Welcome to this afternoon’s session of the Business and Trade Select Committee and the second session in our inquiry on the Employment Rights Bill and industrial relations in the UK. Thank you so much indeed to our witnesses for joining us. We appreciate that there are some reporting restrictions on what some of you can say ahead of your results but we are very grateful to you for making time to give evidence to us today. Mr McCaw, perhaps I could start with you. We now have 160 cases of abuse at McDonald’s reported to the BBC. We note that 300 cases have been reported to the Equalities Watchdog and 700 people, former employees of McDonald’s are taking legal action against you. Has McDonald’s become a predator’s paradise?

Since I saw you in November 2023, I have put in place a programme of significant change within our business, which has seen us strengthen our standards. That programme has seen us launch a wide-ranging cultural action plan that guarantees our ability to detect, to deter and deal with any forms of harassment in our business. It is not just robust but rather industry-leading, and it is working. We have seen—

You say that it is working. One victim told the BBC that managers inappropriately touched her and that when she raised it, she was told to suck it up. Another female worker says that a male manager sent her topless pictures. Another victim says that a shift manager asked her for sex in return for extra shifts. She was 17. Now when you came before us last time, you said you were determined to root out these behaviours and eradicate these people from the business. It sounds to us, from what the BBC has said today, that you failed.

The allegations that you described are abhorrent, unacceptable and there is no place for them in McDonald’s.

They have been allowed to happen.

I would like to be able to investigate each of them, to understand them and ensure that we can take the appropriate action and deal with them. We do not have room in our business for anybody who behaves in that manner. The measures that I have put in place mean that we can offer a secure and safe workplace where people are respected and feel included. I hear from our people that the programme is working. I know this because they tell me that they know how to speak up and that they are confident that if they do speak up, management will take appropriate action. Nine out of 10 employees are recommending that McDonald’s is a great place to work on the back of it.

Since we last met in November 2023, how many managers or staff have been dismissed as a result of investigations into allegations like the appalling allegations we have read about in the BBC today?

A large part of my focus, and one of the most important moves we have made, is to enhance our speak-up channels. We have just launched a new channel called Red Flag, which is designed by our people for our people.

How many managers have been dismissed as a result?

As a result, people are speaking up and we continue to investigate all allegations. We have seen 75 allegations of sexual harassment made, of which 47 were upheld with disciplinary action and 29 people were dismissed over the franchises’ 12-month period.

How many franchises have been terminated as a result of allegations at those particular stores?

We hold all our franchisees to account for a broad set of standards, including standards around people. We have a significant programme of review, with both announced and unannounced visits and a set of measures in place. Ultimately, that allows us to assess our franchisees and their ability to uphold the standards that we expect.

How many franchises have been terminated as a result of allegations of abuse?

I will move aside from allegations because no franchises have been terminated because of allegations. However, across the last five years, 15 franchisees have left the McDonald’s system because of being unable to deliver the right level of performance, of which six were failing to meet the standards required for people practices.

Do you accept that based on the experience that you have had that ultimately this kind of abuse flourishes where there is an imbalance of power in the workplace?

The types of allegations that you describe are not widespread. They are isolated incidents that must be driven out of our business.

They result from more than 700 people bringing legal action against you and 300 cases being reported to the EHRC. We are told that the EHRC is asking you to take tougher action. One hundred sixty cases of abuse were reported to the BBC. It does not sound as if these are isolated incidents. It sounds as if there is a pattern of abuse in what, frankly, has become a hotbed of harassment.

I do not want to belittle any of those allegations. Every single one is important. However, I should be clear and put those numbers that you mentioned in context. By far the majority refer to the period before the new action plan was put in place and they refer to the historic position of people investigated. That is not a reflection of where the culture is in McDonald’s today and all the changes that we have driven over the last 12 to 18 months.

Would you accept that the abuse that we have heard about tends to flourish where there is an imbalance of power in a workplace?

This is not an issue about imbalance of power. This is an issue about very poor behaviour from individuals in the organisation and when it occurs, it does not necessarily occur when somebody is in a position of power. These are behaviours that happen from bad-minded people acting in a completely unacceptable manner and I have no time for them. I am angry that people think they can behave in this way.

So literally you do not think an imbalance of power has anything to do with a permissive environment for abuse like the abuse that we have heard about from the BBC today?

Our managers are our first line of defence against any form of bad behaviour.

Many of these allegations are about managers.

I do not see any pattern that suggests that poor behaviour is driven by managers at all. We have had managers who have had to be disciplined and or dismissed and there is no question about that. However, this is about ensuring that everybody, regardless of their level in the organisation, behaves in the way that we expect within McDonald’s to support what is a dynamic, positive culture in which our teams look after each other.

That surely must be harder to put in place if you have, as you have, 90% of your workforce on zero-hours contracts.

Not at all. We offer every McDonald’s employee the opportunity to choose whether they prefer to have—

If you have an example of an individual saying a shift manager asked her for sex in return for extra shifts, you obviously have a problem in that somebody on a zero-hours contract is in a more vulnerable position.

That behaviour is completely unacceptable. It is abhorrent and I want to investigate it and be able to deal with any wrongdoing that has occurred there. That is a one-off situation. That is an issue of people’s behaviour, disgusting behaviour. It is not an issue with people’s contracts. Everybody who works for McDonald’s can choose whether they would like one of our flexible contracts or a guaranteed hours contract. At the moment, about 17,000 people have chosen guaranteed hours contracts and the rest choose flexible hours contracts. We know that the flexible contracts are particularly popular with young people and nearly 70% of our people are under the age of 25.

You do not accept that the pervasive use of zero-hours contracts creates imbalances of power and imbalances of power create vulnerability for abuse to flourish. You do not accept that argument.

When considering work contracts, for me it is about the quality of the contract; it is not about the number of hours that are stipulated. Our flexible contracts have the same provisions as a guaranteed hours contract other than specifying the number of hours that somebody has to work every single week and that is a preference for young people to be able to choose to work more hours during their holidays and maybe to work not at all during exam periods, for example. The rest of their contracts—the holiday pay they accrue, the statutory sick pay, maternity/paternity rights—all those things are the same as in a guaranteed hours contract and of course, every single person can choose a guaranteed hours contract if they would like to. Quite frankly, it helps me if more people choose a guaranteed hours contract because we know that more of our hours in the restaurants’ working weeks are automatically covered but I do not want to force people to do something they do not want to do. Part of the benefit of working for McDonald’s is the flexibility it brings to our employees and it is one of the main reasons people like to stay with us.

I want to make sure we have this on the record. You do not think that the pervasive use of zero-hours contracts leads to imbalances of power in the workplace.

Contracts that we offer in McDonald’s, which are fair contracts, do not create any sort of systemic behaviour or issue with balances of power. I am very confident of that and I believe that we have in place all of the right people checks to ensure that no managers are using contracts in that way. It is important to understand how we schedule hours in our restaurant—

I am just wondering how, if that is true, we can have victims making allegations that a shift manager asked a 17 year-old girl for sex in return for extra shifts.

