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Covid-19: Supply Chains

Volume 804: debated on Monday 22 June 2020


Asked by

To ask Her Majesty’s Government what steps they are taking to encourage companies to protect those in their supply chains from the effects of Covid-19.

The Government are working around the clock to protect our people and businesses. BEIS is engaging with UK industry and suppliers to ensure that we support all our sectors during and after the Covid-19 crisis. The Government have put in place an unprecedented package of support. Internationally, the UK is responding bilaterally to support companies and supply chains through financial and advisory support.

I thank the Minister for her reply. As she will know, migrant workers making garments and other goods for the western market are a particularly vulnerable group. Most have lost their jobs, many have not been paid for months and millions have been on the road, walking without any money in their pockets to their home villages. Will the Government ensure that, if they offer financial assistance to companies, those companies fulfil all their legal obligations to the workers in their supply chains and, if at all possible, go beyond that to support this most vulnerable group of people?

The noble and right reverend Lord is correct that garment workers from countries such as Bangladesh, Cambodia, Pakistan, India and Myanmar have had major difficulties since UK retailers cancelled their orders. Following a joint Department for International Trade and DfID ministerial meeting with CEOs from the UK garment industry, we are setting up a multi-stakeholder working group for government, retailers and NGOs. In Bangladesh, for example, DfID has been able to support about 1,000 factories and their workers through its “Better Jobs in Bangladesh” programme, enabling them to return safely to work when their factories reopen.

Do the Government not understand that there are already many people, not least in Bangladesh, who are left totally destitute as a result of coronavirus-related policies pursued by the companies which they were supplying? What action are the Government taking to introduce mandatory human rights due diligence in establishing a corporate duty to respect human rights and require companies to identify and prevent abuses in their supply chains?

The noble Lord will be aware that the United Kingdom was, in 2013, the first country to produce a national action plan to respond to the guiding principles on the international treaty on human rights. The UK is responding strongly and bilaterally to support companies and supply chains abroad through financial and advisory support. For example, CDC, the UK’s bilateral development finance institution, is maintaining investments to protect a strongly countercyclical response at this time so as to help companies access finance and protect supply chains and jobs overseas.

But, on another tack, many were struck by how enterprise and private investment helped to secure a speedy recovery in New Orleans after Hurricane Katrina. What steps are the Government planning to remove existing barriers to private enterprise and to encourage new private investment in response to the coronavirus crisis, in the supply chain and elsewhere?

As always, my noble friend displays her credentials as a champion for business. This is a Government who consistently aim to create a strong environment for enterprise, but business needs three things: it needs the markets, and in that regard the Government continually announce measures that will increase confidence in the economy as we move forward through the pandemic; it needs finance—the British Business Bank, a centre of excellence for SME finance, administers the new Future Fund announced in May, which is securing match funding for the private sector to new businesses; and it needs increased productivity through increasing use of technology, as advocated by the Mayhew report, of which my noble friend will be aware, and championed by B4 Business, a charity financially supported by government funds. Only by working on all three fronts can we create the environment in which new small businesses will thrive.

The best way that tier 1 companies can help protect UK supply chains from the effects of Covid is by paying on time. The FSB reports that the problem of late payment is as bad as ever, if not worse. Will the Government now publish their long-awaited consultation on the Prompt Payment Code? Will they make signing up mandatory and enforceable for all companies with 250 or more staff?

The Government are completely focused on fulfilling our manifesto commitment to clamp down on irresponsible payment practices and support small businesses, which are impacted the most. We have a whole range of measures to tackle late payment, including the role of the Small Business Commissioner and the payment practices reporting duty. Minister Scully—the Minister for Small Business—has recently written to the top 18 accounting firms, asking them not only to pay their smaller suppliers promptly but to pass that message on to their large clients. I accept that publishing reform proposals is taking longer than originally hoped. Part of this reflects the need to focus our attention on the urgent response to the Covid-19 pandemic. I am sure that noble Lords on all sides of the House will understand this, but as soon as we can we will address this issue at pace.

My Lords, medical supply chains are only as strong as their weakest link, which is why shortages were common well before Covid or Brexit. However, Covid has caused a systemic shock, which is far from over. It is time to take a far more strategic approach to assuring the resilience of medical supply chains. Following the financial crisis, stress tests were applied to the banking system. Does the Minister agree that it is time to design similar stress tests for UK medical supply, and will she work with colleagues at DHSC to take this forward?

My noble friend asks an interesting question, as even in normal times there have been unforeseen hold-ups in the supply chain, often made worse when the headquarters are overseas and the UK company often cannot have the same visibility of its supply chain in order to alert us to unforeseen hold-ups. The idea of stress testing the supply chains within target industries is an excellent one, and I shall certainly take it back to BEIS, which could perhaps work with DHSC to evaluate measures to mitigate such risks.

Amazon increasingly seems to be part of our critical national infrastructure. US legislators have been asking tough questions about the number of Covid cases in its warehouses and among its delivery workers. What conversations have the Government had with this vital online service, which is serving our nation at the moment?

The Government have been engaging with a wide range of stakeholders about safety in the workplace during this crisis. This includes Amazon, with which we have had many conversations, and I know that the DHSC is grateful to it for its support. In answer to the noble Baroness, I cannot talk in specific terms about what those conversations have held. However, our approach has been split not by specific business types but by the type of working environment. We think that the risk of Covid-19 can be best addressed through personal hygiene and social distancing, and not necessarily through the use of PPE, except of course in clinical settings.

My Lords, following up the question from the noble Baroness, Lady Burt, the Minister will be aware that EU directive 2014/24 on public procurement enables a public authority to pay a subcontractor for work completed in cases of insolvency, instead of the main contractor. This would help cash flow considerably in the supply chain, particularly for small construction companies. Will the Government consider it?

I am grateful to the noble Lord for his question and for giving me advance sight of it, since I do not think that I would have heard of that measure had he not done so. The Government have announced unprecedented support for businesses and workers. These measures include an uncapped package to help firms keep people in employment, deferred tax payments, business rate holidays, small business grants and commercial property mortgage holidays. In any situation where a main contractor becomes insolvent, the immediate focus will be on continuity of service, including by the incumbent contractor or its supply chain. Contracting authorities would first look to the terms of their contracts; they may have step-in rights, direct agreements or collateral agreements which allow them to engage directly with the supply chain behind the insolvent contractor. There are also provisions in UK procurement law—specifically, Regulation 72 of the Public Contracts Regulations 2015 —to allow replacement of an insolvent contractor.

My Lords, with the downgrading of DfID, how do the Government now plan to enhance the rights of the many vulnerable women and girls working in supply chains, or the Dalits of both sexes in south Asia?

I do not accept the premise of the noble Baroness’s question; I do not believe that the role of DfID has been downgraded. As she knows, this Government have been foremost in stopping modern slavery outrages around the world, and we will continue to do that within the context of a combined department.

My Lords, the time allowed for this Question has elapsed. That also concludes the hybrid proceedings on Oral Questions for today. I thank all noble Lords for their contributions.

Sitting suspended.