Who will compensate and protect workers in Leicester’s garment industry? 

By Claudia Webbe MP

Despite the extended media focus, as the year draws to a close, the central questions remain unanswered when it comes to vulnerable and exploited workers, writes CLAUDIA WEBBE

THIS year has been exceptionally difficult for us all. My city of Leicester has had it particularly tough for two key reasons.

We have faced coronavirus restrictions for longer than any other area, which includes not been able to visit each other’s home indoors since the start of the first national lockdown in March 2020 and we have also faced an overdue yet painful resurgence of attention on the scandal in our garment industry.

Exploitation in Leicester’s garment industry has been an “open secret” and widely reported and studied for at least a decade, yet successive conservative governments have failed to act.

Despite the extended media focus, as the year draws to a close, the central questions remain unanswered — what progress has been made this year, and who is protecting workers in Leicester’s garment industry?

Tomorrow, the environmental audit committee — of which I am a member — shall be examining Leicester’s garment industry as part of our follow-up inquiry on fashion sustainability.

Shamefully, the government rejected most if not all the recommendations of the committee’s 2019 inquiry entitled Fixing Fashion: Clothing Consumption and Sustainability, which highlighted concerns regarding fast fashion and exploitation in Leicester’s garment industry.

After this year’s resurgence of reports and widespread condemnation into the scandal, the government must take its head out of the sand and legislate to protect vulnerable workers.

The investigation will include an evidence session with Boohoo Group’s executive chairman, Mahmud Kaman.

The recent Levitt inquiry, commissioned by Boohoo itself, found that Boohoo was aware of endemic workers’ rights abuses in Leicester’s garment industry.

By procuring garments from companies that routinely under-report hours, force employees to work in buildings that pose a severe fire risk and pay as little as four times lower than the legal minimum wage — BooHoo has been complicit in severe instances of exploitation.

Yet it chose to ignore the plight of workers in order to seek ever-higher profits, as sales of clothes made by suppliers in Leicester have also helped reward BooHoo’s bosses with bonuses worth £150 million.

Yet despite being at the centre of this scandal, it is unclear what action BooHoo has taken to end exploitation in their supply chains.

For example, it is not clear what steps Boohoo has taken to ensure that its purchasing practices don’t act as a driver for illegal pay and poor conditions.

Boohoo must sign the transparency pledge and make all of its supplier details public (at home and abroad).

Indeed, it is appalling that Boohoo has not yet published a full list of its suppliers — despite promising to do so.

This only begs the question, what is it attempting to hide?

As the excellent campaign group Labour Behind the Label argue, Boohoo must also end its behaviour of terminating ties with suppliers without paying back wages.

Going further than this, Boohoo should make funding immediately available to ensure that all workers who have enabled their huge profits are fully compensated for years of working at less than half the minimum wage.

Beyond Boohoo, the government and regulatory institutions are not doing nearly enough to protect and recompense underpaid workers.

Workers are still not being paid at least the minimum wage and remain for years on zero-hours contracts without access to holiday pay, sick pay, meal breaks or time-off pay.

There are still grave concerns regarding the illegal use of furlough, double record keeping and unsafe and dangerous work environments.

Research carried out by the University of Leicester in 2015 revealed that most garment workers were paid way below the national minimum wage, did not have employment contracts, and were subject to intense and arbitrary work practices.

The research calculated that the average wage was approximately £3 per hour and made a conservative estimate that the underpaid wage sum in apparel manufacturing within the East Midlands was around £1 million per week.

A more recent study by the British Retail Consortium puts the figure at nearer 2.1 million per week.

The workers whose wages have been stolen from them must be recompensed.

Serious questions need to be asked about the extent to which some among Leicester textile suppliers have engaged in money laundering and VAT fraud.

A recent BBC investigation found that firms in Leicester which supplied Boohoo and Select Fashion had engaged in fraudulent practices, including misleading invoices and cash laundering transactions.

This investigation found that £8m had been received by six companies said to be issuing fake invoices to the original wholesaler, which means that as much as £1.6m of VAT was not recovered.

As this investigation was only the tip of the iceberg, it is possible that tens or even hundreds of millions of taxes are being avoided across the sector.

One of the main reasons why these appalling instances of workplace exploitation in Leicester have been able to exist unchecked, is that 10 years of austerity has severely downgraded our regulatory institutions.

The local authority in Leicester has had its central government grant funding cut from £289m in 2010 to £171m in 2019.

The government has also slashed the budget of the Health and Safety Executive by £100m, or 46 per cent, since 2010.

The budget of HM Revenue and Customs, the body which is meant to enforce the minimum wage, was 40 per cent less in 2016 than in 2000, and staffing levels were reduced by approximately 50 per cent over the same period.

In 2020, HMRC’s national minimum wage team remains significantly under-resourced, meaning the risk of inspection is low.

The most recent director of labour market strategy states that “the average employer can expect an inspection around once every 500 years.”

There are also grave concerns regarding the Gangmasters and Labour Abuse Authority (GLAA), which is dubbed by the government as the leading investigative agency for labour exploitation in Britain.

For one thing, between July and August 2020 — the peak of coverage of this crisis — GLAA did not carry out any enforcement action against employers.

Yet equally worrying is the fact that investigations carried out previously by GLAA involved joint work with immigration enforcement.

For instance, in 2011, Operation Serbal was launched by the UK Border Agency and so called “illegal workers” were arrested in a series of raids on Leicester clothing factories, between May and July 2011.

Indeed, this summer saw a noticeable increase in immigration enforcement vans following the recent resurgence in media reports on this scandal.

This is as counterproductive as it is callous. As the Trades Union Congress rightly highlights, there is clear evidence that workers are deterred from making complaints as they fear being wrongly referred to immigration enforcement.

Joint working should cease and a firewall between immigration enforcement and employment rights enforcement agencies should be established.

There must be a switch in focus from immigration status to tackling worker exploitation.

Rights are meaningless if they are not properly enforced. The government must urgently reverse the funding cuts to regulatory bodies to ensure the safety and fair pay of those at work.

The government could also enhance current regulations by introducing a textile adjudicator (similar to the Groceries Code Adjudicator), which could ensure that payment terms to suppliers are fair, including offering recourse to solution on late order cancellations, delays in payments, unfair or illegal deductions, all of which have a knock-on effect on employment at supplier factories and the ability of suppliers to pay legal wages and provide secure employment.

Trade unions are the best line of defence against workplace exploitation, and the government must open the door for their involvement.

Unions must be granted access to Leicester workplaces to inform workers about the benefits of union membership and collective bargaining.

It also must be made easier for working people to negotiate collectively with their employer, including simplifying the process that workers must follow to have their union recognised by their employer for collective bargaining.

The scope of collective bargaining rights must also be widened, and trade unions should be actively involved in labour market inspections.

Perhaps a new textile and garment workers union is long overdue to help restore Leicester’s once proud role as the jewel in the crown of British industry.

Overall, the lack of progress, made this year, in tackling exploitation in Leicester’s garment industry, mirrors that of the last decade — which is simply not good enough.

Private companies like Boohoo, regulatory bodies and — ultimately — the government must start approaching this crisis with the ambition and urgency it demands.

Claudia Webbe MP is the member of Parliament for Leicester East. You can follow her at www.facebook.com/claudiaforLE and twitter.com/ClaudiaWebbe