I would like to investigate that particular occasion and ensure that we can deal with any wrongdoing that happened on that particular occasion because it is very rare for the manager of a shift to be the person who is scheduling the people for a shift. Typically one of our restaurants will have anything between 10 and 20 managers. At any point in time, one of those managers will be responsible for scheduling overall and that responsibility often changes from one period to the next to keep it fresh. That is not a situation that builds a certain power for one individual who can then control exactly who works what and when. Scheduling is also bound by a system that does most of the work for the managers.

What has the EHRC asked you to do most recently?

We have a wide-ranging agreement with the EHRC that we signed in February 2023. It has many, many—

Have they asked you to strengthen the arrangements?

We are working with the EHRC to strengthen the arrangements. Part of our expectation when we first started working with EHRC is that our agreement would evolve over time as we learn where the priorities need to be and we are in ongoing conversation about strengthening. We have not yet reached a position of being clear what that strengthening might look like.

Why have they made that request?

We expect to continue to evolve the arrangement we have. As new information comes to light, as we understand where the opportunities to get stronger are, we are evolving the agreement in the same way that, as a business, we are evolving our plans as a business that is green and growing.

It is said that in the consultation being undertaken by the Department, you as a company are one of the most vociferous advocates for retaining the flexibilities for zero-hours contracts. Are you arguing to keep the flexibilities of the current zero-hours contract regime?

We are involved in the consultation and I must congratulate the Government on the way they are consulting with business on the Employment Rights Bill. I am very pleased to be part of that discussion with the Secretary of State and the Deputy Prime Minister. Our position is very clear. I put four screens against all the measures. First is practicality; then come affordability, encouragement of further employment and growth. Practicality is very, very important in our industry. It is good to be able to represent the hospitality industry because it experiences peaks and troughs that are much greater than for other retailers and are much less predictable. They are driven by very, very local events. Flexibility is very important; zero-hours contracts are not. What is important for me is that people have choice and knowing that our people, or a number of them, want to choose a flexible contract that does not commit them to working every single week is important. I want to maintain people’s ability to choose. I expect everyone to be offered the opportunity to be able to have a guaranteed hours contract and I expect to have the flexibility to be able to continue to operate our business in such a dynamic environment. I know you will be familiar from your own experience in your early days working in our restaurants of just how those trading patterns go up and down.

Thank you for that answer but, cutting through, does that mean you are basically arguing to retain the current flexibilities or are you happy with the Government’s proposals as set out in the Bill?

We want to retain flexibility. The consultation continues and I think that it should continue. There are proposals to create contracts that are based on the number of hours that people have worked. I think that is that is entirely reasonable. The point that we need to continue consulting on is what is that period of time that we look back over for the hours that people work; that needs to reflect the way that the peaks and troughs work over the course of a year rather than periods of time that could leave you with either not enough or too many people because of the different shapes of the business. As ever, it is about getting the detail absolutely right but I very much support the concept. The concept of the Employment Rights Bill is a direction of travel that I very much support. It will help us to ensure that everybody has access to good jobs, the types of jobs that we offer at McDonald’s, which everyone should be able to have and I think that it will help to level the playing field.

When do you expect to get to a position where there will be zero reports from your staff of abuse and harassment in McDonald’s restaurants?

I can be very clear with you that I will not be happy until there are zero complaints.

I am sure that you will not be happy but when do you think you will get to that point?

I understand that we are operating in a world where harassment is an issue for businesses, organisations and institutions and that we can never ever be complacent. We will employ around 230,000 people over the course of next year and I will always need to have a permanent focus on dealing with and eradicating harassment and I am realistic that that is something that we have to do.

However, you cannot give us a guarantee, or you cannot give us a timeline for it, about when McDonald’s will be abuse free.

I cannot guarantee a time when there will be no allegations raised. If nobody was speaking up, I would be concerned that something was stopping people from speaking up. My aim is to make sure that nobody has any doubt at all that McDonald’s is a business that will not tolerate harassment of any kind. I am a leader. I am a leader who believes that every single person should be able to come to work feeling safe. They should be able to come to work and be respected and everybody should be included no matter where they are from, what their background is and what they believe in. That is what I stand for and that is what my business stands for and we will continue to drive everything we can to achieve that. At the heart of it is having the best speak-up process because a business in which speak-up is healthy, in which people believe in it and trust in it, is a business in which there is no hiding place for bad actors and that is what I am seeking to achieve.

Thank you. I think that people will be concerned that there is no timeline but let me come now to Joshua Reynolds. Q144 Mr Joshua Reynolds: In November 2023, one of your franchisees told our predecessor Committee about your performance and customer excellence system. She said then that they monitored everything that was happening, particularly around people practices. Is that correct?

It is correct. A specific module of the system is purely dedicated to people practices. We call it putting-people-first-visits and there is also a part of every visit that includes people questions to make sure that we always have an unannounced element so that we can always be confident that what we are experiencing when we do these reviews is the reality of what is happening in the restaurant. Q145 Mr Joshua Reynolds: In September 2024, the BBC reported about a McDonald’s restaurant in Cambridgeshire where there were nine victims of modern slavery working, where those victims worked between 70 and 100 hours a week and four of them were paid into the same bank account. Why did your systems not spot that or did your people not spot it?

Yes. Let me just talk about the context there. Over 10 years ago, a criminal gang infiltrated one of our restaurants and in 2015-16, just at the time that Theresa May as Home Secretary was talking about the evolving face of modern slavery, they were able to recruit some people to work in that restaurant. It was around 10 years ago. The face of modern slavery was very different then and businesses’ ability to understand it, recognise it and detect it I am afraid was not where it is today. We have certainly learned from that experience and today it would be very unlikely that it would not be detected because we have put six significant steps in place. The first is simply that today all our managers are aware of what modern slavery looks like and how to detect it. The second step is that when we recruit people, we no longer allow the use of interpreters. In those days, an interpreter was able to step in, which clearly created a barrier. A third area is that we now have much more protection around the number of hours that people work. Anybody who elects to work more than the 48 hours stipulated has to go through a conversation/interview process to confirm that they are doing it of their own free will and that that is what they want to do. We can now also double-check on bank accounts. Any time where more than one person has the same bank account, we can ask questions. Of course, it does not mean that slavery is happening; it may simply be the case of husbands and wives having the same account, but it allows us to tackle that problem. We also have much broader awareness, spiked around International Slavery Remembrance Day, that allows us to make sure that everybody in the restaurant is aware of what modern slavery looks like. Quite often, the managers may not see what people’s colleagues do. Finally, and very importantly, is having the best whistleblowing approach and we do that now in partnership with Unseen, the leading charity in modern slavery, to ensure that people have a route to speak up anonymously because we do understand that it is a very frightening space and people are often intimidated and not prepared to speak and that gives us the best chance. Today, with that level of protection, it is much harder, although we still do have to understand we are dealing with organised criminal gangs in this area. Q146 Mr Joshua Reynolds: You said, a few times, “ about 10 years ago”. The BBC’s report says that this ended in 2019, which is not 10 years ago. These four people were paid into the same bank accounts, £215,000. Do you think that McDonald’s was negligent in not spotting these signs of modern slavery at the time?

I think that it was a very different time. The understanding of modern slavery— Q147 Mr Joshua Reynolds: It might have been a different time but do you think McDonald’s was negligent at the time?

I do not think we were negligent at that time. Q148 Mr Joshua Reynolds: Do you think it should have been spotted at the time?

