Mark Hillsdon reports on why Leicester-based Next is unable to source garments from factories on its own doorstep

In January 2016, Mohammed Rafiq became the first businessman in the UK to be jailed for human trafficking offences. Investigators had discovered a “slave workforce” at his Kozee Sleep factory in Dewsbury, near Leeds, with men being paid as little as £10 a week while forced to work and live in squalid conditions.

The factory supplied several leading High Street retailers, including John Lewis and Next, whose ethical audits had failed to spot what was going on.

Speaking as part of a panel at Ethical Corporation’s recent conference on modern slavery risk in the supply chain, Chris Grayer, Next’s head of supplier ethical compliance, recalled how he was called as a witness and worked closely with the police to bring Rafiq to justice. “One of the things that we realised during the trial was the extent of complicity and then the realisation of the criminality that took place,” he said.

If you see a dress advertised for £12 as made in the UK, do the maths

The Kozee Sleep perpetrators may have been brought to justice, but exploitation of workers in the UK continues, Grayer told delegates. “It's disturbing to be able to tell you that currently there are workers in supply chains in the UK that are being exploited on a day-to-day basis.”

Indeed, the Environmental Audit Committee’s (EAC) recently completed investigation into the garment industry found evidence of criminal underpayment of workers, particularly in Leicester.

The EAC report, Fixing Fashion, said: “‘Made in the UK’ should mean workers are paid at least the minimum wage. But we were told it is an open secret that some garment factories in places like Leicester are not paying the minimum wage. This must stop.”

The EAC's investigation into the garment industry found evidence of criminal underpayment of workers.

The parliamentary committee, led by Labour MP Mary Creagh, cited evidence from Financial Times journalist Sarah O’Connor, who in an in-depth investigation last year found that parts of Leicester’s garment industry had become “detached from UK employment law,” with workers complaining of abysmally low wages, blocked fire escapes, old machines and no holiday or sick pay.

Grayer said it was a sad irony that the risk of worker exploitation is likely to be as high in Leicester as in Turkey or Bangladesh. “We are a Leicester-based business, and we are now very limited as to where we can source products and the level of business that we can place in the region, with the assurance of compliance to our standards; this is because of the exploitation and the incorrect standards that are taking place.

“If you see a dress advertised for £12 as made in the UK, do the maths: it’s impossible for the workers to have been paid the legal minimum wage. Fast fashion is growing at a speed that doesn’t necessarily include the investment into the quality and compliance side of the business.”

Advising suppliers in advance of audits simply provides unsafe assurance to what potentially could be a non-compliant operation

O’Connor’s FT story reported that both Boohoo and Missguided source half their clothes from the UK. In its report, the EAC called upon Boohoo to engage with the trade union Usdaw as a priority, and to recognise unions for its workers.

In the session at Ethical Corporation’s June conference, Grayer outlined the impact of the 2016 Kozee Sleep experience on Next’s approach to due diligence in its supply chain: “The Kozee Sleep incident sped up the roll-out of unannounced audits across the supply chain and is now included in the terms and conditions of supplier contracts.

“Advising suppliers in advance of audits simply provides unsafe assurance to what potentially could be a non-compliant operation. … Our auditors may arrive at 7am, they’ll maybe walk in through the loading bay and they’ll see what’s really going on.

Boohoo has been called upon to recognise unions for its workers. (Credit: Organise)

“More importantly, they’ve been trained to focus on prevention, engagement and collaboration with suppliers, rather than just monitoring.”

Next has also been working with Shift, the US-based centre of expertise on the UN Guiding Principles on Business and Human Rights, to challenge and refine its approach to human rights.

The retailer is part of the organisation’s Business Learning Program, along with the likes of Unilever, Heineken and De Beers. All have very different and diverse supply chains, Grayer said: “But when you examine what the issues are, whether you are brewing beer, mining diamonds or making clothes, many of the human rights issues are common.”

The public has a right to know that the clothes they buy are not produced by children or forced labour

Nevertheless, when there is weak regulation or inadequate enforcement, there are limits to what companies can do on their own. Often human rights abuses aren’t just limited to labour exploitation in factories but are perpetrated by highly organised criminal gangs.

Grayer said bodies such as the police, HMRC, the Health and Safety Executive and the Gangmasters and Labour Abuse Authority need to be given the resources to effectively work together and get to grips with often deep underlying issues in some regions of the UK.

Grayer voiced frustration at the government’s decision in June to reject all of the recommendations of the EAC report, which included a call for more proactive enforcement of the national minimum wage, as well as for the government to penalise retailers who fail to comply with the Modern Slavery Act.

Chris Grayer, Next's head of supplier ethical compliance, and MP Mary Creagh. (Credits: Next/UK Parliament)

Grayer isn’t alone in his frustration. In a strongly worded statement Creagh said: “We presented the government with the evidence that it has failed to stop garment workers in this country being criminally underpaid, despite its claim that the number of national minimum wage inspectors has increased.

“The public has a right to know that the clothes they buy are not produced by children or forced labour, however the government hasn’t accepted our recommendations on the Modern Slavery Act to force fashion retailers to increase transparency in their supply chains.

“This is plain wrong. The EAC will be closely monitoring steps that the government claims it is taking to address the problems exposed in our report.”

Mark Hillsdon is a Manchester-based freelance writer who writes on business and sustainability for Ethical Corporation, The Guardian, and a range of nature-based titles including CountryFile and BBC Wildlife.