Firms must tackle modern slavery to win public contracts

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Organisations must do more to help improve society such as employing a diverse workforce and tackling modern slavery if they want to win public sector contracts, the UK government will announce today

The government will be looking for firms to prove their track record in four areas when awarding public contracts: employing people from diverse backgrounds, including those with disabilities and from ethnic minorities; boosting employees' employability potential through staff training; committing to environmental sustainability; and reducing modern slavery and cyber security risks in their supply chains.

Cabinet Office minister David Lidington will unveil the proposals today. “It is morally right that we make sure none of that money goes to any organisations that profit from the evil practices of modern slavery,” he said in a statement.

“Similarly, it is right that we demand that the organisations we work with meet the high standards we need to protect our environment and employ workforces that represent our diverse society; including people with disabilities and those from ethnic minorities.”

The Public Services (Social Value) Act 2012 already encourages government procurement officers to consider the social and environmental impact of contracts they award. However, these plans will extend the requirements further.

Businesses with an annual turnover of £36 million or more are already compelled under the Modern Slavery Act 2015 to produce a yearly statement outlining steps they have taken to address the risk of modern slavery in their supply chains and within their business.

The government, which spends £49 billion each year on contracts with external organisations, hopes the recent move will rid its own supply chain of bad practices. It will also try to award more contracts to small firms.

Daniel Peyton, managing partner of McGuireWoods' London office, said that he believed the HR professionals the law firm works with will “welcome” the initiative.

“The government’s approach does not yet signal a change in the law in areas like modern slavery, where more effective penalties for non-compliance would be likely to meet broad approval. Nor does it require positive discrimination by employers, which might prove more divisive. Instead this requires employers to ensure that they are proactive in adhering to the spirit, as well as the letter, of laws that deal with morally-sensitive issues in order to obtain commercial benefits,” he said.

“The effects of such an approach will also affect those in supply chains who also stand to benefit from the award of such contracts and who will also have to demonstrate a similar proactive commitment or risk being excluded from these opportunities.”

Peyton added that this could help drive cultural change in organisations: “This seems to be a message consistent with the function and desire of many HR professionals of encouraging, not just strict legal compliance, but a culture of best practice through incremental rather than instant transformational change.”

Matt Gitsham, director of Ashridge Centre for Business and Sustainability and associate professor of sustainable development at Hult International Business School, told HR magazine that there are three key areas where HR has a role to play in tackling modern slavery.

“Provision of training is key. Modern slavery is a new issue happening right under everyone’s noses. Training for everyone across a business on how to spot the signs of Modern Slavery and what to do about it is crucial. Two, HR can also share best practice to influence the employment practices of suppliers, particularly in relation to agency and temporary labour. And three, HR also has a role in supporting and building capability among senior leaders on all these kinds of issues," he said.

"Helping address global issues—from diversity to climate change to modern slavery—has increasingly become part of every senior business leader’s job, and it’s good for business, not a drag. The knowledge and skills associated with all this need to become part of leadership development, recruitment and selection, and succession planning. HR has a crucial role here in supporting their leadership team and helping build the pipeline for the next generation.”

The announcement comes amid rising concerns over government policy on outsourcing public services to private firms, following the widely-publicised collapse of Carillion, which marked the largest construction bankruptcy in British history.

The government has stressed that the changes will not add complexity or increased costs to the procurement process.

Last year a report by the government-backed Labour Market Enforcement body made recommendations to tackle forced labour and other forms of modern slavery. In 2016 Theresa May announced that Britain will lead the fight against modern slavery with a new government taskforce and £33 million of aid funding.

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