It is very hard for me to project myself back to that period of time but I certainly— Q149 Mr Joshua Reynolds: Do you think it should have been spotted? If you had been going into that restaurant, do you think you would have spotted it?

I do not think I would have spotted it, from everything that I understand. Q150 Mr Joshua Reynolds: Someone working 100 hours a week or someone on a 30-hour shift?

I think that for a one-off occasion, it would have been dealt with and considered to have maybe been it was a management mistake. Q151 Mr Joshua Reynolds: When you came to us in November 2023, did you know about this incident?

In November 2023, I was certainly aware that there was a court case ongoing and that we were taking part in it; yes. Q152 Mr Joshua Reynolds: Why did you not report it to us at the time?

It was not part of the conversation. It was not something that I was asked about. Q153 Mr Joshua Reynolds: You were asked specifically, though, about McDonald’s duty of care and you told the Chair of the Committee at the time, “For me it is more than a legal responsibility. For me it is a commitment”. So it was pertinent to the conversation, would you not have thought? If we cannot confirm that if we do not raise a specific question with you, you are not going to tell us everything that we may need to know about this, how can the Committee be sure that problems going on at McDonald’s are not being hidden away from the public?

What you have is my word and my commitment as somebody who puts his personal values and integrity front and centre to everything he does not just as a leader but as a person. That tells you that I will be completely open and transparent and answer your questions as fully as possible. Q154 Mr Joshua Reynolds: You gave that commitment in November 2023 and you did not tell us. You did not tell us. You gave that commitment in November 2023, that exact same commitment, almost word for word in November 2023. You did not tell us about it but now you are telling us that that you are open and transparent about things. So where is the change? The words do not match the rhetoric.

I am sorry but I think that you are misrepresenting the situation. Perhaps you could identify for me the question that would have allowed me to answer that particular area where I would have done. It was not a secret. It was a public court case. Yes, there were reporting restrictions then but it is not something that I in any way attempted to cover up, hide or anything else. I fail to understand where I did not provide the transparency that would be expected. Q155 Matt Western: Mr Macrow, the Chair has explained that about 700 cases are currently outstanding. How many outlets do you have?

We have 1,563 outlets at this time in the UK and Ireland. Q156 Matt Western: Simple maths would suggest one in two McDonald’s outlets has some sort of case against it although probably there are centres or issues in particular outlets or operations. Is that the case?

I have very little visibility of those people who have quite rightly taken up their right to be represented by a legal firm or of all the times, those occasions when those events happened. I am really not sure about what period of time or what number of restaurants those numbers cover.

It is a staggering number, isn’t it, compared to the number of outlets you have—700 cases?

As I have said previously, one case is too many as far as I am concerned and it is absolutely my intention to do everything that I can to remove all forms of harassment from our business.

You wrote to us, to the previous Committee, on 30 November 2023 saying that McDonald’s does not have a duty of care to workers within the outlets. Your tone today suggests that you have changed your view about that. To the public, the people working are McDonald’s workers. Are they McDonald’s workers? They wear McDonald’s uniforms; you are very insistent about franchise standards. To all intents and purposes, they are McDonald’s people aren’t they; they are McDonald’s workers?

We operate 170 or so restaurants ourselves. People who work in those restaurants are McDonald’s employees. Those who—

Those working in the franchise restaurants wear the same uniforms do not they?

They are employees of a separate business. They are employees of the individual franchisee’s business. Franchisees are independent business people running very good small and medium-sized businesses and they are the employers; they take the legal rights. However, those franchisees are not just held by the legal law of the land like everybody else; they are also upheld to a higher level of standards that we expect as McDonald’s because they are the representation of our brand in this country.

They are McDonald’s workers?

No. The workers are employed by the franchisee in each of those areas. They work under the McDonald’s brand and we expect them to enjoy the same employment experience wherever they work and for whichever franchisee they work but ultimately, they are employed by the franchisee.

You have a duty of care to those who are within your own sites but you do not have a duty of care to those who are not in your sites. So there is a difference between the two in terms of whether they are McDonald’s workers.

The legal responsibility is very different if you are the employer versus if you are not the employer.

You have told us that you are determined to fix the problems that we have discussed and you have made certain claims just now saying that you want to establish a secure workplace, that there is no room in your business for these sorts of instances. Why do you not just accept liability, given that the sign across the door is McDonald’s?

Our business is based on understanding the value that franchising brings. We run a better business because we are franchised. The act of placing a highly experienced, talented business leader into a smaller medium-sized business where they know their people, know their customers, are able to support their local community and have a financial and emotional stake in running that business well, yields very good results for everybody, for our customers, our people and the corporation. That is a model that has underpinned the success of McDonald’s worldwide for a long time and it means that we run a very good business in this country.

I want to bottom this out, Mr McCraw. I asked you in November 23, “Is that duty of care a legal responsibility?” and you said, “It certainly is a legal responsibility”. Then you wrote to us on 30 November 2023 walking back on that commitment and you wrote, “The legal responsibilities and duty of care towards employees of franchisees sit with the relevant franchisee”. You said one thing in the Committee and you really nailed your colours to the mast because you went over and above the language and said that not only it is a legal responsibility but you also said that it is a personal commitment for you. But the letter that came two weeks later walked back the statement you had made to the Committee. So we just want to know: did you mislead the Committee or did you misunderstand your legal obligations?

What is explained in the letter is the exact correct position. When I look at the transcript from our conversation, I think there is a misunderstanding about which part of the question I was answering, if I remember correctly, but it is very clear; the legal responsibility sits with the employer. That is absolute and is very clear. McDonald’s employs one group of people and each of our franchisees employs their own group of people. However, I expect everybody who works under the McDonald’s brand to be able to experience the right McDonald’s employment experience and that is what we hold people, franchisees, to account through our franchising standards and we review them regularly against that to ensure that is what is happening.

I have a question about the instances in your wholly-owned restaurants versus your franchise restaurants. Presumably you look and compare at where these cases come up. Is there a pattern across your restaurants and your franchise restaurants? Do you have fewer cases in your own restaurants or is there no pattern? What do you see there?

Harassment is an issue that we have to face up to in every part of our business, regardless of who owns the restaurant. We do not see any particular trends that suggest that it occurs more in one part of the business than in another part. We have to be committed to and alert to harassment in every single place that we operate.

Sticking with that—I am sure you have you have got visibility globally—are you saying that quantitatively there is no material difference between your wholly-owned restaurants and your franchises? I am sure that you have looked at that in detail. Are there no trends to speak of?

Certainly on this issue our franchises perform just as well as our company-owned restaurants. That does not surprise me. You have experienced business people running quite small businesses very close to their people and so, yes, they care deeply about those people, they are in their restaurants and are able to manage the right standards. To become a McDonald’s franchisee is hard work. It takes a year to be recruited and to be trained. It is not a case of somebody just having a lot of money turning up. It is about somebody who wants to not just own but operate a restaurant, be in there. We only take people on who know how to and are motivated to run restaurants, to look after people, to develop cultures. Therefore, my expectation is our franchisees, across most measures, will run our best restaurants. They have the commitment, both financial and emotional, that drives that will.

The culture and the tone of any company are always led by the top and by the leadership. How do you think, therefore, apart from spot-checking that you are doing, to eliminate or reduce the number of cases of any sort of inappropriate behaviour? All I have heard so far is spot-checking. What other mechanisms do you have?

