Boohoo, Next, Asos and more want factory licensing system to prevent abuse

By

Sandra Halliday

Published
Jul 20, 2020

​UK retailers are urging strong government action as they deal with the Leicester garment factory scandal. The main company in the spotlight, Boohoo Group, and others are calling for a licensing system for textile factories. 

It wants a licensing scheme that guarantees such factories are fit to trade with CEO John Lyttle sending the Home Secretary a letter saying a “joint effort between industry and government” is needed to reset the UK garment industry and “provide an incentive for retailers and brands to invest”.

Meanwhile, a group of major fashion retailers and 50 MPs have echoed those sentiments and also written to Priti Patel via a letter coordinated by the British Retail Consortium (BRC) and the All Party Parliamentary Group (APPG) for Fashion and Textiles.

The retailers include Next, M&S, Asos, River Island, New Look, Asda, Joules, Matalan, Morrison, N Brown, Very Group and Missguided.

Patel is reportedly muling the official response to allegations of malpractice in garment factories in Leicester with a possible tightening up of rules around modern slavery. The scandal came to light as a result of a Sunday Times investigation into low wages, but also because of fears over inadequate social distancing when Leicester became the first (and so far only) UK location to see a local lockdown after a spike in coronavirus cases. 

Boohoo believes that a licensing scheme is the best way forward as it would raise much-needed tax revenue and also create a barrier for “rogue businesses”.

Lyttle said issues looked at via such a scheme should include protecting workers from forced labour and other mistreatment, as well as debt bondage, compliance with minimum wage rules, plus other issues such as taxes and health and safety.

Boohoo’s business model is all about cheap fashion and fast trend response and the company manufactures a big chunk of its offer in the UK in order to facilitate this. There have been reports that as much as 7% of its production could be in the hands of unmonitored subcontractors. These companies haven't been given the work directly by Boohoo and fall through the gaps in its scrutiny of its supply chain.

Credit Suisse analysts have estimated that its ability to trace the origin of the goods it sells is worse than that of big name companies such as H&M and Inditex.

Boohoo has launched an investigation and has allocated millions of pounds in funding to improve its supply chain, as well as saying that it remains committed to UK manufacturing. 

Meanwhile, the letter from the BRC and retailers contains many of the same points and said that swift action is needed to avoid thousands more people facing exploitation. Boohoo didn't sign the letter but its CEO has endorsed its contents.

BRC chief executive Helen Dickinson, said that the body has called on the government to take action about such exploitation on numerous occasions and although there is "no silver bullet", licensing would be a step forward.