Bring in a Garment Trading Adjudicator and Stop Unethical Trading Practices in the UK

Vote and have your say on this important industry issue: Introduction of a Garment Trading Adjudicator – stopping unfair trading practices in the UK fashion industry

This policy submission is made on behalf of Transform Trade and provides proposal to the ‘Better Jobs and Better Work’ commission, addressing questions 3, 6, and 7.

The introduction of a Garment Trading Adjudicator to regulate the UK’s largest fashion businesses’ purchasing practices is integral to ensuring British consumers’ confidence that retailers benefiting from the UK market are not subjecting their international and domestic partners to unethical practices in clothing supply chains.

What is the issue?

Many large UK fashion brands buy clothing in a way that places inappropriate, unexpected, and excessive risks and costs onto supplier factories in the UK and worldwide. This impacts factories’ viability, but also undermines fair competition in the UK market for smaller brands. Clothing manufacturing has largely been driven out of the UK in part because of the prevalence of abusive purchasing practices.

These unfair purchasing practices include cancellation of orders, price reduction, refusal to pay for goods dispatched/in production and delaying payment of invoices. A recent survey found factories reported that large brands including Aldi, Asda, Gap, H&M, Lidl, LPP, Next, and Zara all subjected some of their Bangladeshi factory suppliers to the four types of unfair purchasing practices cited above.

This way of buying causes job losses, poverty wages, excessive overtime, and unsafe working conditions for the people, majority of whom are women and from Asian and ethnic minority backgrounds, who make our clothes. Manufacturers purposefully recruit “flexible workers” so that they can adjust production plans at short notice to the volatile trading practices of the clothing retailers.

What can be done?

The introduction of a Garment Trading Adjudicator (or ‘Fashion Watchdog’) to regulate the purchasing practices of the largest fashion brands selling in the UK market would enable:

• consumers to have confidence that retailers had adhered to fair business practices
• fair market & competition for smaller fashion brands (who sometimes pay upfront)
• factories being able to plan and invest
• decent working conditions to be offered by manufacturers both in UK and overseas
• environmental improvements

The establishment of a similar regulator, the Groceries Code Adjudicator, to oversee food retailers’ practices towards food suppliers, has successfully reduced the prevalence of unfair practices that breach the statutory Groceries Supply Code of Practice. In 2014, 79% of suppliers in groceries reported experiencing a breach of the statutory fair purchasing code, this reduced to 29% of suppliers in 2021, with food retailers continuing to operate successfully and competitively. As a result, some of the large food retailers pay their food suppliers between 1-3 months earlier than their clothing suppliers.

How will it work?

The Garment Trading Adjudicator would ensure large clothing retailers/brands abide by a Statutory Code, initially replicating elements in the Groceries Supply Code of Practice and would need to include Principle of Fair Dealing so suppliers can operate with certainty.

(https://www.gov.uk/government/publications/groceries-supply-code-of-practice/groceries-supply-code-of-practice)

Current activities?

17 Labour MPs are listed as supporters on the Transform Trade Fashion Watchdog – MP Supporter Page with additional interest expressed by shadow MPs. (https://www.transform-trade.org/fashion-watchdog)

The culture of the garment sector is driven by practices of the largest retailers in the Global North, regulation of these businesses will change the power imbalance of the trade. The UK is a major consumer market and London has iconic fashion status across the world, but this image is tainted by abusive practices. By establishing a sister adjudicator to the supermarket watchdog the UK can stand tall as a world leader for fair business practices within clothing sector.

Fashion-Enter Ltd CEO Jenny Holloway responded:

I totally endorse Hilary’s views here. My name is Jenny Holloway CEO of a social Enterprise Fashion-Enter Ltd. 

I have been on both sides of fashion – a senior buyer with the Acadia Group, M&S and Littlewoods and I currently run a social enterprise that focuses on ethical production and an ESFA approved academy for technical skills Level 1 – 5.  We are based in Haringey, Islington, Leicester and Newtown in Wales. 

I have seen the most awful practices from retailers. The drive to chase up margins by retailers and etailers forces the factories into sharp practices resulting in infringement of the Modern Slavery Act. I have also seen unscrupulous factories profiter from their labour force too but this is a minority and I am aware that this happens in every industry. 

Recently I know that a  disreputable etailer was working whilst they must have been in solvent leaving the factories with major debt and forcing the factories to liquidate. 

When times are hard retailers can advocate increases to discounts, cancel orders without true justification and withhold payments – why should these factories bear the brunt of these sharp practices? It’s totally unfair and there is no recourse for the factories to go to. 

There needs to be an ombudsman / adjudicator that can support the factories and help them through difficult negotiations. There is no voice for the factories who are too often too “scared” to complain in case they do not receive any future orders. 

There is no forecasting or planning for factories either – when the weather is sunny the sales go up and then there’s the mad race for orders to be delivered on time. However, the support for factories is certainly not there when sales are more depressed – it never used to be like this. As a selector at M&S in the 80s there was respect for suppliers and plans were created together and implemented as one. 

Retailers have the power to bring back Made in the UK and to support a manufacturing industry that could be a “world beater” – like the days when Leicester “clothed the world”.

The current malpractices have to stop – it’s  time to support the little guys on the manufacturing ground and bring in adjudicators.

To share, comment and support this policy tap here. 

Contact your MP and sign up to this initiative via Transform Trade here.