I completely agree with you. I think that culture starts with the leaders in the business and it is upon all of us to demonstrate not just the right behaviours but the right approaches to drive the right culture. The changes we have put in place make for a wide range of cultural action. Let me take you to the three biggest changes that we have put in place. The first is the launching of the new red-flag, speak-up campaign that I mentioned. It was designed by the people, for the people. It is in their language, it frames potential issues in the way that they understand and are relevant to them, and it gives them the ability to digitally and immediately speak up should they have a problem. That is critical because if people are comfortable about speaking up and everyone is confident people will speak up, there is no hiding place. The second big area for me was a significant investment in creating our investigation handling unit headed by our director of workplace investigations. That allows people to be confident that we will be able to assess very quickly every single allegation made and ensure that there is a thorough, professional and fair investigation backed up by external legal experts where required, where cases are more complex and more serious, that will take place at speed so that people are confident that we will get the right—

Are these cases going to the police when needed and when necessary? Some of the situations that have arisen are quite dire. What actually happens afterwards?

In the case of criminal activity—fortunately, most allegations are not criminal, but in the case of criminal activity—we will always ask the person who is reporting to take their case to the police. However, that must be a decision for the individual to make for themselves. That is something that we have learnt from working with organisations like the EHRC because reporting to the police against the will of an individual can often put a person at personal risk. We will always encourage complainants to go to the police and will support them in doing so but it is their personal choice to do so.

You have talked about the importance of culture being led from the top, but I am afraid I need to return to this issue of employment contracts because I just do not see how you can root out harassment and bullying and create a culture where people can speak up when nine in 10 of your workers are employed on zero-hours contracts, which by definition open the door to favouritism, bullying and sexual harassment. We have heard about sex for shifts happening in one of your restaurants, and if it has happened once, it will have happened more than once. I also think I heard you say that you would like to eliminate zero-hours contracts from your business. I very much hope that the Employment Rights Bill will enable you to do that but would you agree that the continued use of zero-hours contracts enables predatory managers and puts workers at greater risk of bullying and sexual harassment?

First of all, just to correct one of your assumptions there, I did not say that I would like to eliminate flexible-hour contracts from our business. What I said is that I would be very happy to have more people on guaranteed hours because that helps us with the staffing of the restaurants. And no, I do not accept that premise at all. What you describe are cultural issues that must be addressed. They are not contractual issues in any way, shape or form. Most businesses, particularly—

You have not understood. It absolutely is a cultural issue. If a manager can say, “If you behave in a way I do not like, I will not give you the shifts that you need next week”, or, “If you do not give me this sexual favour, I will not give you the shifts that you need next week”, by definition, that is how zero-hours contracts work. They put too much power in the hands of managers and they give very little recourse to workers. Are you expecting these workers to speak up and disclose sexual harassment at work?

Please let me explain how it works in a McDonald’s restaurant. There are two really important things to consider here. First is the way our speak-up channels work. They do not go to the manager. They can be anonymous. They do not put anybody at risk from speaking up. Speaking up to say, “I have had an issue and have not been able to get the hours I wanted”, or, “Somebody has asked for something, a level of behaviour, for me to get those hours” is not something that we are unable to deal with. That can be dealt with through speaking up without going anywhere near the manager at all, so that protects the individual. Also, as I explained earlier, we may have as many as 20-plus managers in a restaurant. Anyone may be doing the schedule for two weeks’ time for any one week. The power does not sit with one manager, who can determine what is going to happen to everybody in the restaurant. It is driven by a system. A computerised system sits behind it as well. What determines people’s working hours is the number of hours that they would like to work, the hours that they are available to work, and the available hours that we have to offer. Now, of course, it is not just people who are on flexible contracts who might be looking for more hours. Somebody on a guaranteed hours contract may have opted for a 12-hour a week contract but this week they would like to work 22 hours. If we have 22 hours that match their availability, we will be able to give it to them. They will also be looking to increase their hours. It is not simply people on flexible contracts who will be asking to work more hours at times, or indeed asking to reduce their hours sometimes.

Ms Lorains, could I start with you? The BBC reported that victims of modern slavery who were forced by the same gang that my colleague mentioned were forced to work for Speciality Flatbreads Limited. Speciality Flatbreads supplied products to you and to other leading supermarkets. I wonder if you could tell us when you first became aware of concerns about this particular supplier, what the details of those concerns were, and probably most importantly, what action you took as a result?

Absolutely, and thank you for your question. In 2022[1], we were made aware of the allegations, almost simultaneously through the charity Unseen and through our internal visits to the site. We worked with Unseen to conduct a thorough investigation and an independent assessment of what had happened. Due to the nature of the findings and the concerns, we shared the details with Unseen, the police and the GLAA. We were informed via Unseen that the police would visit the site but that the GLAA had confirmed that it was outside its remit. We did not receive any further updates until the BBC programme was aired, but we stopped taking from that site as soon as we had concluded the investigation.

Following from that, and this is perhaps a question for both of you, what systemic changes did you make to your internal processes because of that case? Were you concerned that you had not picked up on the difficulties yourselves—that it took an external source to come to you and tell you about that? Did you make changes? Perhaps you first, Ms Lorains.

Maybe I can start by saying to the Committee that Tesco takes the human rights of the workers in our own operation and our supply chains very seriously. We take a very much risk-based approach. We have a five-step process in our own operation and our supply chains, which starts with a risk assessment of both the country of production and the type of product. We then look at prioritisation and understanding our leverage, so where we can make the biggest difference. We then move on to the third stage, which is mitigation, followed by grievance and remediation, which is where should we be made aware of issues from anyone, obviously including from ourselves, and we move forward. Finally, comes monitoring and communication because unfortunately human rights risks are in the world and there are some higher-risk countries where there are higher risks or some higher-risk areas where there are higher risks and therefore we need to remain vigilant but also transparent in sharing our learnings.

“To err is human, but to correct is divine”. We are trying to understand what failed in this instance and what you learned from it.

In this instance, we were made aware through two routes. One was through our annual technical audit, which we conduct of all of our sites, and we were aware when we went to—

You have told us how you became aware. We are trying to understand what failed. Why did you end up in this situation?

Mr Byrne, if I may explain—from a perspective of human rights in our supply chain, we have several layers of how we protect.

I understand that.

In our supply chains we therefore have very clear requirements for all our suppliers.

I understand that as well, but my question is: what failed?

In this instance, I think a little bit as Mr Macrow shared, there clearly was a criminal gang involved in the recruitment of workers. As soon as we were made aware—and I know you are asking what failed—as soon as we were made aware we put in place a rapid investigation and our remediation. In this instance, however, a criminal gang had placed workers in a supplier site of ours. Unfortunately—and I am sure the committee have heard this from other members and other witnesses—the seasonal worker and migrant worker schemes in the UK are placing an increased risk of this happening. Therefore it is essential that we are 100% vigilant all the time and that is what we aim to be.

So the radar, basically, your radar, and you have described a very sophisticated radar, just did not pick up this incident. It did not pick up this risk.

Our radar is designed to look as broadly as possible and proactively. My job is every day to come to work with my team and try to absolutely avoid every instance of any human rights abuse.

