support victims.

Question put and agreed to.