When you looked at this case, what did you think? What did you say to yourself and your team about how you could stop it from happening again? You said that the radar failed. How do you build a better radar for the future?

If I may say, Mr Byrne, the radar did not fail in that we did pick up that there were issues through our own audit at a similar time to Unseen. That led us to investigate. That is one part of our radar. One of the things that I maybe can talk about is one of the things we have implemented since this incident and that is how we can use digital threat intelligence, scanning more digital sources of information. Audits are a very, very powerful tool, but they are one part of a toolkit and they are part of a toolkit which is about a moment in time. Within our programmes, if I look at the radar, we have our audits, which are an annual programme from a technical perspective and risk-based from a human rights perspective. However, at the same time, in every one of our primary supplier sites in the UK and in our high-risk countries, we have a protector line. In Tesco, we have a protector line for our own colleagues, which is an anonymous line that you can call. In every one of our primary sites in the UK and in 33 countries, including our high-risk countries, in 180 different languages, we have a line where I can have my voice heard. That is one of the things that is critical to me, that any worker in our supply chain’s voice is heard. Unfortunately, in this instance, those workers did not come to us, but we were able to see it through our audit and we were able to see it through the work with Unseen. In addition, we have looked since at how we can look at digital tools to help us scan even more and enhance our worker voice.

If you take a step up now from Tesco to UK PLC, what changes in the law do you think would help UK PLC build collectively a better radar?

There are probably three things that I would encourage the Government to look at across the range of avoiding and mitigating human rights abuses. The first is around how you can support Section 54 of the Modern Slavery Act. As I have mentioned, we think transparency is an essential part of businesses being able to demonstrate what they are doing. Our ask would be to make sure that businesses are complying with disclosing but also that those disclosures are sufficiently detailed enough to allow rigour and transparency. The second point would be around having the right resource within the government agencies that support. The GLAA is critical in the work that we do but we would say that additional resource would allow GLAA to respond more rapidly. Obviously, the Fair Work Agency will be bringing multiple agencies together but we would be asking that the resourcing is in line more with the ILO recommendation of one agent per 100,000 workers, which I believe, from what we are hearing, is about one-third of what the GLAA is working on. The third point that we would talk about is making sure that every body within this sphere that is seen as a modern slavery first responder is very clear on being trained so that they understand their responsibilities. Finally, if I may, Mr Byrne, and I know I have mentioned this already, but I do believe the Seasonal Worker Scheme is probably the one or the main weak point in our UK labour approach. It is unfortunately exposing workers and migrant workers to the risk of abuse through debt bondage. If I may give context, of the 21 labour allegations in our supply chain that we published in our modern slavery report last year, 11 referenced the Seasonal Worker Scheme.

The same question to McDonald’s: what did you do differently? Again, I appreciate the difficulty here, that these people are bad actors but the system has to be designed to take account of that. You must realise that there are people out there like that. I was interested as well to hear that Tesco has a risk register. It is unfortunate that the UK has to be, by its nature, on that risk register as well, I imagine.

For our restaurants, it is the six steps that I outlined earlier. It is the additional awareness among our managers, the removal of interpreters from the recruitment process, the duplicate bank account checks that we now run systematically, the review of working hours, both when somebody requests to go beyond 48 but also a historic review through all the putting-people-first visits that we do, and the whistleblowing hotline. Those are the things that we have put in place. While I cannot guarantee that had they been in place when those people were recruited in 2015-16, I think that there is an increased chance we would have spotted it. Certainly, the duplicate bank accounts, if we had been able to flag them, would have allowed us to ask more questions. Of course, it does always still rely on those people you are asking the questions of being prepared to flag the issue but of course we today would have the partnership with Unseen to get them to help us from that perspective as well.

What is Tesco’s approach to sourcing product from Xinjiang in China now?

We have no operations in Xinjiang and we do not source from the Xinjiang region. We have not done so since April 2022, following Government advice and following our previous letter to the Government.

Okay. Obviously, you all know very well about the “Panorama” programme, Antonio Petti, shell companies and all this. What surprises me is this. Take the product coming out of Xinjiang, things like cotton, tomatoes, the well-known products. The “Panorama” programme used an origin verification firm to look at the tomatoes and found that yours, plus Morrisons’, Waitrose’s and Asda’s all had a Chinese profile. It is not that hard to do. I do not understand why, if you are serious about rooting that out, you do not just run these checks on all the obvious products all the time.

Maybe I can answer that in a few different ways. In looking at a complex allegation of origin differences we need to take many steps. Maybe I can just briefly talk about what we do within our broader supply chain. It is absolutely our commitment—and it is my job, I am responsible for it—to make sure that the products we sell are safe, legal, good quality and responsibly and sustainably sourced. That is our commitment to our customers. We use multiple layers to make sure that the supplier partners we work with are delivering what we would expect. That starts with our terms and conditions and, as you would expect, our policies. Our commitment also includes additional levels of specific specifications on each product and a compliance mechanism that includes audits and also includes traceability, so data checks. When we conduct an audit, we go into store, we pick up a physical product—I hope this will help to explain—we go back to the site, and we say, “Within three hours, you need to show us the traceability on the paperwork of exactly what has gone into that product”. We do use testing. Specifically, we use surveillance testing, as you have spoken of. What the leading scientific bodies within country-of-origin testing would say is that it is a very useful tool, but it is not conclusive by itself. So when we were—

With respect, I totally agree with everything you say; no question about that, but it is not conclusive. Are you de facto running tests on the obvious products all the time, because, if not, why wouldn’t you be?

We run tests from a risk-based perspective on various different elements, either in a proactive programme or in a reactive programme.

In Xinjiang, are you running proactively on cotton, tomatoes and whatever else that that comes out of Xinjiang at scale?

On country of origin at the moment, the tests are not conclusive and therefore we use traceability more with our supply base. However, when we are made aware of an allegation like the BBC’s, or if we in our own supply chain have concerns, we would use—

I did not understand that.

Apologies. There are two different routes—that well, many different routes—that you can use to piece together the picture when you are confirming the country of origin of a product. The challenge that we have as an industry at the moment, and the scientific community would agree, is that the country-of-origin testing, because it is taking one particular sample against a very large database of possible options, is not conclusive by itself as to country of origin. It either gives you—

I completely agree again but what I am trying to understand is, say for cotton or tomatoes, whether you are running a systematic process for all of your cotton products or all of your tomato products, by default, not to get a perfect answer, because I understand you will not get a perfect answer, but to raise your level of certainty to then go and probe much more actively through other channels, such as your three-hour checks or whatever. What I am trying to get to the bottom of is, are you taking that approach on—let’s say just cotton and tomatoes—are you doing that in cotton and are you doing that in tomatoes now?

Our approach would be the reverse of what you have described. We would use our audits and the data traceability to give us the initial read—

I apologise for interrupting but time and everything else—I am not trying to be rude. Given that we know that a lot of cotton comes out of Xinjiang and that a lot of tomatoes comes out of Xinjiang, would it not be safer to be saying that we do not want that in our supply chain if we are Tesco and therefore, we are going to, by default, start running those checks all the time. If you really do not want it in your supply chain, starting at that point and working backwards will get your results much more quickly, if you do want to get the bottom of it.

My personal perspective is that that level of testing is not the most practical solution and is not going to get us to what you desire. However, I am in total agreement with you: what we need to continue doing is looking at how we piece together the multiple different pieces of due diligence and the multiple different ways of due diligence, whether that is certification schemes, whether that is audits, whether that is data, whether that is surveillance testing, to give us confidence that we do not have any Xinjiang products in our supply chain. I am as disappointed as I think anybody in this Committee to have heard the allegation. We have fully investigated. We have not found conclusive evidence that there are Chinese tomatoes in that tomato paste. However, the judgment call I have made is that there were technical failings on that site, which meant that I cannot rule out or confirm definitively the risk of contamination and therefore we have made the decision to exit that supplier site.

By default, are you asking all your suppliers whether their cotton and tomatoes come from China?

We have made it very clear to all of our suppliers that no cotton or tomatoes can be sourced from Xinjiang. That is—

Okay, but sorry that was not the question. The question was are you asking by default all your cotton and tomato products whether the product has Chinese—Chinese not Xinjiang—cotton in it? Are you asking that question by default, given that you are worried about Xinjiang?

Within our specifications, we will specify on each product where products are allowed to come from. Taking the tomato paste as an example, our Tesco own brand tomato paste is allowed to contain only tomatoes from Italy. It is very clear to that supplier that no tomatoes from China are allowed in that product. We would have that for every single product that we source.

Cotton?

Again, we do not source any product from Xinjiang and we are clear with our suppliers about that.

Will you always know whether your cotton comes from China?

Yes, we would know the source. We would know the source, either the individual region, if it is specified as one region, or the multiple different countries that we could source from.

Our onboarding process for any supplier is that they cannot supply Tesco without having had a technical audit, which includes ensuring compliance with the core parts of the ETI base code. In addition, if the supplier is in a high-risk country, they have to have had a human rights audit. They cannot supply us until those audits have been completed and any critical non-conformances have been closed down. In addition to that, we have a risk-based approach and I have already briefly outlined this to the Committee. Our ongoing due diligence approach, may include things such as audits and my own and our own business team’s visits, as well as worker-voice due diligence training. If there is anything specifically on that case of anything that we found maybe I could follow up with the Committee, if that is okay just on that specific audit. Certainly for us to have continued to supply or to have taken supply from that site we would have gone through all those stages.

The audit is tailored depending on the site and what needs to be looked at. Our human rights audits, just to give an example, will include both visiting the site and expert worker interviews, but they will also include visiting associated places such as worker accommodation, if that is included. They can take anything from a day to two or three days, but it is very dependent and tailored to the particular piece we are looking at. The time period from that audit to supply very much depends on what we find. So if the audit has no major issues, we would be able to move quite rapidly. If the audit has non-conformances, we would need the supplier to act on any critical non-conformances before we move forward. It depends on if we were to find anything.

I have a responsible sourcing director who sits within my team. I stand over all of the human rights and responsible sourcing, along with my broader responsibility. My team would stand over the decision to exit, to suspend or continue to work with a supplier as they remediate issues in conjunction with our commercial teams. May I also say, to give reassurance, that any critical breaches that we find are also escalated and reviewed with our Group Risk and Compliance Committee, which is chaired by our group CEO. There is ultimate visibility at the absolute top of our business of any of these issues.

When we look at the onboarding of any supplier, we clearly—

We are not talking about any supplier; we are talking about this one in particular that has been featured in the Leigh Day case and in the newspapers.

Apologies. The reason why I am taking a step back is that it is the same for any supplier that we onboard and any site we onboard. We review the commercial part of the business—

So how did this go wrong?

As I said to your colleague, I would like to be able to write back to the Committee with the specific elements of this case, if that is okay. However, for every supplier that we onboard, it is a joint commercial, quality, human rights and responsible sourcing decision.

Apologies; could you explain the question?

The bringing forward of a site and a supplier for consideration would normally come from the product side of the business because my team is not responsible for creating the products and finding suppliers to produce those products. That sits as an accountability in our commercial team. However, to be 100% clear, a supplier cannot supply Tesco unless they have had a technical audit and, if they are in a high-risk country, a human rights audit. It does not matter how great a commercial product they have, however great a commercial partner they may be, they have to comply with our responsible sourcing requirements to be a supplier of Tesco.

Since the VK Garments issue, which obviously we were made aware of in 2023[2], we continue to work with our suppliers in the way that I have described to the Committee. I know we are we are tight on time so I do not want to repeat what I have already said. However, it is very much about those initial onboarding checks, continued rigour and, in our high-risk countries, our annual human rights audits, which look both at the site, at the surrounding worker environment, be that accommodation or anything else. In addition, there is our ongoing due diligence, which would be our protector line that I have spoken about, which would give any worker in those high-risk countries in our primary supplier sites the opportunity to raise concerns with us even though they are not contracted directly through us, and at the same time the enhancements on a digital threat intelligence, which I have spoken to Mr Byrne about.

I absolutely trust that our supply base is clear on our requirements and we have many wonderful suppliers who we have worked with for many years.

That is a very political answer.

However, despite everything we do and what I have to take some comfort in, is the fact that when I look at how Tesco is benchmarked by industry experts, our approach is held up very highly. KnowTheChain put us a second out of 60 in its 2023 benchmark, which is all about how you protect your supply chain and how you remove forced labour from your supply chain. Despite everything that we do, however, unfortunately, there is a higher risk of human rights abuses in certain high-risk countries. Therefore, I and my team come to work come to work every day to make sure that we are removing those instances and stopping them. On the rare occasions, when things like you have just described do happen, we are absolutely open to understanding them, rapidly investigating and understanding them, and then taking action, remediating and understanding the root cause. It is a global challenge and an industry challenge that we face. By coming together, both with the individual actions that we as Tesco are taking, and as industry and using our collective voice and our collective power, we are able to make a difference and we will make a difference.

Very briefly, Ms Lorains, when you have a facility, a factory, that you contract to, say, in Mae Sot, when you take on a contract with them to supply particular garments manufactured there, do personnel employed by Tesco Plc, go out there and establish the contract with them and do the checks, and then subsequently do the checks every year, that is Tesco employees?

We have two different types of visits that I would talk to the Committee about. We have third-party audits, which are done by verified audit companies, that we have a structured relationship with and that we manage in a in a very close way to make sure that they are reviewing to Tesco’s requirements. We have calibration sessions with them, we work very closely to make sure—

So it is contracted out, very simply?

We have third party audits and—

I have established that—that is very clear.

Could I just explain the other side, in 30 seconds?

We just want to press this point, if you do not mind.

It is very clear that you contract that out to an agency to do the checks subsequently to the establishment of the contract. I just want to be absolutely clear that when you set up that contract, it is set up by Tesco Plc staff going to Mae Sot, looking at the factory, looking at the working conditions and so on, and that they are the ones that write and agree the contract with that business?

If I may, I would say that we do not contract out our audits. We have a very controlled set of audit service providers who we have a very—

They are not Tesco employees?

They are not Tesco employees but they are trained to the standard that we would expect them to be. That is in part due to the practicality of the number of sites we look at. We also—

When you are choosing those partners, when you are sourcing these audit checking services, what is the universe of companies like that you choose from?

We look at the universal audit service providers but we continue to challenge ourselves to have a very small set of providers that we can have strategic relationships with. We want them to be an extension of the Tesco business.

I understand that. This is a really important strategic question for us. What do you think that market of auditors is like? Is it good? Do you have a lot of choice?

We work very closely and we have a programme of audit service provider selection, which goes through that broad market, because there is a broad market, to look at those few providers that we would work with. We are pleased that today we work with a small set of audit service providers. Clearly, in the case that you spoke to me about, there was an issue with an audit provider and that is something that has been a key part of that complaint.

Rosie Wrighting, do you want to pursue that?

I know that our teams would have visited the factory. I would need to come back to you about how close to the incident.

This contractor that you employ—is it a sole contract with Tesco or do they do contracts for other companies?

The audit service providers do work across multiple companies; however we have a direct specification with them and it is a Tesco specific audit that we are asking them to do.

Understood. Thank you very much for clarifying that.

I am staying with Tesco. In your most recent modern slavery statement, you have confirmed two to four instances of exploitation in your operations and around 15 in your supply chain. So 48% of your high-risk suppliers have had incidences of labour market non-compliance. Is labour non-compliance part of your business model?

Absolutely not. We take human rights incredibly seriously and hopefully, through my explanation of our processes and our approach, you can see how human rights are embedded from the bottom of our business all the way through to the top. If I may comment on those two different data points that you raised, within our modern slavery report, we do explain that 48% of our sites last year had non-conformances. While every non-conformance is key and something that we will work with our suppliers over a very short time frame to resolve, the vast majority of those—

What timeframe?

For critical non-conformances we would set three months and for minor and major non-conformances we would set six months maximum. Those classifications are in accordance with SMETA, which classifies across a very broad set of human rights activities and factors the spectrum of the audit. Yes, we do see that 48% and the majority of those—

It is staggering amount, 48%.

It is. It is a higher number than I would want it to be. It has been increasing, unfortunately, over the last few years.

It does not sound as if you have t a grip on your compliance.

We visit every supplier site in a high-risk country every year and they have a human rights audit. The purpose of that audit is to look at those very broad human rights factors and understand if there is anything that is not delivering what we would expect. While, as I was saying, every part of non-compliance and non-conformance is very important to me and we work with our suppliers to close them down, the vast majority of those numbers are what would be defined by SMETA as more ongoing things that need to be improved and can be improved very quickly. They might be things such as the frequency of fire drills, absolutely essential but something that we can work immediately with the supplier on and say, “You need to increase that”. The most severe instances that we are talking about at the Committee are those small number—well, one is too many, let me be very clear, but they are the much smaller number of those numbers that you raised around the 15 in our supply chain and the partial two in our own operations, where we did substantiate claims of forced labour. One is too many for me. We take every allegation very seriously and we fully investigate but what I did want to make clear to the Committee is that there is a distinction between the different types of non-conformances and issues that we find.

I want to follow up with Mr Macrow. Unlike Tesco, you do not publish any findings from your due diligence in your modern slavery statement. Why do you not publish the results?

I must admit that I do not have an answer to that question. It is not something that I have stopped and considered. We have a modern-day slavery statement that we comply with and I have not considered beyond that. I am happy to take that away and look into it.

Would you be happy to provide a statement to us, afterwards, with the results?

I am certain that we can get back in touch and let you know. I am sorry; I do not think I properly understand your question.

Tesco has its modern slavery statement. You have not published your findings and the results of the findings. I am asking you whether you can supply that to us.

Tesco publishes a statement, do its due diligence, and publish the findings of the due diligence. You publish a statement but do not publish anything beyond that. We are interested in why you do not publish the results of your due diligence work. No doubt you will have done due diligence work on your supply chains. We are just interested in why you do not—

Sorry, I am not a supply chain expert. Let me explain what I can about the supply chain and perhaps I can refer you to my supply chain experts to follow up after the meeting. We have a very strict set of global standards that have to be adhered to by all our suppliers. In this country, we have a large but not very complex supply chain. We buy £2.4 billion worth of UK product but that is just through 75 suppliers, and those suppliers are governed by our agreement. We audit them through an external company every year to the SMETA standards , as well as managing with our own team who also visit them and conduct at least one business review with everyone each year. We have a team of 26 people managing that group of 75 suppliers and a lot of them have been with us for many, many years—more than 20 years—so we know them very well. We do understand those suppliers very well. I certainly am happy to put you in touch with my supply chain team expert, or our global team, for more broader sourcing questions.

Thank you.

Thank you, Mr Opie, for your patience. This one is for you, if you would like to lead off. In the Employment Rights Bill, the Government propose the creation of a new Fair Work Agency. We would be interested in your thoughts about what the Government need to do to make sure that it protects the most vulnerable workers both here in the UK and abroad.

Thanks for the question. Yes, we supported the Fair Work Agency and we have written to the Minister to confirm not only our support for it but we would like to see the detail of how the agency is going to implement its work and go as far as it possibly can. We do like the idea of the co-ordination of the various agencies coming together; we think that is the most effective area. We have a couple of things we would like the Government to consider, going further than is suggested at least at the moment. The first is to be clear about the powers of the Fair Work Agency and the interventions it can make. The GLAA focus at the moment is primarily on modern slavery cases, for example, whereas we think human rights issues in the supply chain should also be an issue of focus for them. We would also like the Fair Work Agency to be able to look at recruitment agencies that operate outside the UK. For example, Claire mentioned the potential problems that we have identified with our work with members on the Seasonal Worker Scheme Taskforce, which we have shared with the Government. One of those is with recruitment agencies operating in countries outside Europe who are sending workers into the UK scheme. We feel that they are unfairly charging those workers for various expenses before they come into the UK. Some of those workers are already coming in as bonded workers, in effect. I think it is key that the powers it has are both sufficient to deal with the powers the GLAA already has in its regulated sectors, but also can go further both here in the UK and abroad to tackle the issue of workers, particularly those who are being sent into seasonal-worker roles here in the UK. Finally, and picking up on something that was said earlier, we thought it would be a very good role for this agency to look at modern slavery statements. It may surprise you, but since 2015 when the Act came in, we are told that there are still thousands of businesses who are not even publishing a statement, let alone the efficacy of those statements. We think that this agency could look at that but also be given powers to intervene if they think a statement is insufficient or if a statement is not being prepared in the first place.

We have heard that the resources available for enforcement in this country are not adequate and do not meet international standards. Do you have a comment on resourcing?

Absolutely. We worked very hard with the Government of the time in 2015. We wanted the Modern Slavery Act to go further than it went originally. For example, we would have liked the threshold for businesses covered to be lower to cover more businesses. We gave evidence to the House of Lords review of modern slavery last year, for example, and agreed pretty much with every recommendation they made in their report—which the Government has just responded to—including that the public sector, for example, be included in the Modern Slavery Act as well. Looking at the amount of work we would like that agency to do, the resource is a big one. However, we are not talking about huge sums of money here. If you were to triple the GLAA’s budget, you are probably going from about £8 million to £24 million a year. We are talking about relatively small sums in the scheme of things but they could play such an important role. The responsibility will always sit with the retailers. We have heard from two retailers but from my position at the BRC, can I tell you this challenge is faced by every retailer, every public sector procurement business out there, to try to eradicate human rights abuses in their supply chains. Therefore, with a little bit of support from the Government combined with pressure on businesses to do everything they can, we do feel we can make a big difference in this area.

Following on from there, what improvements would you like to see to the Modern Slavery Act? That question is for everybody.

Do you want to start, Mr Opie?

First of all, we should start with enforcing what is already there. Currently, the scrutiny of statements is woeful, frankly, and it should improve. The Government should really be looking to identify those companies, certainly those that are not preparing statements and also, through better guidance, be clear on what is expected in the statements themselves. Going to the next stage, we have had—

Just before you move off that point, is there a risk that we put through the Employment Rights Bill, strengthen labour standards here in the UK, but the risk of labour abuse just gets offshored?

Absolutely. The one thing that is missing in this Bill is to tackle both the Modern Slavery Act conditions and all the issues around the Fair Work Agency. The Modern Slavery Act is still sitting with the Home Office, which is still looking at possible changes going forward next year. To us, it would have made much more sense to have all of this wrapped up together.

Sorry, please continue.

I was just going to finish on this. We touched on this before. We would like the Government to really regain its progressive approach to modern slavery. We think we had that in 2015. We were one of the first countries to go. We have done very little with the Modern Slavery Act since 2015, either in guidance or support or challenge. We would like it to start looking at issues about mandatory human rights due diligence, for example. Should companies be required to put that forward? We are seeing that in Europe, where there is some progressive legislation. The new EU Directive, which will come in shortly, requires that from businesses. We do not understand why the UK would not want to go down the same route, particularly as we are tackling global supply chains here. The way you tackle global supply chains is through collaboration, global companies and businesses getting together, sending the right signals to the market that every supplier, whether it is in China, India or Bangladesh, is doing the same thing, because they know that without doing it, they cannot get onto these really high value markets. Aligning ourselves with these other countries, through the EU, or some of the work that is already seen in America and individual countries such as Germany, would be a very powerful tool for doing that.

I agree with what Mr Opie has said. They would be our key areas too. If would reinforce that for the UK to remain competitive, being aligned to some of the more progressive steps forward that are happening in the EU, particularly around the Corporate Sustainability and Due Diligence Directive, is essential. Also for me, it gives me hope that it is a precursor to global standards, which will help us to tackle the challenges that we have spoken about today.

You must worry about bad competitors undercutting you by offshoring labour abuse if we do not make these changes.

I feel that as a business, my responsibility is to listen to my customers and I know that our customers want products that are safe, legal, great quality and sustainably and responsibly sourced, and they ask us to do that. However, I do believe that legislation plays one very critical part in levelling the playing field. Therefore, my ask to Government would be that there is a role for them to help all of us in the UK to deliver better human rights for the workers in our supply chains and make sure that the UK is progressive in that thinking but that we move forward as an industry.

Can I add one thing to that? There is an onshoring potential to this as well. We have fashion retailers in particular who would love to source more manufactured garments here in the UK. We have struggled to tackle some of the human rights abuses in our own supply chains here and that is putting off companies, fashion retailers here, sourcing more in the UK. If we had greater powers, greater demonstration of enforcement, that would bring supply back to the UK. There is a really positive issue around development here within the UK if we get this right. We would have fashion retailers. We know that. We spoke to various mayors about three or four years ago to try to get it off the ground. We never got it off the ground because we could not get the assurances on labour enforcement. There is real potential for the UK.

Mr Macrow, what is your perspective on this?

I think Mr Opie has represented the industry incredibly well. I have nothing further to add to that.

There has been a mention there of American standards. The US reviewed its treaty with Canada and Mexico, the USMCA, to allow goods to be stopped at the US border if there were questions about labour standards. Is that something that the UK should be looking at in our new trade deals? Should we have built into them the ability to stop goods if there is a suspicion that they have come from areas where standards have not been met?

Yes, I think there should be the potential to look at all of these issues. We have not spoken, for example, about trade policy here, what our trade policy is in terms of how we ensure that workers in countries that we are importing from are also protected. I know that the Government made a statement in the House of Lords response around the Australia and New Zealand deals, for example, but I think it should be more of a part. Now, I think there are other powers that might come before that, which would be examination of due diligence, which then also takes directors of those businesses and the businesses themselves to task if they are not doing it. The second thing you could do, which is in the EU legislation, is around remediation for workers who might be affected being paid directly through civil penalties of the businesses that have caused that by not following their own due diligence. I think there is a suite of measures out there that the Government could look at. I think they are probably on an escalation with stopping goods at the border at the end of it, but there are definitely more things that the Government could do to intervene here.

Restricted visas: you were quick out of the gate to flag about the Seasonal Worker Scheme and, whether it is people working in the fields or people working in people’s houses, this is a high-risk area. How would you most like to see that scheme reformed?

We have given the Government a number of measures that we think would help to secure those schemes. If you are talking about things like the Seasonal Worker Scheme, which allocates—I forget how many—tens of thousands permits a year.

The number is 40,000.

Yes. Those should be underpinned by very clear conditions of how those labour providers are bringing workers into the country and how those visas are used. There are both issues about bringing workers in and then how those workers are treated within the UK in terms of maybe being moved from farm to farm or processing plant to processing plant without the workers necessarily wanting to move there. We have shared through our Seasonal Worker Scheme Taskforce, which includes some of the anti-slavery NGOs, the farmers themselves, ourselves, a number of recommendations to the Government, which we feel would make a big difference to really give everybody the confidence. The flip side for the farmers, because these workers are absolutely crucial to UK production, is that they get certainty on the visa scheme. Instead of maybe renewing it every one or two years, they would know that if these conditions are met and this is the labour market that we anticipate, these are the number of visas that we will have for the next five years minimum.

Ms Lorains, any observations on trade policy, the use of something like USMCA mechanisms to stop bad goods at the border?

I was just going to make two very quick points. I would be very supportive, as Mr Opie has said, of the changes and the review of bad goods at the border. The other piece I would add is that I think that if the UK is not progressive in this—and, by the way, what we are talking about is in line with Tesco’s policies—I think we are at risk of the UK potentially becoming a dumping ground for products that cannot enter the EU and cannot enter the USA. It would be a real pity if we ever ended up finding ourselves in that situation.

Literally—I just want to underline this—you think the UK could become a dumping ground for second-class products if we do not reform the Modern Slavery Act?

I think that there is a risk that if our policies are behind those of Europe and America, it creates a gap and that creates an ability for things to enter the UK market that are not entering other markets.

The country that led the abolition of slavery could actually be one of the countries that sustains labour abuse around the world?

I believe that as the UK labour market, we have such a position to drive forward labour standards across the globe. I would be delighted to see us continue to take a leading position there and hopefully be able to drive those, global standards that start to eradicate some of the risks we have talked about today.

Anything to add to that, Mr Macrow?

Nothing to add.

I am sorry that we overran but this has been a very important set of evidence from you. We are very grateful to you for spending the time and the preparation to join us this afternoon. There will be a few follow-up bits of correspondence and we would be grateful for your co-operation for that but, for now, that concludes this panel. Thank you very much indeed, folks. [1] The witness subsequently wished to clarify that they were made aware of the allegations in 2020, rather than in 2022. [2] The witness subsequently wished to clarify that this should be 2022, rather than 2023.